News

Innergex completes $1.1bn acquisition of Alterra Power Corp., incl. share in Icelandic geothermal power company

Innergex completes $1.1bn acquisition of Alterra Power Corp., incl. share in Icelandic geothermal power company Students visiting the Svartsengi geothermal plant in Iceland (source: ThinkGeoEnergy)
Alexander Richter 6 Feb 2018

Canadian Innergex Renewable Energy has finalised the acquisition of Alterra Power Corp, also from Canada in a deal valued at $1.1 billion. Announced in October 2017, the deal includes the 53.9% share of Alterra Power Corp. in Icelandic geothermal power company HS Orka.

In a release today, Canadian Innergex Renewable Energy Inc. (TSX: INE) announced the completion of the previously disclosed acquisition of Alterra Power Corp. (TSX: AXY) by way of an arrangement agreement pursuant to which Innergex acquired all of the issued and outstanding common shares of Alterra for an aggregate consideration of $1.1 billion, including the assumption of Alterra’s debt.

The acquisition was announced in late October 2017 and includes Alterra Power Corp.’s holding in HS Orka, an Icelandic geothermal power company. Alterra Power owns 53.9% of HS Orka.

Innergex’s acquisition of Alterrra, its largest and most significant to date, immediately adds 485 MW (gross 1,049 MW) of high qualityrenewable energy assets, in operation and under construction, to Innergex’s portfolio, bringing the Corporation’s total capacity to 1,609 MW (gross 2,896 MW). By 2020, Innergex’s net installed capacity is expected to reach over 2,000 MW from a well-diversified resource mix of hydro, wind, solar and geothermal projects in Canada, the U.S., France and Iceland. The acquisition also brings Innergex an extensive pipeline of prospective projects in preliminary stages or in progress, with an estimated net capacity of more than 5,000 MW.

“Our acquisition of Alterra is about accelerating our growth and taking Innergex to the next level,” said Michel Letellier, President and Chief Executive Officer of Innergex. “We are one of the largest independent renewable energy producers in Canada, with a market cap of more than $1.8 billion, a strong balance sheet, a more diversified asset base, and a sizeable project pipeline that places us on a substantial growth trajectory.”

“This transaction gives us a stronger platform for solid, long-term growth in the United States, the world’s second largest growth market for renewables. By combining the Innergex and Alterra teams, and leveraging Alterra’s U.S. development expertise, we can significantly expand our presence in the U.S. market as well as Canada, Latin America and Europe,” said Letellier. “It’s another significant step forward in Innergex’s international expansion, which should be beneficial for our shareholders.”

Support from la Caisse

Concurrently with the closing of the acquisition, the Corporation has successfully completed the financing of the cash portion of the Transaction. La Caisse, one of its main shareholders, provided Innergex with a $150 million subordinated unsecured 5-year term loan at a competitive interest rate.

Increase to the revolving credit facilities

Innergex is also pleased to announce that its revolving credit facilities were increased by $225 million to $700 million, led by BMO Capital Markets, National Bank Financial Inc. and TD Securities as Co-Lead Arrangers and Joint Book Managers. This increase enables the Corporation to pursue the development of its asset portfolio and the construction of its projects. The maturity of the revolving credit facilities remains December 2022.

Results of Consideration Elections

Pursuant to the Transaction, Alterra shareholders had the right to elect to receive either $8.25 in cash (“Cash Alternative”) or 0.5563 Innergex common shares (“Share Alternative”) for each Alterra common share, subject in each case to the pro-ration, such that the aggregate consideration paid to all Alterra shareholders will consist of approximately 25% in cash and 75% in Innergex common shares.

The results of the elections received prior to the election deadline of 5 PM EST on January 25, 2018 are as follows:

  • Shareholders representing 24,552,909 Alterra common shares elected to receive the per share Cash Alternative;
  • Shareholders representing 19,732,374 Alterra common shares elected to receive the per share Share Alternative; and
  • Shareholders representing 14,021,729 Alterra common shares did not make an election.

Since the aggregate number of Alterra common shares in respect of which registered Alterra shareholders have elected to receive the per share Cash Alternative or have not made an election exceeds the maximum cash consideration (as defined in the arrangement agreement dated as of October 30, 2017 by and between Innergex and Alterra), holders of Alterra common shares who elected to receive the per share Cash Alternative or who have not made an election will be subject to proration in the manner described in Alterra’s management information circular dated November 14, 2017. Such proration will result in a consideration per Alterra common share of about 37.8% in cash ($3.1175) and about 62.2% in Innergex common share (0.34608 of Innergex common share).

The Innergex common shares issuable to Alterra shareholders with the transaction represent an ownership of approximately 18% of the combined corporation.

Ross Beaty appointed to Board

Mr. Ross Beaty, Executive Chairman of Alterra, has agreed to a 12-month holding period of the Innergex shares he received through the transaction. As of today, Mr. Beaty joins the Innergex’s Board of Directors.

“We welcome Ross Beaty as a new director on the Innergex board. His extensive industry knowledge and insight will bring significant value to Innergex and will help advance the successful integration of the two companies,” said Mr. Jean La Couture, Chairman of the Board of Innergex.

Delisting of Alterra shares

The common shares of Alterra are expected to be delisted from the Toronto Stock Exchange (TSX) effective as of the closing of the market on February 7, 2018 and Alterra has applied to cease to be a reporting issuer under applicable Canadian securities laws.

Source: Company release by email