- Common shareholders to receive US$3.03 per share in cash, representing a 48%
premium to the 30-day volume weighted average price per common
share on the NYSE
- Convertible debentures to be converted to common shares,
including a make whole premium; following conversion, debenture
holders will receive US$3.03 per
share in cash
- Preferred shareholders and medium term noteholders to receive
cash representing meaningful premiums to recent trading prices
DEDHAM, Mass., Jan. 14, 2021 /CNW/ -- Atlantic Power Corporation
(NYSE: AT) (TSX: ATP) ("Atlantic Power"), an independent power
producer with operations in eleven U.S. states and two Canadian
provinces, today announced that it has entered into a definitive
agreement with I Squared Capital, a leading global infrastructure
investor, under which the company's outstanding common shares and
convertible debentures, and the outstanding preferred shares and
medium term notes of certain of its subsidiaries, will be acquired.
The total enterprise value of the deal is approximately
US$961 million (based on current
foreign exchange rates) and the transaction was unanimously
approved by Atlantic Power's board of directors.
"We are pleased to announce this transaction with I Squared
Capital. The independent directors of the Board, with the
assistance of our financial and legal advisors, carefully analyzed
I Squared Capital's offer, and after extensive negotiation and
thorough consideration, concluded that the agreement is in the best
interests of Atlantic Power," said Kevin T.
Howell, Chairman of Atlantic Power's Board of Directors.
"The all-cash price of US$3.03 per
common share represents a significant premium to our recent trading
levels," said James J. Moore, Jr.,
President and Chief Executive Officer of Atlantic Power. "As our
fellow shareholders know, the future value of our shares is highly
dependent on power prices and re-contracting outcomes for several
major Power Purchase Agreements that are expiring in the next three
to five years. The acquisition of our shares for cash would remove
this uncertainty for investors and provide immediate and
significant cash value. We have carefully considered the offer and
we encourage our fellow shareholders to join management and the
Board in voting to approve this transaction."
"The agreement also provides for the acquisition of our other
public securities for cash, delivering a positive outcome for all
of our security holders. Completion of this transaction is
conditioned upon the approval of these holders, as well as other
required approvals, which are discussed in this press release,"
continued Mr. Moore. "I Squared Capital is a strong financial
organization whose leaders have significant experience in the power
sector. Thomas Lefebvre and his team
have been resilient and resourceful in putting together this
transaction, which we believe is an excellent opportunity for the
security holders and employees of Atlantic Power."
"We are excited to partner with Jim
Moore and the management team, who have made great progress
over the past several years in improving the company's balance
sheet and leverage ratio while addressing operational challenges,"
stated Thomas Lefebvre, Partner at I
Squared Capital. "Atlantic Power has an attractive portfolio of
assets that I Squared Capital is well positioned to manage and we
look forward to working together."
Transaction Highlights
- Common shareholders of Atlantic Power will receive US$3.03 per common share in cash, representing a
48% premium to the 30-day volume weighted average price per common
share on the New York Stock Exchange for the period ending
January 14, 2021.
- Atlantic Power's 6.00% Series E Convertible Unsecured
Subordinated Debentures due January 31,
2025 will be converted into common shares of Atlantic Power
immediately prior to the closing of the transaction based on the
conversion ratio in effect at such time (including the "make whole
premium shares" issuable under the terms of the trust indenture for
the convertible debentures following a cash change of control).
Holders of the convertible debentures will receive US$3.03 per common share held following the
conversion of the convertible debentures, plus accrued and unpaid
interest on the convertible debentures up to, but excluding, the
closing date of the transaction.
- Atlantic Power Preferred Equity Ltd.'s ("APPEL") cumulative
redeemable preferred shares, Series 1, cumulative rate reset
preferred shares, Series 2, and cumulative floating rate preferred
shares, Series 3, will be redeemed for Cdn$22.00 per preferred share in cash,
representing meaningful premiums to the recent trading prices of
such shares on the Toronto Stock Exchange.
- Atlantic Power Limited Partnership's ("APLP") 5.95% medium term
notes due June 23, 2036 will be
redeemed for consideration equal to 106.071% of the principal
amount of medium term notes held as of the closing of the
transaction, plus accrued and unpaid interest on the medium term
notes up to, but excluding, the closing date of the transaction.
Holders of medium term notes that deliver a written consent to the
proposed amendments to the trust indenture governing the medium
term notes (as described below) will also be entitled to a consent
fee equal to 0.25% of the principal amount of medium term notes
held by such holders, conditional on closing of the
transaction.
The acquisition of Atlantic Power's outstanding common shares
and the redemption of the outstanding preferred shares of APPEL
will be completed by way of a plan of arrangement (the
"Arrangement") under the Business Corporations Act
(British Columbia). In connection
with the Arrangement, Atlantic Power's shareholder rights plan will
be terminated and all rights to purchase Atlantic Power's common
shares issued pursuant to the shareholder rights plan will be
cancelled.
Recommendation of the Board and the Special Committee
The board of directors of Atlantic Power (the "Board"), after
consultation with financial and legal advisors, and based on the
unanimous recommendation of a special committee of the Board (the
"Special Committee") comprised entirely of independent directors,
has unanimously approved the Arrangement and determined that the
Arrangement is in the best interests of Atlantic Power, and
recommends that Atlantic Power's common shareholders vote in favor
of the Arrangement. The board of directors of APPEL has
similarly unanimously approved the Arrangement and determined that
the Arrangement (together with a proposed continuance of APPEL
under the laws of British
Columbia) is in the best interests of APPEL and recommends
that the preferred shareholders of APPEL vote in favor of the
Arrangement and the proposed continuance.
The Board, after consultation with financial and legal advisors,
and based on the unanimous recommendation of the Special Committee,
has also unanimously determined that the mandatory conversion of
Atlantic Power's convertible debentures in accordance with the
terms set out in the Arrangement Agreement (the "Arrangement
Agreement") is in the best interests of Atlantic Power and
recommends that holders of the convertible debentures vote in favor
of an amendment to the trust indenture governing the convertible
debentures to provide for their mandatory conversion on closing of
the Arrangement into common shares of Atlantic Power based on the
conversion ratio in effect at such time under the terms of the
trust indenture (including the "make whole premium shares" issuable
under the terms of the trust indenture following a cash change of
control).
In addition, the board of directors of the general partner of
APLP, after consulting with financial and legal advisors, has
unanimously determined that the mandatory redemption of its 5.95%
medium term notes due June 23, 2036
in accordance with the terms set out in the Arrangement Agreement
is in the best interests of APLP and recommends that holders of the
medium term notes vote in favor of an amendment to the trust
indenture governing the medium term notes to provide for such
mandatory redemption on closing of the Arrangement for
consideration equal to 106.071% of the principal amount of the
medium term notes held plus accrued and unpaid interest thereon up
to, but excluding, the closing date of the transaction. Holders of
medium term notes that deliver a written consent to the proposed
amendments to the trust indenture governing the medium term notes
will also be entitled to a consent fee equal to 0.25% of the
principal amount of medium term notes held by such holders,
conditional on closing of the transaction.
Blair Franklin Capital Partners Inc. has provided the Special
Committee and the Board, and the board of directors of
APPEL, with its opinions that, as of the date of the opinions,
and subject to the factors, assumptions, limitations and
qualifications on which such opinions are based, the consideration
to be paid to holders of Atlantic Power's common shares and
convertible debentures, and the preferred shares of APPEL (in each
case other than I Squared Capital and its affiliates), is fair,
from a financial point of view, to such holders. Each of the
directors and executive officers of Atlantic Power has entered into
a support agreement to vote their common shares and preferred
shares, if any, in support of the Arrangement, and to vote their
convertible debentures and medium term notes, if any, in support of
the amendments to the trust indentures governing the convertible
debentures and the medium term notes, as applicable.
The Arrangement Agreement
The Arrangement Agreement, entered into with affiliates of
infrastructure funds managed by I Squared Capital (the
"Purchasers") provides that the transaction (the "Transaction") is
subject to a number of closing conditions, including court approval
of the Arrangement, regulatory approvals (including under the
Competition Act (Canada)
and the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, the Communications Act of 1934, as amended, and the
Federal Power Act, as amended), as well as the receipt of certain
third-party consents.
The Transaction is also conditional on the approval of
two-thirds of the votes cast by holders of Atlantic Power's common
shares voting in person or by proxy at a special meeting of
Atlantic Power's common shareholders and the approval of two-thirds
of the votes cast by holders of APPEL's preferred shares (voting as
a single class) in person or by proxy at a meeting of APPEL's
preferred shareholders in respect of both the Arrangement and the
proposed continuance of APPEL under the laws of British Columbia.
In addition, the Transaction is conditional upon the approval of
the holders of the convertible debentures and the medium term
notes, respectively (in each case either by way of votes of the
holders of the convertible debentures and the medium term notes
holding at least two-thirds of the principal amount of the
convertible debentures and the medium term notes, respectively,
voted in person or by proxy at separate meetings of the holders of
the convertible debentures and the medium term notes or by way of
separate written consents of the holders of the convertible
debentures and the medium term notes holding not less than
two-thirds of the principal amount of convertible debentures and
medium term notes outstanding, as applicable), of certain
amendments to the trust indentures governing such securities, as
described above. Atlantic Power and APLP will seek the approval of
the holders of the convertible debentures and medium term notes by
way of separate meetings and/or consent solicitations.
A bondholder representing approximately 66% of the principal
amount of medium term notes and approximately 19% of the principal
amount of convertible debentures outstanding has agreed to vote in
favor of or otherwise consent to amendments to the trust indentures
governing those securities.
The Arrangement Agreement is subject to customary
non-solicitation provisions, including Atlantic Power's right to
consider and accept unsolicited superior proposals in certain
circumstances, subject to a right to match in favor of the
Purchasers. A termination fee of US$12.5
million will be payable by Atlantic Power to the Purchasers
should the Transaction not close under certain circumstances,
including if the Arrangement is not completed as a result of
Atlantic Power accepting an unsolicited superior proposal. A
reverse termination fee of US$15
million will be payable by the Purchasers to Atlantic Power
should the Transaction not close as a result of an uncured breach
by the Purchasers of the Arrangement Agreement (provided Atlantic
Power is not then in breach of the Arrangement Agreement).
Further information regarding the Transaction, including without
limitation information regarding the Arrangement, the amendments to
the trust indentures of the convertible debentures and the medium
term notes, the terms and conditions of the 0.25% consent fee in
respect of the medium term notes, copies of the fairness opinions
and the various factors considered by the Board, the board of
directors of APPEL and the board of directors of the general
partner of APLP will be included in Atlantic Power's management
information circular and proxy statement, which will be mailed to
Atlantic Power's shareholders and APPEL's preferred shareholders,
and the management information circulars and/or consent
solicitation documents to be mailed to Atlantic Power's convertible
debenture holders and APLP's medium term noteholders. Copies of the
Arrangement Agreement and the management information circulars will
be available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov,
or through Atlantic Power's website at www.atlanticpower.com.
Following closing of the Transaction, the common shares of
Atlantic Power will be delisted from the TSX and the NYSE and the
preferred shares and convertible debentures will be delisted from
the TSX. The parties currently expect to close the Transaction in
the second quarter of 2021.
Financial and Legal Advisors
Goldman Sachs & Co. LLC is acting as lead financial advisor
to the Special Committee. Blair Franklin Capital Partners Inc. is
acting as financial advisor to the Special Committee, the Board and
the board of directors of APPEL and has provided its fairness
opinions on a fixed-fee basis. Cleary
Gottlieb Steen & Hamilton LLP is acting as U.S. legal
counsel to the Special Committee and Atlantic Power, and Goodmans
LLP is acting as Canadian legal counsel to the Special Committee
and Atlantic Power. Kingsdale Advisors is acting as strategic
shareholder advisor and proxy solicitation agent to Atlantic
Power.
RBC Capital Markets is acting as financial advisor and arranging
financing in support of the deal for I Squared Capital. Sidley
Austin LLP is acting as U.S. legal counsel to I Squared Capital,
and Stikeman Elliott LLP is acting as Canadian legal counsel to I
Squared Capital.
Investor Conference Call and Webcast
Atlantic Power's management team will host a telephone
conference call and webcast to discuss this announcement on
Friday, January 15, 2021 at
8:00 AM ET. An accompanying
presentation will be available on the Conference Calls page of
Atlantic Power's website prior to the call.
Phone Numbers:
U.S. (Toll Free): +1 (855) 239-3193
Canada (Toll Free): +1 (855)
669-9657
International (Toll): +1 (412) 542-4129
Conference Access: Please request access to the
Atlantic Power conference call.
Webcast: The call will be broadcast over Atlantic
Power's website at www.atlanticpower.com.
Replay: Access conference call number
10151644 at the following telephone numbers:
U.S. (Toll Free): +1 (877) 344-7529
Canada (Toll Free): +1 (855)
669-9658
International (Toll): +1 (412) 317-0088
The replay will be available one hour after the end of the
conference call through February 15,
2021 at 11:59 PM ET.
About Atlantic Power
Atlantic Power is an independent power producer that owns power
generation assets in eleven states in the
United States and two provinces in Canada. Atlantic Power's generation projects
sell electricity and steam to investment-grade utilities and other
creditworthy large customers predominantly under long term PPAs
that have expiration dates ranging from 2021 to 2043. The company
seeks to minimize its exposure to commodity prices through
provisions in the contracts, fuel supply agreements and hedging
arrangements. The projects are diversified by geography, fuel type,
technology, dispatch profile and offtaker (customer). Approximately
75% of the projects in operation are 100% owned and directly
operated and maintained by Atlantic Power. The company has
expertise in operating most fuel types, including gas, hydro, and
biomass, and it owns a 40% interest in one coal project.
Atlantic Power's shares trade on the NYSE under the symbol AT
and on the TSX under the symbol ATP. For more information, please
visit Atlantic Power's website at www.atlanticpower.com.
Copies of Atlantic Power's financial data and other publicly
filed documents are available on SEDAR at www.sedar.com or on EDGAR
at www.sec.gov/edgar.shtml under "Atlantic Power Corporation" or on
Atlantic Power's website.
About I Squared Capital
I Squared Capital is an independent global infrastructure
investment manager focusing on energy, utilities, digital
infrastructure, transport and social infrastructure in the
Americas, Europe and Asia. Headquartered in Miami, the firm has over $24 billion in assets under management and
offices in Hong Kong, London, New Delhi,
New York and Singapore.
Cautionary Note Regarding Forward-Looking Statements
To the extent any statements made in this news release contain
information that is not historical, these statements are
forward-looking statements within the meaning of Section 27A of the
U.S. Securities Act of 1933, as amended, and Section 21E of the
U.S. Securities Exchange Act of 1934, as amended, and under
Canadian securities law (collectively, "forward-looking
statements").
Certain statements in this news release may constitute
forward-looking statements, which reflect the expectations of
Atlantic Power's management regarding the future growth, results of
operations, performance and business prospects and opportunities of
Atlantic Power and its projects and the Transaction. These
statements, which are based on certain assumptions and describe
Atlantic Power's future plans, strategies and expectations, can
generally be identified by the use of the words "plans", "expects",
"does not expect", "is expected", "budget", "estimates",
"forecasts", "targets", "intends", "anticipates" or "does not
anticipate", "believes", "outlook", "objective", or "continue", or
equivalents or variations, including negative variations, of such
words and phrases, or state that certain actions, events or
results, "may", "could", "would", "should", "might" or "will" be
taken, occur or be achieved. Examples of such statements in this
press release include, but are not limited to, statements with
respect to the following:
- the anticipated benefits of the Transaction to the parties,
Atlantic Power's shareholders and convertible debenture holders,
APPEL's preferred shareholders and the holders of medium term notes
of APLP;
- the anticipated receipt of required regulatory, court and
securityholder approvals for the Transaction;
- the receipt of third-party consents necessary to satisfy
closing conditions to the Transaction;
- the ability of the parties to satisfy the other conditions to,
and to complete, the Transaction;
- Atlantic Power's intention to hold meetings of its shareholders
and convertible debenture holders, APPEL's intention to hold a
meeting of APPEL's preferred shareholders and APLP's intention to
hold a meeting of the medium term noteholders;
- the mailing of the management information circular and proxy
statement and/or consent solicitation documents; and
- the anticipated timing of the closing of the Transaction.
Forward-looking statements involve significant risks and
uncertainties, should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indications of whether or not or the times at or by which such
performance or results will be achieved. Risks and uncertainties
inherent in the nature of the Transaction include, without
limitation, the failure of Atlantic Power, APLP, APPEL and I
Squared Capital to obtain necessary securityholder, regulatory and
court approvals, including those noted above, obtain third-party
consents, or to otherwise satisfy the conditions to the completion
of the Transaction, in a timely manner, or at all, failure to
realize the expected benefits of the Transaction and general
economic conditions. Failure to so obtain required approvals or
consents, or the failure of the parties to otherwise satisfy the
conditions to or complete the Transaction, may result in the
Transaction not being completed on the proposed terms, or at all.
Please also refer to the factors discussed under "Risk Factors" and
"Forward-Looking Information" in Atlantic Power's periodic reports
as filed with the SEC from time to time for a detailed discussion
of the risks and uncertainties affecting Atlantic Power. The
anticipated dates provided may change for a number of reasons,
including unforeseen delays in preparing securityholder meeting or
consent solicitation materials, the inability to secure necessary
securityholder, regulatory, court or other third-party approvals or
consents in the time assumed, delays resulting from the impact of
the COVID-19 pandemic, or the need for additional time to satisfy
the other conditions to the completion of the Transaction. Although
the forward-looking statements contained in this news release are
based upon what are believed to be reasonable assumptions,
investors cannot be assured that actual results will be consistent
with these forward-looking statements, and the differences may be
material. These forward-looking statements are made as of the date
of this news release and, except as expressly required by
applicable law, Atlantic Power assumes no obligation to update or
revise them to reflect new events or circumstances.
Additional Information about the Arrangement and Where to
Find It
This news release is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote or approval in any jurisdiction, nor
shall there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law. This release is
being made in respect of the Transaction involving Atlantic Power,
APPEL and I Squared Capital pursuant to the terms of the
Arrangement Agreement by and among Atlantic Power, APPEL and I
Squared Capital and may be deemed to be soliciting material
relating to the Transaction. In connection with the Transaction,
Atlantic Power will file a management information circular and
proxy statement relating to a special meeting of its common
shareholders with the SEC and Canadian Securities Administrators.
Additionally, Atlantic Power will file other relevant materials in
connection with the Transaction with the SEC. Securityholders of
Atlantic Power are urged to read the management information
circular and proxy statement regarding the Transaction and any
other relevant materials carefully in their entirety when they
become available before making any voting or investment decision
with respect to the Transaction because they will contain important
information about the Transaction and the parties to the
Arrangement Agreement. The definitive management information
circular and proxy statement will be mailed to Atlantic Power's
common shareholders. Securityholders of Atlantic Power will be able
to obtain a copy of the management information circular and proxy
statement, and the filings with the SEC and Canadian Securities
Administrators that will be incorporated by reference into the
proxy statement as well as other filings containing information
about the Transaction and the parties to the Arrangement Agreement
made by Atlantic Power with the SEC and Canadian Securities
Administrators free of charge on EDGAR at www.sec.gov, on SEDAR at
www.sedar.com, or on Atlantic Power's website at
www.atlanticpower.com. Information contained on, or that may be
accessed through, the websites referenced in this communication is
not incorporated into and does not constitute a part of this press
release. We have included these website addresses only as inactive
textual references and do not intend them to be active links.
Participants in the Solicitation
Atlantic Power and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from the
holders of Atlantic Power's common shares in respect of the
Transaction. Information about Atlantic Power's directors and
executive officers is set forth in the proxy statement and proxy
circular for Atlantic Power's 2020 Annual General Meeting of
Shareholders, which was filed with the SEC and Canadian Securities
Administrators on April 28, 2020.
Investors may obtain additional information regarding the interest
of such participants by reading the management information circular
and proxy statement regarding the Transaction when it becomes
available.
Contacts:
For Atlantic Power
Atlantic Power Corporation
Investor Relations
+1 (617) 977-2700
info@atlanticpower.com
For I Squared Capital
Andreas
Moon, Managing Director and Head of Investor Relations
andreas.moon@isquaredcapital.com
+1 (786) 693-5739
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SOURCE Atlantic Power Corporation