LONGUEUIL, QC, May 8, 2019 /CNW Telbec/ - Innergex
Renewable Energy Inc. (TSX: INE) ("Innergex" or the "Corporation")
is pleased to announce the closing of a construction financing and
tax equity commitment for the Foard City wind project located in
Foard County, Texas. The
US$290.9 million
(CAN$388.7 million) financing has been arranged with lenders
Santander, MUFG, Zions Bancorp and the Royal Bank of Canada, backed by a US$275.0 million (CAN$367.5 million) tax equity
commitment from Berkshire Hathaway Energy and a US$23.3 million (CAN$31.1 million) 7-year term
loan facility with a 10-year amortization period to be provided by
the lenders upon the commercial operation date.
"Foard City is the largest wind
farm project ever built by Innergex and, with the Phoebe solar
project under construction, will add almost 600 MW of new installed
capacity in the United States by
the end of 2019," said Michel
Letellier, President and Chief Executive Officer of
Innergex. "The construction activities progress well on site and
Innergex is excited to secure financings which optimize the capital
structure in a way that creates maximum value for our
shareholders."
Management expects to receive approval of a layout of 327.6 MW
for the Foard City wind project
from the Federal Aviation Administration in the coming months. Up
to now, 94 turbines out of 130 already received their approval.
Construction costs should amount to US$384.8
million (CAN$513.4 million) and the project is expected to
reach commercial operation in Fall 2019. The facility is
expected to produce a gross estimated long-term average of 1,230
GWh and projected revenues and projected Adjusted EBITDA for the
first full year of operation are US$20.1
million (CAN$26.9 million) and US$10.1 million (CAN$13.5 million) respectively.
In addition, the project will benefit from a 100% of the US
Production Tax Credits ("PTCs"), representing US$0.024 per KWh of electricity produced for the
first 10 years of operations. This amounts to an after-tax benefit
of approximately US$29.5 million per
year (CAN$39.4 million) adjusted to inflation annually and, coupled
with other tax attributes, will support the US$275.0 million (CAN$367.5 million) tax equity
investment.
About Innergex Renewable Energy Inc.
The
Corporation is an independent renewable power producer which
develops, acquires, owns and operates hydroelectric facilities,
wind farms and solar farms. As a global corporation, Innergex
conducts operations in Canada,
the United States, France and Chile. Innergex manages a large portfolio of
assets currently consisting of interests in 66 operating facilities
with an aggregate net installed capacity of 1,988 MW (gross
2,888 MW), including 37 hydroelectric facilities, 25 wind
farms and four solar farms. Innergex also holds interests in seven
projects under development with a net installed capacity of 870 MW
(gross 948 MW), two of which are currently under construction
and prospective projects at different stages of development with an
aggregate gross capacity totalling 7,767 MW. Respecting the
environment and balancing the best interests of the host
communities, its partners, and its investors are at the heart of
the Corporation's development strategy. Its approach for building
shareholder value is to generate sustainable cash flows, provide an
attractive risk-adjusted return on invested capital and to
distribute a stable dividend. Innergex Renewable Energy Inc. is
rated BBB- by S&P. The Corporation also owns an equity interest
in two geothermal power generation plants in Iceland for which a sale agreement was reached
in March 2019 and should be completed
by the end of the second quarter of 2019.
Non-IFRS Measures
Some measures referred to in this
press release are not recognized measures under IFRS 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 the
Corporation's production and cash generation capabilities, its
ability to sustain current dividends and dividend increases and its
ability to fund its growth. These indicators also facilitate the
comparison of results over different periods. Adjusted EBITDA is
not a measure recognized by IFRS and have no standardized meaning
prescribed by IFRS.
References in this document to "Adjusted EBITDA" are to net
earnings (loss) from continuing operations to which are added
(deducted) provision (recovery) for income tax expenses, finance
cost, depreciation and amortization, other net expenses, share of
(earnings) loss of joint ventures and associates and unrealized net
(gain) loss on financial instruments. Innergex believes that the
presentation of this measure enhances the understanding of the
Corporation's operating performance. Readers are cautioned that
Adjusted EBITDA should not be construed as an alternative to net
earnings, as determined in accordance with IFRS.
Forward-Looking Information Disclaimer
To inform
readers of the Corporation's future prospects, this press release
contains forward-looking information within the meaning of
applicable securities laws, including, but not limited to,
Innergex's business strategy, future development and growth
prospects, business outlook, objectives, plans and strategic
priorities, and other statements that are not historical facts
("Forward-Looking Information"). Forward-Looking Information can
generally be identified by the use of words such as
"approximately", "may", "will", "could", "believes", "expects",
"intends", "should", "plans", "potential", "project",
"anticipates", "estimates", "scheduled" or "forecasts", or other
comparable terminology that state that certain events will or will
not occur. It represents the projections and expectations of the
Corporation relating to future events or results as of the date of
this press release.
Forward-Looking Information includes future-oriented financial
information or financial outlook within the meaning of securities
laws, such as expected production, projected
revenues and projected Adjusted EBITDA, to inform readers
of the potential financial impact of expected results, of the
expected commissioning of Development Projects, of the potential
financial impact of completed and future acquisitions and of the
Corporation's ability to sustain current dividends and to fund its
growth. Such information may not be appropriate for other
purposes.
Since forward-looking statements address future events and
conditions, they are by their very nature subject to inherent risks
and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors and risks.
These include, but are not limited to, the risks associated with
the renewable energy industry in general such as execution of
strategy; ability to develop projects on time and within budget;
capital resources; derivative financial instruments; current
economic and financial conditions; hydrology and wind regimes,
geothermal resources and solar irradiation; construction, design
and development of new facilities; performance of existing
projects; equipment failure; interest rate and refinancing risk;
currency exchange rates, variation in merchant price of
electricity, financial leverage and restrictive covenants; and
relationships with public utilities. Readers are cautioned that the
foregoing list of factors is not exhaustive. Additional information
on these and other factors that could affect the operations or
financial results of Innergex are included in Innergex's annual
information form available on SEDAR at www.sedar.com.
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 hydroelectricity, the
historically observed flows of the river, the operating head, the
technology employed and the reserved aesthetic and ecological
flows; for wind energy, the historical wind and meteorological
conditions and turbine technology; for solar energy, the historical
solar irradiation conditions, panel technology and expected solar
panel degradation and for geothermal power facilities, the
historical geothermal resources, natural depletion of geothermal
resources over time, the technology used and the potential of
energy loss to occur before delivery. 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 LTA.
|
Improper assessment
of water, wind, solar and geothermal resources and associated
electricity production
Variability in
hydrology, wind regimes, solar irradiation and geothermal
resources
Risks inherent in
geothermal resource
Equipment
supply
Equipment failure or
unexpected operations and maintenance activity
Natural disasters and
force majeure
Regulatory and
political risks affecting production
Health, safety and
environmental risks affecting production
Variability of
installation performance and related penalties
Availability and
reliability of transmission systems
Litigation
|
Projected
revenues
For each facility,
expected annual revenues are estimated by multiplying the LTA by a
price for electricity stipulated in the PPA secured with a
public utility or other creditworthy counterparty mainly. In
most cases these PPAs stipulate a base price for electricity
produced and, in some cases, a price adjustment depending on
the month, day and hour of its delivery. This excludes
facilities, which receive revenues, based on the market (or spot)
price for electricity, including the Miller Creek
hydroelectric facility, which receives a price based on
a formula using the Platts Mid-C pricing indices, the
Horseshoe Bend hydroelectric facility, for which 85% of the
price is fixed and 15% is adjusted annually as determined by the
Idaho Public Utility Commission. Revenues at the HS Orka
facilities also fluctuate with the price of aluminum, as
certain of those PPAs are linked to such price. In most cases,
power purchase agreements also contain an annual inflation
adjustment based on a portion of the Consumer Price
Index.
|
See principal
assumptions, risks and uncertainties identified under "Expected
Production"Reliance on various forms of PPAs
Revenues from certain
facilities will vary based
on the market (or
spot) price of electricity
Fluctuations
affecting prospective power prices
Changes in general
economic conditions
Ability to secure new
Power Purchase
Agreements or renew
any Power Purchase
Agreement
|
Projected Adjusted
EBITDA
For each facility,
the Corporation estimates annual operating earnings by adding
(deducting) to net earnings (loss) provision (recovery) for
income tax expenses, finance cost, depreciation and
amortization, other net expenses, share of (earnings) loss of joint
ventures and associates and unrealized net (gain) loss on
financial instruments. Innergex believes that the presentation
of this measure enhances the understanding of the
Corporation's operating performance. Readers are cautioned
that Projected Adjusted EBITDA should not be construed as
an alternative to net earnings, as determined in accordance
with IFRS.
|
See principal
assumptions, risks and uncertainties identified under "Expected
Production" and "Expected Revenues"
Variability of
facility performance and related penalties
Unexpected
maintenance expenditures
|
Estimated project
costs, expected obtainment of permits, start of construction, work
conducted and start of commercial operation for Development
Projects or Prospective Projects
For each Development
Project and Prospective Project, the Corporation may provide (where
available) an estimate of potential installed capacity, estimated
project costs, project financing terms and each project's
development and construction schedule, based on its extensive
experience as a developer, in addition to information directly
related incremental internal costs, site acquisition costs and
financing costs, which are eventually adjusted for the projected
costs and construction schedule provided by the engineering,
procurement and construction ("EPC") contractor retained for the
project.
The Corporation
provides indications based on assumptions regarding its current
strategic positioning and competitive outlook, as well as
scheduling and construction progress, for its Development Projects
and its Prospective Projects, which the Corporation evaluates based
on its experience as a developer.
|
Uncertainties
surrounding development of new facilities
Performance of major
counterparties, such as suppliers or contractors
Delays and cost
overruns in the design and construction of projects
Ability to secure
appropriate land
Obtainment of
permits
Health, safety and
environmental risks
Social acceptance of
renewable energy projects
Ability to secure new
Power Purchase Agreements or renew any Power Purchase
Agreement
Relationships with
stakeholders
Equipment
supply
Interest rate
fluctuations and financing risk
Risks related to U.S.
PTCs and ITCs, changes in U.S. corporate tax rates and availability
of tax equity financing
Relationships with
stakeholders
Regulatory and
political risks
Higher-than-expected
inflation
Natural
disaster
Ability of the
Corporation to execute its strategy for building shareholder
value
Failure to realize
the anticipated benefits of completed and future
acquisitions
Changes in
governmental support to increase electricity to be generated from
renewable sources by independent power producers
Regulatory and
political risks
Foreign market growth
and development risks
Outcome of insurance
claims
|
Qualification for
PTCs and ITC
For certain
Development Projects in the United States, the Corporation has
conducted on- and off-site activities expected to qualify its
Development Projects for PTCs or ITC at the full rate and to obtain
tax equity financing on such a basis. To assess the potential
qualification of a project, the Corporation takes into account the
construction work performed and the timing of such work.
|
Risks related to U.S.
PTCs and ITC, changes in U.S. corporate tax rates and availability
of tax equity financing
Regulatory and
political risks
Delays and cost
overruns in the design and construction of projects
Obtainment of
permits
|
Expected closing
of the sale of equity interest in HS Orka
The Corporation
reasonably expects that the closing conditions will be completed
within the
deadlines
|
Satisfaction of
closing conditions
Third party consents
and right of first refusal
|
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 forward-looking
statements contained in this press release are made as of the date
hereof and Innergex undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, unless so required by
applicable securities laws.
innergex.com
SOURCE Innergex Renewable Energy Inc.