Innergex Renewable Energy Inc. (TSX: INE) (“Innergex” or the “Corporation”) is pleased to announce that it has signed a final agreement to acquire TransCanada’s 62% interest in five wind farms in the Gaspé peninsula in Quebec known as Baie-des-Sables, Carleton, Gros-Morne, L’Anse-à-Valleau and Montagne Sèche (the “Cartier Wind Farms”), as well as its 50% interest in the operating entities of the Cartier Wind Farms (the “Cartier Operating Entities”), for total consideration of approximately $630 million (the “Transaction”). Innergex currently owns the remaining interests in both the Cartier Wind Farms and Cartier Operating Entities.
“By acquiring TransCanada’s interest in the Cartier Wind Farms and Cartier Operating Entities, not only do we add 366 MW of net installed capacity to our portfolio, but we look forward to welcoming a team with unique expertise to advance our future growth projects,” said Michel Letellier, President and Chief Executive Officer of Innergex. “We have always considered Cartier Wind Farms as an integral part of our business and the Transaction fits seamlessly with our growth strategy and allows us to expand in Quebec, the province where Innergex laid its roots. With this acquisition, our breakthrough in Chile and our projects under construction or in development, not only will we reach our goal of net 2,000 MW but we should reach net 2,500 MW by 2020. We are proud to solidify our position as a leader in the Canadian renewable energy market.”
FINANCING
Innergex has obtained commitments from two leading Canadian banks, BMO Capital Markets and TD Securities, to backstop its existing credit facilities and to provide two short-term credit facilities to cover the purchase price and transaction costs in its entirety. The financing has been structured to allow Innergex to maintain a solid investment-grade rating.
A first one-year term credit facility of $400 million non-recourse to Innergex will allow the Corporation to put in place a non-recourse long-term financing at the project level based on the useful life of the assets. The 62% interest in Cartier Wind Farms being acquired is currently debt-free.
A second one-year term credit facility of $240 million will be reimbursed through the strategic divestment of a minority interest in the Cartier Wind Farms and of other assets which could further benefit the Corporation. Innergex intends to find a partner to acquire, in a structured transaction, a stake in Cartier Wind Farms which will increase shareholders’ return while optimizing the investment structure. Innergex will keep 100% ownership interest in Cartier Operating Entities.
Innergex also concluded that selected asset divestments to supply equity for the transaction are optimal for its long-term performance and outlook. Innergex believes there are a number of attractive, actionable opportunities to monetize selected assets or portions of existing assets in a manner that supports Innergex’s long-term strategy. The Corporation will diligently investigate these various options to derive maximum value from its portfolio of assets. The timing of such sales is subject to prevailing market conditions but are expected to be completed within a year.
DESCRIPTION OF THE ACQUIRED ASSETS
The Cartier Wind Farms are located in the Gaspésie region of Quebec. With an aggregated gross installed capacity of 590 MW, the expected long-term average annual power generation is approximately 1,780 GWh, enough to power about 80,900 Quebec households. All of the electricity produced by these wind farms is sold under existing power purchase agreements (“PPAs”) at fixed prices of which a portion is adjusted according to inflation indexes, for initial terms of 20 years, ending between 2026 and 2032, with Hydro-Québec.
Innergex expects the 62% acquired interest in the Cartier Wind Farms to generate revenues of approximately $82.9 million and projected Adjusted EBITDA of approximately $68.4 million annually.
With this Transaction, Innergex will take over management and operations of the Cartier Wind Farms. The Cartier Operating Entities consist of a team of 42 people dedicated to operations and maintenance and 4 administrative employees who will join Innergex’s ranks of wind experts who will create synergies and optimize management of our growing portfolio of wind assets.
Innergex expects to complete the acquisition of Cartier Wind Farms and Cartier Operating Entities in the fourth quarter of 2018, subject to regulatory approvals, key third party consents and other customary closing conditions. The Transaction is not subject to approval by Innergex’s shareholders.
The Corporation develops, acquires, owns and operates hydroelectric facilities, wind farms, solar farms and geothermal power generation plants. As a global player in the renewable energy sector, Innergex conducts operations in Canada, the United States, France, Iceland and Chile. Innergex manages a large portfolio of assets currently consisting of interests in 68 operating facilities with an aggregate net installed capacity of 1,725 MW (gross 3,072 MW), including 37 hydroelectric facilities, 25 wind farms, four solar farms and two geothermal facilities. Innergex also holds interests in five projects under development with a net installed capacity of 719 MW (gross 800 MW) two of which are currently under construction and prospective projects at different stages of development with an aggregate net capacity totalling 8,180 MW (gross 8,850 MW). Innergex Renewable Energy Inc. is rated BBB- by S&P. The Corporation’s strategy for building shareholder value is to develop or acquire high-quality facilities that generate sustainable cash flows and provide an attractive risk-adjusted return on invested capital and to distribute a stable dividend.
