Algonquin Power Subsidiary Agrees to Buy Kentucky Assets from AEP
October 26 2021 - 6:40PM
Dow Jones News
By Kimberly Chin
Liberty Utilities Co., an indirect subsidiary of Algonquin Power
& Utilities Corp., agreed to buy regulated Kentucky assets from
American Electric Power Co., or AEP, for about $2.85 billion,
including around $1.22 billion in debt.
The acquisition of Kentucky Power Co. and AEP Kentucky
Transmission Co. will help support Algonquin's plans to shift its
assets toward cleaner energy sources and meet its net-zero
greenhouse gas emissions target within its operations by 2050, the
company said.
Kentucky Power intends to seek regulatory approval to transfer
operational control of its Mitchell coal plant, for which it has a
50% ownership interest, to AEP subsidiary Wheeling Power, thereby
exiting Kentucky Power from the plant by 2028, Algonquin said.
Algonquin can leverage its "significant experience in 'greening'
fleets of regulated fossil fuel generation" by helping Kentucky
Power replace fossil fuel generation with renewable energy,
Algonquin said.
The Canada-based Algonquin recently completed an investment of
$1.1 billion in wind farms to support the service territory of the
Empire District Electric Co. utility. Empire District also closed
the Asbury coal plant last year, Algonquin said. The company closed
its acquisition of the Empire District utility in early 2017.
Algonquin expects the deal to be accretive to adjusted earnings
within the first full year and generate mid-single digit growth
after that.
To finance the deal, Algonquin said it has received a roughly
$2.73 billion syndicated financing commitment from CIBC and
Scotiabank.
Concurrently, Algonquin said that CIBC and Scotiabank have
agreed to buy, on a bought-deal basis, an aggregate of 44.1 million
of the company's shares for C$18.15, or $14.65, apiece. Algonquin
expects proceeds of around $646 million. The underwriters will also
be given an over-allotment option and will be able to buy up to an
additional 6.6 million in shares at the offering price, giving it
the potential proceeds of around $743 million from the
offering.
Kentucky Power is a electricity generation, distribution and
transmission utility in Kentucky that serves about 228,000 active
customers. Kentucky Transmission is an electricity transmission
business serving the Kentucky portion of the transmission
infrastructure that connects with the Pennsylvania, New Jersey and
Maryland regional organization.
Algonquin expects the deal to close in the middle of next
year.
Write to Kimberly Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
October 26, 2021 18:25 ET (22:25 GMT)
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