LONGUEUIL, QC, July 15, 2020
/CNW Telbec/ - Innergex Renewable Energy Inc. (TSX: INE)
("Innergex" or the "Corporation") is pleased to announce the
acquisition of all the Class B shares of a portfolio of six
operating wind farms in Elmore County,
Idaho, in the United States
(the "Mountain Air Acquisition") for a purchase price of
US$56.8 million (CAN$77.3
million) from Terna Energy SA. The six 23 MW wind farms,
Cold Springs, Desert Meadow,
Hammett Hill, Mainline, Ryegrass and Two Ponds, have a total
installed capacity of 138 MW.
"The Mountain Air Acquisition is expected to be immediately
accretive to Free Cash Flow per share. We are pleased to further
expand our portfolio in the United
States with fully contracted wind farms," said Michel Letellier, President and Chief Executive
Officer of Innergex. "Despite the current crisis, Innergex remains
in an excellent position to pursue its growth, and we remain
committed to identifying strategic acquisition opportunities on our
own as well as through our Strategic Alliance with
Hydro-Québec."
The wind farms were fully commissioned in December 2012. The Mountain Air Acquisition is
expected to produce a gross estimated long-term average of 331 GWh
per year and a US$21.1 million
(CAN$28.7 million) projected adjusted EBITDA for 2021. The Class B
shares should provide Innergex with additional cash immediately
available for distribution representing 62.25% of the project free
cash flow. Following cash distributions to the tax equity partner,
the distributions receivable by Innergex would be approximately
US$6.1 million (CAN$8.3 million). The
Class A shares will remain the property of the tax equity partner.
The existing US$111.1 million
(CAN$151.3 million) long-term non-recourse project-level
financing amortized over the next 12 years remains in place.
The Mountain Air wind farms are equipped with a total of 60
Siemens Gamesa 2.3 - 101 model wind turbines that are all connected
to a common substation. The wind turbines are currently under a
full scope Service Maintenance Agreement, and all wind farms have
power purchase agreements with Idaho Power Company, a power utility
rated BBB by Standard & Poor's, for 100% of their capacity over
a remaining period of approximately 12.5 years.
The Mountain Air Acquisition is the second of the two potential
acquisitions announced on February 6,
2020, completed using the proceeds of Hydro-Québec's private
placement. The use of the proceeds for both acquisitions is less
than anticipated last February, mainly because the Corporation
decided to adopt a different structure with the Mountain Air
Acquisition, acquiring only one class of the total shares of the
project while maintaining the same free cash flow accretion
profile. The remaining proceeds from Hydro-Québec's private
placement could therefore be applied to other
opportunities.
About Innergex Renewable Energy Inc.
For 30
years, Innergex has believed in a world where abundant renewable
energy promotes healthier communities and creates shared
prosperity. As an independent renewable power producer which
develops, acquires, owns and operates hydroelectric facilities,
wind farms and solar farms, Innergex is convinced that generating
power from renewable sources will lead the way to a better world.
Innergex conducts operations in Canada, the United
States, France and
Chile and manages a large
portfolio of high-quality assets currently consisting of interests
in 75 operating facilities with an aggregate net installed capacity
of 2,794 MW (gross 3,694 MW), including 37 hydroelectric
facilities, 32 wind farms and six solar farms. Innergex also holds
interests in six projects under development, two of which are under
construction, with a net installed capacity of 295 MW (gross 369
MW), and prospective projects at different stages of development
with an aggregate gross capacity totaling 7,131 MW. Its approach to
building shareholder value is to generate sustainable cash flows,
provide an attractive risk-adjusted return on invested capital and
to distribute a stable dividend.
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. Free Cash Flow 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 (revenues) expenses,
share of (earnings) loss of joint ventures and associates and
unrealized net (gain) loss on financial instruments. Other net
revenues related to PTCs are included in Adjusted EBITDA. 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.
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 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. Innergex believes that presentation of
this measure enhances the understanding of the Corporation's cash
generation capabilities, its ability to sustain current dividends
and dividend increases and its ability to fund its growth. Readers
are cautioned that Free Cash Flow should not be construed as an
alternative to cash flows from operating activities, 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, use of proceeds of the Private
Placement; future development and growth prospects (including
expected growth opportunities under the Strategic Alliance),
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
estimates, projections and expectations of the Corporation relating
to future events, results or developments 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
Free Cash Flow, to inform readers of the potential financial impact
of expected results, of the expected commissioning of the
Corporation's development projects, of the potential financial
impact of pending, 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; qualification
for PTCs and ITCs; current economic and financial conditions;
hydrology and wind regimes, 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.
To combat the spread of the COVID-19, authorities in all regions
where we operate have put in place restrictive measures for
businesses. However, these measures have not impacted the
Corporation in a material way to date as electricity production has
been deemed essential service in every region where we operate. Our
renewable power production is sold mainly through PPAs to solid
counterparts. It is not excluded that current or future restrictive
measures might have an adverse effect on the financial stability of
the Corporation's suppliers and other partners, or on the
Corporation's operating results and financial position. The
issuance of permits and authorizations, negotiations and
finalizations of agreements with regards to development and
acquisition projects, construction activities and procurement of
equipment could be adversely impacted by the COVID-19 restrictive
measures.
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; and for solar energy, the
historical solar irradiation conditions, panel technology and
expected solar panel degradation. Other factors considered 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.
On a consolidated
basis, the Corporation estimates its LTA by adding together the
expected LTAs of all the Operating Facilities that it consolidates.
This consolidation excludes however the facilities which are
accounted for using the equity method.
|
Improper assessment
of water, wind and solar resources and associated electricity
production
Variability in
hydrology, wind regimes and solar irradiation resources
Equipment supply
risk, including 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 Adjusted
EBITDA
For each facility,
the Corporation estimates annual operating earnings by adding
(deducting) to net earnings (loss) income tax expense (recovery),
finance costs, depreciation and amortization, other net expenses
(revenues), share of (earnings) loss of joint ventures and
associates and change in fair value of financial
instruments.
|
See principal
assumptions, risks and uncertainties identified under "Expected
Production"
Reliance on
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
PPAs or renew any PPA
Unexpected
maintenance expenditures
|
Projected Free
Cash Flow and intention to pay dividend quarterly
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 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. The Corporation
estimates the annual dividend it intends to distribute based on the
Corporation's operating results, cash flows, financial conditions,
debt covenants, long-term growth prospects, solvency, test imposed
under corporate law for declaration of dividends and other relevant
factors.
|
See principal
assumptions, risks and uncertainties identified under "Expected
Production" and "Projected Adjusted EBITDA"
Foreign exchange
fluctuations
A credit rating that
may not reflect actual performance of the Corporation or credit
rating downgrade
Possibility that the
Corporation may not declare or pay a dividend
|
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.
www.innergex.com
SOURCE Innergex Renewable Energy Inc.