TerraForm Power, Inc. (Nasdaq:TERP) (“TerraForm Power” or the
“Company”), an owner and operator of clean energy power plants,
today announced that its subsidiary, TerraForm Power Operating, LLC
(“Operating”), has entered into an agreement to sell a portfolio of
24 operating solar projects in the United Kingdom representing 365
MW (the “UK Portfolio”) to Vortex, a renewable energy platform
managed by EFG Hermes’ private equity arm. The UK Portfolio is one
of the largest portfolios of solar projects in the United Kingdom
and was assembled by TerraForm Power in 2014 and 2015.
The transaction is valued at approximately $580
million and represents an implied multiple of approximately 16x
TerraForm Power’s expected 2016 EBITDA contribution from the UK
Portfolio. Operating expects to receive approximately $208
million of proceeds from the sale, net of certain transaction
expenses and distributions expected to be taken from the UK
Portfolio before closing, and subject to potential currency
fluctuation. The Company expects to use the transaction proceeds to
enhance its liquidity position and reduce its net debt. Upon
completion, the Company expects to reduce non-recourse project debt
on its balance sheet by approximately $370 million.
“The TerraForm Power Board and management team
continues to execute on our key strategic initiatives, including
fleet optimization and deleveraging, and this transaction
demonstrates our progress in positioning the Company for value
creation,” said Peter Blackmore, Chairman and Interim CEO of
TerraForm Power. “Given the strong demand for operational United
Kingdom solar plants, we are pleased to capitalize on the
opportunity to monetize the high-quality portfolio of solar plants
that our team has assembled and strengthened over the last two
years and generate significant value for our shareholders.”
“The United Kingdom is a key contributor to
Europe's solar market,” added Karim Moussa, EFG Hermes Head of
Private Equity. “This Portfolio offers us an attractive entry point
with a long-term investment proposition in the country. Our
existing asset base in Vortex paid superior cash yields to our
investors to date. We are delighted to add this high quality
Portfolio to the platform and bring in the United Kingdom's premier
solar developer as our technical partner.”
Vortex intends to refinance the existing
non-recourse project debt facility with a new upsized facility and
will enter into new contracts with Lightsource Renewable Energy, a
leading service provider in the United Kingdom, for operations
& maintenance and management services.
The transaction is expected to close in the
first half of 2017, subject to certain conditions precedent.
After close, TerraForm Power will continue to own an 11 MW
operating solar plant in the United Kingdom, which it expects to
divest in the future.
Citi served as exclusive financial advisor and
Linklaters, LLP acted as counsel to TerraForm Power. Watson
Farley & Williams acted as counsel to Vortex Solar.
About TerraForm Power
TerraForm Power is a renewable energy company
that is changing how energy is generated, distributed and owned.
TerraForm Power creates value for its investors by owning and
operating clean energy power plants. For more information about
TerraForm Power, please visit: www.terraformpower.com.
About EFG Hermes
With a current footprint spanning seven
countries in the Middle East and North Africa, EFG Hermes started
in Egypt and has grown over 30 years of success to become the
region’s leading investment bank. Drawing on our proven
track-record and a team of 865 talented employees, we provide a
wide spectrum of financial services that include investment
banking, asset management, securities brokerage, research and
private equity to the entire region.
EFG Hermes’ private equity arm is one of the
Arab world’s leading private-equity groups with a special focus on
investing in infrastructure (particularly renewable energy),
healthcare and consumer products. With more than a decade of
experience in investing across a broad industrial footprint, the
firm is a leader in infrastructure private equity.
For further information about EFG Hermes, please
visit www.efghermes.com and stay connected with
us:https://twitter.com/efghermes http://www.youtube.com/user/EFGHermesHolding http://www.linkedin.com/company/efg-hermes
About Vortex
Vortex was established in 2014, sponsored by EFG
Hermes, to pursue yielding renewable energy investments in Europe.
Vortex comprises a team of 10 dedicated infrastructure and private
equity specialists with wide experience in global infrastructure
and renewable energy investments.
Vortex acquired in 2014 a 49% stake in wind
energy company EDPR France in a USD 208 million leveraged buyout
and acquired a 664 MW portfolio spanning Spain, Portugal, Belgium,
and France in 2016 for USD 620 million, bringing Vortex’s net
capacity in onshore wind to 457 MW.
Cautionary Note Regarding
Forward-Looking Statements
This communication contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements can be identified by the fact that they
do not relate strictly to historical or current facts. These
statements involve estimates, expectations, projections, goals,
assumptions, known and unknown risks, and uncertainties and
typically include words or variations of words such as “expect,”
“anticipate,” “believe,” “intend,” “plan,” “seek,” “estimate,”
“predict,” “project,” “goal,” “guidance,” “outlook,” “objective,”
“forecast,” “target,” “potential,” “continue,” “would,” “will,”
“should,” “could,” or “may” or other comparable terms and
phrases.
They include, without limitation, statements
relating to the expected closing of the sale of the UK Portfolio;
expected financial and operating metrics of the Company, including
expected 2016 EBITDA; the expected proceeds from the sale of the UK
Portfolio; the impact of the sale of the UK Portfolio on the
Company’s liquidity position and debt; the future growth of the
Company; a refinancing of the existing non-recourse project debt
facility for the UK Portfolio; the service provider for the UK
Portfolio; and the Company’s ownership or divestment of additional
UK assets. These forward-looking statements are based on current
expectations as of the date of this press release and are subject
to known and unknown risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
by such statements, including but not limited to: whether and when
the closing of the sale of the UK Portfolio occurs; whether certain
conditions precedent are reached and the amount of time achieving
such conditions precedent may take; management decisions by Vortex
Solar; the operating and financial results of the Company; whether
the Company is able to successfully negotiate a sale of additional
UK assets on acceptable terms; as well as additional factors we
have described in other filings with the Securities and Exchange
Commission.
The risks included above are not exhaustive.
Other factors that could adversely affect our business and
prospects are described in the filings made by us with the
Securities and Exchange Commission. The Company undertakes no
obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or
otherwise, except as otherwise required by law.
Appendix Table A-1: Reconciliation of
2016 Estimated EBITDA to Estimated Net Income (for the 365 MW UK
Portfolio)
($ in
millions) |
UK Portfolio 2016 Estimate |
Estimated Net income |
(7 |
) |
Interest expense |
26 |
|
Depreciation, amortization, and accretion expense |
16 |
|
Estimated EBITDA |
35 |
|
|
|
|
Contacts
Investors:
Brett Prior
TerraForm Power
investors@terraform.com
Media:
Meaghan Repko / Joseph Sala / Nicholas Leasure
Joele Frank, Wilkinson Brimmer Katcher
media@terraform.com
(212) 355-4449
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