- Two wind facilities with an aggregate installed capacity of
43 MW
- Projected increase to revenues and Adjusted EBITDA of
C$14.5M and C$12.0M, respectively and Free Cash Flow to
Innergex of C$2.0M for the twelve
months of operations
- Total enterprise value acquired of C$145.6M
LONGUEUIL, QC, July 5, 2017 /CNW Telbec/ - Innergex
Renewable Energy Inc. (TSX: INE) ("Innergex") is pleased to
announce that a final agreement has been signed with BayWa r.e. to
purchase two wind projects in France with a total aggregate installed
capacity of 43 MW. The acquisition, subject to customary
closing conditions, is expected to be concluded following the
mechanical completion of the projects for which the commissioning
is scheduled in the third quarter of 2017. Innergex will have a
69.55% interest in the wind farms and Desjardins Group Pension Plan
will own the remaining 30.45%.
"With this acquisition, Innergex will then own 15 wind
facilities in France for a total
installed capacity of 317 MW," said Michel Letellier,
President and Chief Executive Officer of Innergex. "Our expansion
into France has been very
successful. We have established an ecosystem made up of solid
relationships with key developers in France, such as BayWa r.e., and we intend to
continue to build on this momentum and to develop our own projects
to pursue growth. Our assets are young and supported by long-term
power purchase agreements which guarantee a low-risk and prosperous
future."
The purchase price of the equity is approximately €27.2 million
(or C$39.9 million), subject to
certain adjustments. Innergex's net share of the purchase price
will amount to about €16.5 million (or C$24.2 million) and will be paid through
available funds under its corporate revolving credit facility.
Non-recourse debts related to the projects, which are already in
place, will amount to €72.0 million (or C$105.7 million) and will remain at the project
level.
The Corporation will reduce its exposure to exchange rate
fluctuations by entering into long-term currency hedging
instruments.
DESCRIPTION OF THE ACQUIRED ASSETS
The two wind farms
are located in the Champagne-Ardenne region of France. The aggregated installed capacity is
43 MW and the average annual power generation is expected to reach
118,000 MWh, enough to power about 24,775 French households. All
the electricity produced by these wind farms will be sold under
power purchase agreements (PPAs) at fixed prices of which a portion
is adjusted according to inflation indexes, for an initial term of
15 years, with Electricité de France (EDF).
Innergex is expecting revenues of approximately €9.9 million (or
C$14.5 million) and Adjusted EBITDA
of approximately €8.2 million (or C$12.0
million) for the first 12 months of operations.
The projects consist of 18 Vestas wind turbines (with an
individual gross capacity of 2 and 3 MW) that will be operated by
the wind turbine manufacturer under a 15-year operation and
maintenance contract.
Project
name
|
Gross capacity
(MW)
|
COD
(100%)
|
PPA
expiry
|
Plan
Fleury
|
22.0
|
Q3 2017
|
2032
|
Les
Renardières
|
21.0
|
Q3 2017
|
2032
|
Total
|
43.0
|
|
|
BENEFITS OF THE TRANSACTION
- Strengthens Innergex's portfolio of young wind projects in
France by increasing geographical
and technological diversification of assets
- Consolidates Innergex's position as a long-term committed
renewable energy developer in France
About Desjardins Group Pension Plan
The
mission of the Desjardins Group Pension Plan, acting through its
Retirement Committee, is to provide a defined benefit pension plan
to more than 50,000 beneficiaries. With $11.4 billion in net assets under management, it
is the 7th largest private pension plan in Canada. As at the end of December 2016, the equity value of Desjardins
Group Pension Plan's infrastructure portfolio was close to
$1.5 billion. About half of its
investments are in the renewable energy infrastructure sector with
interests in 43 operating facilities and an aggregate installed
capacity of 2,345 MW, including 9 hydroelectric facilities, 25 wind
farms and 9 solar farms.
About Innergex Renewable Energy Inc.
The
Corporation develops, owns and operates run-of-river hydroelectric
facilities, wind farms and solar photovoltaic farms and carries out
its operations in Quebec,
Ontario and British Columbia, Canada, France and Idaho,
USA. Its portfolio of assets currently consists of: (i)
interests in 51 operating facilities with an aggregate net
installed capacity of 1,063 MW (gross 1,758 MW), including 31
hydroelectric facilities, 19 wind farms and one solar farm; (ii)
interests in one project under construction with a net installed
capacity of 31 MW (gross 45 MW), for which a power purchase
agreement has been secured; and (iii) prospective projects with an
aggregate net capacity totalling 3,560 MW (gross 3,940 MW).
Innergex Renewable Energy Inc. is rated BBB- by S&P.
The Corporation's strategy for building shareholder value is to
develop or acquire high-quality facilities that generate
sustainable cash flows and provide an attractive risk-adjusted
return on invested capital and to distribute a stable dividend.
Non-IFRS measures disclaimer.
Readers are
cautioned that Adjusted EBITDA and Free Cash Flows are not measures
recognized by IFRS and have no standardized meaning prescribed by
it, and therefore may not be comparable to those presented by other
issuers. Innergex believes that these indicators are important, as
they provide management and the reader with additional information
about its cash generation capabilities and facilitates the
comparison of results over different periods. References in this
press release to "Adjusted EBITDA" are to revenues less operating
expenses, general and administrative expenses and prospective
project expenses. Readers are cautioned that Adjusted EBITDA should
not be construed as an alternative to net earnings as determined in
accordance with IFRS. References to "Free Cash Flow" are to cash
flows from operating activities before changes in non-cash
operating working capital items, less maintenance capital
expenditures net of proceeds from disposals, scheduled debt
principal payments, preferred share dividends declared and the
portion of Free Cash Flow attributed to non-controlling interests,
plus cash receipts by the Harrison Hydro L. P. for the wheeling
services to be provided to other facilities owned by the
Corporation over the course of their power purchase agreement, plus
or minus other elements that are not representative of the
Corporation's long-term cash generating capacity, such as
transaction costs related to realized acquisitions (which are
financed at the time of the acquisition), realized losses or gains
on derivative financial instruments used to hedge the interest rate
on project-level debt or the exchange rate on equipment
purchases.
Forward-Looking Information Disclaimer
In order
to inform readers of the Corporation's future prospects, this press
release contains forward-looking information within the meaning of
applicable securities laws ("Forward-Looking Information").
Forward-Looking Information can generally be identified by the use
of words such as "projected", "potential", "expect", "will",
"should", "estimate", "forecasts", "intends", or other comparable
terminology that states that certain events will or will not occur.
It represents the estimates and expectations of the Corporation
relating to future results and developments as of the date of this
press release. It includes future-oriented financial information,
such as expected production, revenues, Adjusted EBITDA and
projected Free Cash Flow, to inform readers of the potential
financial impact of the acquisition. Such information may not be
appropriate for other purposes.
Forward-Looking Information in this press release is based on
certain key expectations and assumptions made by the Corporation.
The following table outlines Forward-Looking Information contained
in this press release, the principal assumptions used to derive
this information and the principal risks and uncertainties that
could cause actual results to differ materially from this
information.
Principal
Assumptions
|
Principal Risks and
Uncertainties
|
Expected
production
For each facility,
the Corporation determines a long-term average annual level of
electricity production ("LTA") over the expected life of the
facility, based on engineers' studies that take into consideration
a number of important factors: for wind energy, the historical wind
and meteorological conditions and turbine technology. Other factors
taken into account include, without limitation, site topography,
installed capacity, energy losses, operational features and
maintenance. Although production will fluctuate from year to year,
over an extended period it should approach the estimated long-term
average.
|
Improper assessment
of wind resources and associated electricity production
Variability in wind
regime
Equipment failure or
unexpected operations and maintenance activity
Natural
disaster
|
Projected
Revenues
For each facility,
expected annual revenues are estimated by multiplying the LTA by a
price for electricity stipulated in the power purchase agreement
secured with a public utility or other creditworthy counterparty.
These agreements stipulate a base price and, in some cases, a price
adjustment depending on the month, day and hour of delivery. In
most cases, power purchase agreements also contain an annual
inflation adjustment based on a portion of the Consumer Price
Index.
|
Production levels
below the LTA caused mainly by the risks and uncertainties
mentioned above
Unexpected seasonal
variability in the production and delivery of electricity
Lower-than-expected
inflation rate
|
Projected Adjusted
EBITDA
For each facility,
the Corporation estimates annual operating earnings by subtracting
from the estimated revenues the budgeted annual operating costs,
which consist primarily of operators' salaries, insurance premiums,
operations and maintenance expenditures, property taxes and
royalties; these are predictable and relatively fixed, varying
mainly with inflation (except for maintenance
expenditures).
|
Variability of
facility performance and related penalties
Unexpected
maintenance expenditures
Changes in the
purchase price of electricity upon renewal of a PPA
|
Projected Free
Cash Flow
The Corporation
estimates Projected Free Cash Flow as projected cash flows from
operating activities before changes in non-cash operating working
capital items, less estimated maintenance capital expenditures net
of proceeds from disposals, scheduled debt principal payments,
preferred share dividends declared and the portion of Free Cash
Flow attributed to non-controlling interests, plus cash receipts by
the Harrison Hydro L.P. for the wheeling services to be
provided to other facilities owned by the Corporation over the
course of their power purchase agreement, plus or minus other
elements that are not representative of the Corporation's long-term
cash generating capacity, such as transaction costs related to
realized acquisitions (which are financed at the time of the
acquisition), realized losses or gains on derivative
financial instruments used to hedge the interest rate on
project-level debt or the exchange rate on equipment
purchases.
|
Adjusted EBITDA below
expectations caused mainly by the risks and uncertainties mentioned
above and by higher prospective project expenses
Projects costs above
expectations caused mainly by the performance of counterparties and
delays and cost overruns in the design and construction of
projects
Regulatory and
political risk
Interest rate
fluctuations and financing risk
Financial leverage
and restrictive covenants governing current and future
indebtedness
Unexpected
maintenance capital expenditures
Possibility that the
Corporation may not declare or pay a dividend
|
Estimated project
start of commercial operation for Development Projects or
Prospective Projects
For each development
project, the Corporation provides indications regarding scheduling
and construction progress for its Development Projects and
indications regarding its Prospective Projects, based on its
extensive experience as a developer.
|
Performance of
counterparties, such as the EPC contractors
Delays and cost
overruns in the design and construction of projects
Relationships with
stakeholders
Regulatory and
political risks
Natural
disaster
|
Expected Closing
of the Acquisition and of the Investments by a Desjardins Group
Pension Plan
The Corporation
reasonably expects that the closing conditions will be completed
within the deadlines.
|
Availability of the
capital
Regulatory and
political risks
Performance of the
counterparties
|
Material risks and uncertainties
The material risks and uncertainties that may cause actual
results and developments to be materially different from current
expressed Forward-Looking Information are referred to in the
Corporation's Annual Information Form in the "Risk Factors" section
and include, without limitation: failure to complete the
transactions; the ability of the Corporation to implement its
strategy; its ability to access sufficient capital resources;
liquidity risks related to derivative financial instruments; the
exchange rate fluctuations; the growth and development of foreign
markets; changes in hydrology, wind regimes and solar irradiation;
delays and cost overruns in the design and construction of
projects; the ability to develop new facilities; variability of
facilities performance and related penalties; failure to perform
from main counterparties; potential undisclosed liabilities
associated with the acquisition; the ability to integrate the
acquired facilities; and failure to realize the benefits of this
acquisition.
Although the Corporation believes that the expectations and
assumptions on which Forward-Looking Information is based are
reasonable, readers of this press release are cautioned not to rely
unduly on this Forward-Looking Information since no assurance can
be given that they will prove to be correct. The Corporation does
not undertake any obligation to update or revise any
Forward-Looking Information, whether as a result of events or
circumstances occurring after the date of this press release,
unless so required by legislation.
SOURCE Innergex Renewable Energy Inc.