NEE Nextera Energy Inc

By Chris Wack

NextEra Energy Partners LP (NEP) has an agreement with a unit of NextEra Energy Resources LLC to buy a portfolio of 11 wind and solar projects consisting of about 1,388 megawatts.

In conjunction with the acquisition, NextEra Energy Partners also has entered a $750 million convertible equity portfolio financing with a fund managed by BlackRock Global Energy & Power Infrastructure.

The Florida limited partnership expects to buy the portfolio for $1.275 billion, plus the assumption of $930 million in tax equity financing and $38 million of non-recourse project debt as of year-end 2018. The acquisition is expected to contribute adjusted EBITDA of $290 million to $310 million, and cash available for distribution of $122 million to $132 million, each on a five-year average annual run-rate basis, beginning Dec. 31, 2018. The deal is seen closing in the fourth quarter.

NextEra Energy Partners intends to finance the portfolio purchase using the $573 million proceeds from the sale earlier this year of its Canadian assets as well as capacity under an existing credit facility. Funds drawn under the credit facility are expected to be immediately repaid with the BlackRock convertible equity portfolio.

Under the terms of the financing, the BlackRock fund will pay $750 million in exchange for an equity interest in the entity that will own the 1,388-MW portfolio being acquired by NextEra Energy Partners. The fund is expected to earn an effective coupon of 2.5% over the initial three-year period, which represents the fund's initial 15% allocation of distributable cash flow from the portfolio.

During the fourth year of the agreement, NextEra Energy Partners expects to exercise its right to buy out the fund's equity interest for a fixed payment equal to $750 million, plus a fixed pre-tax return of 7.75%. NextEra Energy Partners has the right to pay at least 70% of the buyout amount in NextEra Energy Partners common units, issued at no discount to the then-current market price, with the balance paid in cash. Following the initial three-year period, if NextEra Energy Partners hasn't exercised its buyout right, the BlackRock fund's allocation of distributable cash flow from the portfolio would increase to 80%.

Shares of NextEra Energy Partners were untraded at $48.38 a share premarket Wednesday.

Write to Chris Wack at chris.wack@wsj.com

(END) Dow Jones Newswires

September 05, 2018 08:21 ET (12:21 GMT)

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