CALGARY, May 1, 2019 /CNW/ - TransAlta Corporation
("TransAlta" or the "Company") (TSX:TA) (NYSE:TAC) today
announced the closing of the initial tranche of its previously
announced $750 million strategic
investment by an affiliate of Brookfield Renewable Partners
("Brookfield").
"Having achieved this important milestone, we can now start to
realize the benefits of our partnership and financing with
Brookfield," said Dawn Farrell, CEO of TransAlta. "We are moving
swiftly to put capital to work including advancing our coal-to-gas
conversions."
As previously disclosed, Brookfield will invest $750 million in TransAlta through the purchase of
exchangeable securities, which are convertible into an equity
ownership interest in TransAlta's Alberta hydro assets in the future at a value
based on a multiple of the hydro assets' future adjusted EBITDA. In
connection with today's initial closing, Brookfield invested $350 million in TransAlta in exchange for
unsecured, subordinated debentures; the remaining $400 million will be invested in October 2020 in exchange for a new series of
redeemable, retractable first preferred shares, subject to the
satisfaction of certain customary conditions precedent. In
connection with the transaction, TransAlta shareholders recently
elected to its Board of Directors two experienced Brookfield executives, Harry Goldgut and Richard Legault, at its 2019 Annual and Special
Shareholders' Meeting.
The investment provides the financial flexibility to drive
TransAlta's transition to 100% clean energy by 2025, recognizes the
anticipated future value of TransAlta's Alberta hydro assets, and also accelerates the
Company's plan to return capital to its shareholders. It also
creates a partnership with one of the world's leaders in the
renewables industry and is expected to generate value in the
near-term, while driving sustainable growth over the long-term for
all TransAlta shareholders.
Further Information
Further information is contained in the Company's material
change report dated March 26, 2019
and investment agreement dated as of March
22, 2019 previously filed on www.sedar.com and
www.sec.gov. Additional details about the strategic investment by
Brookfield will be available in
the Company's further material change report, to be filed on
www.sedar.com and www.sec.gov in due course. Copies of
the definitive agreements entered into by TransAlta and
Brookfield on the initial closing
date will also be filed with the material change report.
About TransAlta Corporation
TransAlta owns, operates and develops a diverse fleet of
electrical power generation assets in Canada, the United
States and Australia with a
focus on long-term shareholder value. We provide municipalities,
medium and large industries, businesses and utility customers
clean, affordable, energy efficient, and reliable power. Today, we
are one of Canada's largest
producers of wind power and Alberta's largest producer of hydro-electric
power. For over 100 years, TransAlta has been a responsible
operator and a proud community-member where its employees work and
live. TransAlta aligns its corporate goals with the UN Sustainable
Development Goals and we have been recognized by CDP (formerly
Climate Disclosure Project) as an industry leader on Climate Change
Management. We are also proud to have achieved the Silver level PAR
(Progressive Aboriginal Relations) designation by the Canadian
Council for Aboriginal Business.
For more information about TransAlta, visit our web site at
www.transalta.com.
Forward-Looking Statements
This news release contains forward-looking statements and
forward-looking information within the meaning of applicable
securities laws (collectively referred to as "forwarding-looking
statements"). All forward-looking statements are based on our
beliefs as well as assumptions based on information available at
the time the assumption was made and on management's experience and
perception of historical trends, current conditions, results and
expected future developments, as well as other factors deemed
appropriate in the circumstances. Forward-looking statements are
not facts, but only predictions and generally can be identified by
the use of statements that include phrases such as "may", "will",
"can", "could", "would", "should", "shall", "believe", "expect",
"estimate", "anticipate", "intend", "plan", "propose", "project",
"forecast", "foresee", "potential", "enable", "continue" and
similar expressions. These statements are not guarantees of our
future performance, events or results and are subject to a number
of significant risks, uncertainties and other important factors
that could cause our actual performance, events or results to be
materially different from those set out in the forward-looking
statements. More particularly, and without limitation, this news
release contains forward-looking statements relating to: statements
relating to the strategic investment by and partnership with
Brookfield and its affiliated
entities; the timing and probability for completing the proposed
second tranche of the Brookfield
investment; the ability of the investment to enhance the Company's
financial position and to execute its strategy; the Company's use
of proceeds and strategy, plans and priorities, including as it
pertains to reducing debt, growing the renewables business,
maintaining, realizing and maximizing the value of the hydro
assets, converting coal-fired units to natural gas fired units and
returning capital to shareholders; the Company's relationship with
Brookfield and other shareholders;
the expected timing, costs and benefits of the strategic investment
by and partnership with Brookfield; the expected benefits to be
realized from the election of Brookfield's nominees to the Board of
Directors of the Company; the expected higher cash flow and
anticipated adjusted EBITDA to be generated by the Alberta hydro assets following expiry of the
power purchase arrangement in 2020 or upon the conversion of the
exchangeable securities; the expected benefits of Brookfield being a cornerstone shareholder;
and the timing, terms and probability of returning capital to
shareholders through share buy-backs. These statements are based on
TransAlta's beliefs and assumptions based on information available
at the time the assumptions were made, including assumptions
pertaining to: the Company's ability to successfully defend against
any existing or potential legal actions or regulatory proceedings,
including by Mangrove Partners; the closing of the second tranche
of the Brookfield investment
occurring and other risks to the Brookfield investment not materializing; no
significant changes to regulatory, securities, credit or market
environments; the anticipated Alberta capacity market framework in the
future; our ownership of or relationship with TransAlta Renewables
Inc. not materially changing; the Alberta hydro assets achieving their
anticipated future value, cash flows and adjusted EBITDA; the
anticipated benefits and financial results generated on the
coal-to-gas conversions and the Company's other strategies; the
Company's and Mangrove's strategies and plans; no significant
changes in applicable laws, including any tax or regulatory changes
in the markets in which we operate; the anticipated structure and
framework of an Alberta capacity
market in the future; risks associated with the impact of the
Brookfield investment on the
Company's shareholders, debtholders and credit ratings; assumptions
referenced in our 2019 guidance; no material decline in the
dividends expected to be received from TransAlta Renewables Inc.;
the expected life extension of the coal fleet and anticipated
financial results generated on conversion; and assumptions relating
to the completion of the strategic partnership with and investment
by Brookfield and proposed share
buy-backs. The forward-looking statements are subject to a number
of risks and uncertainties that may cause actual performance,
events or results to differ materially from those contemplated by
the forward-looking statements. Some of the factors that could
cause such differences include: the failure of the Brookfield's director nominees to be elected
at future shareholders' meetings; the failure of the second tranche
of the Brookfield investment to
close; the outcomes of existing or potential legal actions or
regulatory proceedings not being as anticipated, including those
pertaining to the Brookfield
investment; changes in our relationships with Brookfield and its affiliated entities or our
other shareholders; our Alberta
hydro assets not achieving their anticipated value, cash flows or
adjusted EBITDA; the Brookfield
investment not resulting in the expected benefits for the Company
and its shareholders; the inability to complete share buy-backs
within the timeline or on the terms anticipated or at all;
fluctuations in demand, market prices and the availability of fuel
supplies required to generate electricity; changes in the current
or anticipated legislative, regulatory and political environments
in the jurisdictions in which we operate; environmental
requirements and changes in, or liabilities under, these
requirements; the failure of the conditions precedent to the second
tranche of the investment to be satisfied; risks associated with
the calculation of the hydro assets' EBITDA, including
non-financial measures included in that calculation; the
anticipated benefits of the joint Brookfield/TransAlta hydro operating committee
not materializing; the timing and value of Brookfield's exchange of exchangeable
securities and the amount of equity interest in the hydro assets
resulting therefrom; changes in general economic conditions
including interests rates; operational risks involving our
facilities; unexpected increases in cost structure; failure to meet
financial expectations; structural subordination of securities; and
other risks and uncertainties contained in the Company's Management
Proxy Circular dated March 26, 2019
and its Annual Information Form and Management's Discussion and
Analysis for the year ended December 31,
2018, filed under the Company's profile with the Canadian
securities regulators on www.sedar.com and the
U.S. Securities and Exchange Commission ("SEC") on
www.sec.gov. Readers are urged to consider these factors
carefully in evaluating the forward-looking statements and are
cautioned not to place undue reliance on these forward-looking
statements, which reflect TransAlta's expectations only as of the
date of this news release. In light of these risks, uncertainties
and assumptions, the forward-looking statements might occur to a
different extent or at a different time than we have described, or
might not occur at all. TransAlta disclaims any intention or
obligation to update or revise these forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law. Certain financial
information contained in this news release, including the
calculation of EBITDA pursuant to the Brookfield investment, may not be standard
measures defined under International Financial Reporting Standards
("IFRS") and may not be comparable to similar measures presented by
other entities. For further information on the calculation of
EBITDA in respect of the Brookfield investment and with regard to the
exchangeable securities, reference should be made to the material
change report and the investment agreement previously filed by the
Company, and the further material change report and copies of the
definitive agreements to be filed, with the Canadian securities
regulators on www.sedar.com and the SEC on
www.sec.gov.
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SOURCE TransAlta Corporation