JUNO BEACH, Fla., April 19, 2021 /PRNewswire/ -- NextEra
Energy Partners, LP (NYSE: NEP) today announced that it has entered
into a definitive agreement with Brookfield Renewable, a global
owner and operator of renewable power assets, to acquire a
391-megawatt (MW) portfolio of four operating wind assets located
in California and New Hampshire for a base purchase price of
$733 million, subject to closing
adjustments.
"This transaction demonstrates NextEra Energy Partners'
continued ability to execute its long-term growth plan," said
Jim Robo, chairman and chief
executive officer. "This acquisition of approximately 400 megawatts
of long-term contracted wind projects with high-credit-quality
customers further enhances the diversity of the partnership's
existing portfolio. This portfolio is an attractive acquisition for
NextEra Energy Partners and is supported by our ability to leverage
NextEra Energy Resources' best-in-class operating platform to
reduce costs and create value for LP unitholders. The assets are
well-situated in strong markets with long-term renewables demand,
providing long-term optionality for the portfolio. The transaction
also provides an accretive investment opportunity to deploy the
proceeds from the second draw of our 2020 convertible equity
portfolio financing, illustrating NextEra Energy Partners' ability
to leverage its value-enhancing financing structures to support
long-term growth. NextEra Energy Partners remains on a
trajectory to grow our LP distributions per unit by 12% to 15%
through 2024, and, in our view, the partnership has never been
better positioned to deliver unitholder value going forward."
Portfolio acquisition and financing details
The
portfolio is comprised of four wind generation facilities, totaling
391 MW. Almost all of the portfolio's capacity is contracted with
investment-grade counterparties and a cash available for
distribution (CAFD)-weighted remaining contract life of
approximately 13 years at the time of closing. The assets are
located in markets with significant long-term renewables demand,
supporting potential re-contracting or repowering opportunities
after the initial contract terms. The assets included are:
- Alta Wind VIII, 150-MW wind generating facility in California.
- Windstar,120-MW wind generating facility in California.
- Coram, 22-MW wind generating facility in California.
- Granite, 99-MW wind generating facility in New Hampshire.
NextEra Energy Partners expects to acquire the unlevered
portfolio for a base purchase price of $733
million, subject to closing adjustments. NextEra Energy
Partners plans to fund the transaction with a combination of
undrawn funds remaining from the 2020 convertible equity portfolio
financing and existing debt capacity. The acquired assets are
expected to contribute adjusted EBITDA and CAFD of approximately
$63 to $70
million, each on a five-year average run-rate basis,
beginning Dec. 31, 2021.
The transaction is subject to approval from the Federal Energy
Regulatory Commission and New Hampshire Site Evaluation Committee,
as well as expiration or termination of the waiting period under
the Hart-Scott-Rodino Act. NextEra Energy Partners expects to
complete the acquisition in the third quarter of 2021, subject to
customary closing conditions and the receipt of regulatory
approvals.
Outlook
NextEra Energy Partners now expects a
Dec. 31, 2021, run rate for adjusted
EBITDA in the upper end of its previously announced range of
$1.44 billion to $1.62 billion and CAFD in the upper end of its
previously announced range of $600
million to $680 million,
reflecting calendar year 2022 expectations for the portfolio at
year-end 2021.
From a base of its fourth-quarter 2020 distribution per common
unit at an annualized rate of $2.46
per common unit, NextEra Energy Partners continues to expect 12% to
15% per year growth in limited partner distributions as being a
reasonable range of expectations through at least 2024. NextEra
Energy Partners expects the annualized rate of the fourth-quarter
2021 distribution, which is payable in February 2022, to be in a range of $2.76 to $2.83 per
common unit. These expectations are subject to the usual caveats
and include the impact of incentive distribution rights fees, as
these fees are treated as an operating expense.
This news release refers to adjusted EBITDA and CAFD
expectations. NextEra Energy Partners' adjusted EBITDA expectations
represent projected (a) revenue less (b) fuel expense, less (c)
project operating expenses, less (d) corporate G&A, plus (e)
other income less (f) other deductions including IDR fees.
Projected revenue as used in the calculations of projected EBITDA
represents the sum of projected (a) operating revenues plus (b) a
pre-tax allocation of production tax credits, plus (c) a pre-tax
allocation of investment tax credits plus (d) earnings impact from
convertible investment tax credits and plus (e) the reimbursement
for lost revenue received pursuant to a contract with NextEra
Energy Resources.
CAFD is defined as cash available for distribution and
represents adjusted EBITDA less (1) a pre-tax allocation of
production tax credits, less (2) a pre-tax allocation of investment
tax credits, less (3) earnings impact from convertible investment
tax credits, less (4) debt service, less (4) maintenance capital,
less (5) income tax payments less, (6) other non-cash items
included in adjusted EBITDA if any. CAFD excludes changes in
working capital and distributions to preferred equity
investors.
Adjusted EBITDA, CAFD, limited partner distribution and other
expectations assume, among other things, normal weather and
operating conditions; public policy support for wind and solar
development and construction; market demand and transmission
expansion support for wind and solar development; market demand for
pipeline capacity; and access to capital at reasonable cost and
terms. Please see the accompanying cautionary statements for a list
of the risk factors that may affect future results. Adjusted EBITDA
and CAFD do not represent substitutes for net income, as prepared
in accordance with GAAP. The adjusted EBITDA and CAFD run-rate
expectations have not been reconciled to GAAP net income because
NextEra Energy Partners' GAAP net income includes unrealized
mark-to-market gains and losses related to derivative transactions,
which cannot be determined at this time.
Advisors
Citi is serving as sole financial
advisor to NextEra Energy Partners, and Pillsbury Winthrop Shaw
Pittman LLP is acting as counsel to the partnership.
NextEra Energy Partners, LP
NextEra Energy Partners, LP (NYSE: NEP) is a growth-oriented
limited partnership formed by NextEra Energy, Inc. (NYSE: NEE).
NextEra Energy Partners acquires, manages and owns contracted clean
energy projects with stable, long-term cash flows. Headquartered in
Juno Beach, Florida, NextEra
Energy Partners owns interests in geographically diverse wind and
solar projects in the U.S. as well as natural gas infrastructure
assets in Texas and Pennsylvania. For more information about
NextEra Energy Partners, please visit:
www.NextEraEnergyPartners.com.
Cautionary Statements and Risk Factors That
May Affect Future Results
This news release contains "forward-looking statements" within
the meaning of the federal securities laws. Forward-looking
statements are not statements of historical facts, but instead
represent the current expectations of NextEra Energy Partners, LP
(together with its subsidiaries, NEP) regarding future operating
results and other future events, many of which, by their nature,
are inherently uncertain and outside of NEP's control.
Forward-looking statements in this news release include, among
others, statements concerning adjusted EBITDA, cash available for
distributions (CAFD) and unit distribution expectations, as well as
statements concerning NEP's future operating performance and
financing needs. In some cases, you can identify the
forward-looking statements by words or phrases such as "will," "may
result," "expect," "anticipate," "believe," "intend," "plan,"
"seek," "aim," "potential," "projection," "forecast," "predict,"
"goals," "target," "outlook," "should," "would" or similar words or
expressions. You should not place undue reliance on these
forward-looking statements, which are not a guarantee of future
performance. The future results of NEP and its business and
financial condition are subject to risks and uncertainties that
could cause NEP's actual results to differ materially from those
expressed or implied in the forward-looking statements. These risks
and uncertainties could require NEP to limit or eliminate certain
operations. These risks and uncertainties include, but are not
limited to, the following: NEP's ability to make cash distributions
to its unitholders is affected by wind and solar conditions at its
renewable energy projects; Operation and maintenance of renewable
energy projects and pipelines involve significant risks that could
result in unplanned power outages, reduced output or capacity,
personal injury or loss of life; NEP's business, financial
condition, results of operations and prospects can be materially
adversely affected by weather conditions, including, but not
limited to, the impact of severe weather; NEP depends on certain of
the renewable energy projects and pipelines in its portfolio for a
substantial portion of its anticipated cash flows; NEP is pursuing
the repowering of wind projects and the expansion of natural gas
pipelines that will require up-front capital expenditures and
expose NEP to project development risks; Terrorist acts,
cyberattacks or other similar events could impact NEP's projects,
pipelines or surrounding areas and adversely affect its business;
The ability of NEP to obtain insurance and the terms of any
available insurance coverage could be materially adversely affected
by international, national, state or local events and
company-specific events, as well as the financial condition of
insurers. NEP's insurance coverage does not provide protection
against all significant losses; NEP relies on interconnection,
transmission and other pipeline facilities of third parties to
deliver energy from its renewable energy projects and to transport
natural gas to and from its pipelines. If these facilities become
unavailable, NEP's projects and pipelines may not be able to
operate or deliver energy or may become partially or fully
unavailable to transport natural gas; NEP's business is subject to
liabilities and operating restrictions arising from environmental,
health and safety laws and regulations, compliance with which may
require significant capital expenditures, increase NEP's cost of
operations and affect or limit its business plans; NEP's renewable
energy projects or pipelines may be adversely affected by
legislative changes or a failure to comply with applicable energy
and pipeline regulations; Petroleos Mexicanos (Pemex) may claim
certain immunities under the Foreign Sovereign Immunities Act and
Mexican law, and the Texas
pipeline entities' ability to sue or recover from Pemex for breach
of contract may be limited and may be exacerbated if there is a
deterioration in the economic relationship between the U.S. and
Mexico; NEP does not own all of
the land on which the projects in its portfolio are located and its
use and enjoyment of the property may be adversely affected to the
extent that there are any lienholders or land rights holders that
have rights that are superior to NEP's rights or the U.S. Bureau of
Land Management suspends its federal rights-of-way grants; NEP is
subject to risks associated with litigation or administrative
proceedings that could materially impact its operations, including,
but not limited to, proceedings related to projects it acquires in
the future; NEP's cross-border operations require NEP to comply
with anti-corruption laws and regulations of the U.S. government
and Mexico; NEP is subject to
risks associated with its ownership interests in projects or
pipelines that are under construction, which could result in its
inability to complete construction projects on time or at all, and
make projects too expensive to complete or cause the return on an
investment to be less than expected; NEP relies on a limited number
of customers and is exposed to the risk that they may be unwilling
or unable to fulfill their contractual obligations to NEP or that
they otherwise terminate their agreements with NEP; NEP may not be
able to extend, renew or replace expiring or terminated power
purchase agreements (PPA), natural gas transportation agreements or
other customer contracts at favorable rates or on a long-term
basis; If the energy production by or availability of NEP's
renewable energy projects is less than expected, they may not be
able to satisfy minimum production or availability obligations
under their PPAs; NEP's growth strategy depends on locating and
acquiring interests in additional projects consistent with its
business strategy at favorable prices; Reductions in demand for
natural gas in the United States
or Mexico and low market prices of
natural gas could materially adversely affect NEP's pipeline
operations and cash flows; Government laws, regulations and
policies providing incentives and subsidies for clean energy could
be changed, reduced or eliminated at any time and such changes may
negatively impact NEP's growth strategy; NEP's growth strategy
depends on the acquisition of projects developed by NextEra Energy,
Inc. (NEE) and third parties, which face risks related to project
siting, financing, construction, permitting, the environment,
governmental approvals and the negotiation of project development
agreements; Acquisitions of existing clean energy projects involve
numerous risks; NEP may continue to acquire other sources of clean
energy and may expand to include other types of assets. Any further
acquisition of non-renewable energy projects may present unforeseen
challenges and result in a competitive disadvantage relative to
NEP's more-established competitors; NEP faces substantial
competition primarily from regulated utilities, developers,
independent power producers, pension funds and private equity funds
for opportunities in North
America; The natural gas pipeline industry is highly
competitive, and increased competitive pressure could adversely
affect NEP's business; NEP may not be able to access sources of
capital on commercially reasonable terms, which would have a
material adverse effect on its ability to consummate future
acquisitions and pursue other growth opportunities; Restrictions in
NEP and its subsidiaries' financing agreements could adversely
affect NEP's business, financial condition, results of operations
and ability to make cash distributions to its unitholders; NEP's
cash distributions to its unitholders may be reduced as a result of
restrictions on NEP's subsidiaries' cash distributions to NEP under
the terms of their indebtedness or other financing agreements;
NEP's subsidiaries' substantial amount of indebtedness may
adversely affect NEP's ability to operate its business, and its
failure to comply with the terms of its subsidiaries' indebtedness
could have a material adverse effect on NEP's financial condition;
NEP is exposed to risks inherent in its use of interest rate swaps;
NEE has influence over NEP; Under the cash sweep and credit support
agreement, NEP receives credit support from NEE and its affiliates.
NEP's subsidiaries may default under contracts or become subject to
cash sweeps if credit support is terminated, if NEE or its
affiliates fail to honor their obligations under credit support
arrangements, or if NEE or another credit support provider ceases
to satisfy creditworthiness requirements, and NEP will be required
in certain circumstances to reimburse NEE for draws that are made
on credit support; NextEra Energy Resources, LLC (NEER) or one of
its affiliates is permitted to borrow funds received by NEP's
subsidiaries and is obligated to return these funds only as needed
to cover project costs and distributions or as demanded by NextEra
Energy Operating Partners, LP (NEP OpCo). NEP's financial condition
and ability to make distributions to its unitholders, as well as
its ability to grow distributions in the future, is highly
dependent on NEER's performance of its obligations to return all or
a portion of these funds; NEER's right of first refusal may
adversely affect NEP's ability to consummate future sales or to
obtain favorable sale terms; NextEra Energy Partners GP, Inc. (NEP
GP) and its affiliates may have conflicts of interest with NEP and
have limited duties to NEP and its unitholders; NEP GP and its
affiliates and the directors and officers of NEP are not restricted
in their ability to compete with NEP, whose business is subject to
certain restrictions; NEP may only terminate the Management
Services Agreement among, NEP, NextEra Energy Management Partners,
LP (NEE Management), NEP OpCo and NextEra Energy Operating Partners
GP, LLC (NEP OpCo GP) under certain limited circumstances; If the
agreements with NEE Management or NEER are terminated, NEP may be
unable to contract with a substitute service provider on similar
terms; NEP's arrangements with NEE limit NEE's potential liability,
and NEP has agreed to indemnify NEE against claims that it may face
in connection with such arrangements, which may lead NEE to assume
greater risks when making decisions relating to NEP than it
otherwise would if acting solely for its own account; NEP's ability
to make distributions to its unitholders depends on the ability of
NEP OpCo to make cash distributions to its limited partners; If NEP
incurs material tax liabilities, NEP's distributions to its
unitholders may be reduced, without any corresponding reduction in
the amount of the IDR fee; Holders of NEP's units may be subject to
voting restrictions; NEP's partnership agreement replaces the
fiduciary duties that NEP GP and NEP's directors and officers might
have to holders of its common units with contractual standards
governing their duties and the NYSE does not require a publicly
traded limited partnership like NEP to comply with certain of its
corporate governance requirements; NEP's partnership agreement
restricts the remedies available to holders of NEP's common units
for actions taken by NEP's directors or NEP GP that might otherwise
constitute breaches of fiduciary duties; Certain of NEP's actions
require the consent of NEP GP; Holders of NEP's common units
currently cannot remove NEP GP without NEE's consent and provisions
in NEP's partnership agreement may discourage or delay an
acquisition of NEP that NEP unitholders may consider favorable;
NEE's interest in NEP GP and the control of NEP GP may be
transferred to a third party without unitholder consent; NEP may
issue additional units without unitholder approval, which would
dilute unitholder interests; Reimbursements and fees owed to NEP GP
and its affiliates for services provided to NEP or on NEP's behalf
will reduce cash distributions from NEP OpCo and from NEP to NEP's
unitholders, and there are no limits on the amount that NEP OpCo
may be required to pay; Increases in interest rates could adversely
impact the price of NEP's common units, NEP's ability to issue
equity or incur debt for acquisitions or other purposes and NEP's
ability to make cash distributions to its unitholders; The
liability of holders of NEP's units, which represent limited
partnership interests in NEP, may not be limited if a court finds
that unitholder action constitutes control of NEP's business;
Unitholders may have liability to repay distributions that were
wrongfully distributed to them; The issuance of securities
convertible into, or settleable with, common units may affect the
market price for NEP's common units, will dilute common
unitholders' ownership in NEP and may decrease the amount of cash
available for distribution for each common unit; NEP's future tax
liability may be greater than expected if NEP does not generate net
operating losses (NOLs) sufficient to offset taxable income or if
tax authorities challenge certain of NEP's tax positions; NEP's
ability to use NOLs to offset future income may be limited; NEP
will not have complete control over NEP's tax decisions;
Distributions to unitholders may be taxable as dividends; and, The
coronavirus pandemic may have a material adverse impact on NEP's
business, financial condition, liquidity, results of operations and
ability to make cash distributions to its unitholders. NEP
discusses these and other risks and uncertainties in its annual
report on Form 10-K for the year ended December 31, 2020 and other SEC filings, and this
news release should be read in conjunction with such SEC filings
made through the date of this news release. The forward-looking
statements made in this news release are made only as of the date
of this news release and NEP undertakes no obligation to update any
forward-looking statements.
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SOURCE NextEra Energy Partners, LP