CALGARY, March 17, 2020 /PRNewswire/ - TransAlta
Corporation ("TransAlta") (TSX: TA) (NYSE: TAC) announced today the
acquisition of a contracted cogeneration asset from two private
companies for a purchase price of approximately US$27 million, subject to working capital
adjustments. The asset is a 29 MW cogeneration facility in
Michigan which is contracted under
a long-term power purchase agreement and steam sale agreement for
approximately six years with high quality counterparties.
"The acquisition marks our first U.S. cogeneration project and
aligns with our strategy of growing our on-site generation
business, diversifying our cogeneration portfolio, and increasing
the pipeline of assets for potential future drop-downs into
TransAlta Renewables," said Dawn
Farrell, President and Chief Executive Officer of TransAlta.
"The expansion into new geographic markets further enhances our
position as a leader in behind the fence generation and provides
potential for future opportunities in the U.S. cogeneration
space."
The cogeneration facility, which comprises a single GE LM2500
gas turbine and an ABB steam turbine, has been operational since
1991. The electricity and steam output of the facility are fully
contracted providing consistent, predictable revenues through 2026.
The acquisition will be funded with cash on hand.
Investment Highlights:
- Attractive cash-on-cash yield and project return acquisition
metrics;
- Expands TransAlta's platform in the U.S. and is an entry into
the U.S cogeneration space;
- Potential drop-down candidate to TransAlta Renewables
Inc.;
- Long-term contracted cash flows with high quality
counterparties; and
- Provides further geographic, technology and counterparty
diversification.
The acquisition is subject to customary regulatory approvals and
is expected to close in the second quarter of 2020.
About TransAlta:
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. TransAlta provides municipalities, medium and
large industries, businesses and utility customers with clean,
affordable, energy efficient and reliable power. Today, TransAlta
is 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 has been recognized by CDP (formerly
Climate Disclosure Project) as an industry leader on Climate Change
Management. TransAlta is 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 its website at
transalta.com.
Forward Looking Statements:
This news
release contains forward looking statements within the meaning of
applicable securities laws. The use of any of the words
"expect", "anticipate", "continue", "estimate", "may", "will",
"project", "should", "propose", "plans", "intends" and similar
expressions are intended to identify forward looking information or
statements. More particularly, and without limitation, this news
release contains forward looking statements and information
relating to: the completion of the acquisition of the
cogeneration facility and the associated benefits therefrom;
expectations and plans for future growth, including expansion into
new markets; and the potential for a drop-down of the assets
to TransAlta Renewables Inc. These forward looking
statements are based on a number of assumptions considered by the
Company to be reasonable as of the date of this news release,
including, but not limited to, the following: unanticipated impacts
relating to novel coronavirus; no significant changes to applicable
laws and regulations, including any tax and regulatory changes; no
material adverse impacts to the investment and credit markets; and
assumptions regarding our current strategy and priorities,
including as it pertains to our growth strategy and relationship
with TransAlta Renewables. 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, which
include: failure to satisfy the conditions to the closing of the
transaction; changes in the market place in which the cogeneration
facility is located; failure to proceed with the drop-down
to TransAlta Renewables Inc.; changes to the operational
characteristics of the off-takers under the long-term power
purchase agreement; changes in the law or political developments;
and other risk factors contained in the Company's Annual
Information Form and Management's Discussion and Analysis for the
year end dated December 31, 2019,
filed under the Company's profile with the Canadian securities
regulators on www.sedar.com and the U.S. Securities and Exchange
Commission on www.sec.gov. Readers are cautioned not to place undue
reliance on this forward looking information, which is given as of
the date it is expressed in this news release. The Company
undertakes no obligation to update or revise any forward looking
information except as required by law. For additional information
on the assumptions made, and the risks and uncertainties which
could cause actual results to differ from those in the forward
looking information, refer to the Company's Annual Report and
Management's Discussion and Analysis filed under the Company's
profile on SEDAR at www.sedar.com and with the U.S. Securities and
Exchange Commission at www.sec.gov.
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SOURCE TransAlta Corporation