Nov 19 2012
Atlantic Power Corporation today announced that it has entered into an agreement with Veolia Environnement SA ("Veolia") to acquire all of the outstanding shares of Ridgeline Energy Holdings, Inc. ("Ridgeline Energy" or "Ridgeline"), currently a wholly-owned subsidiary of Eolfi SA, a European renewable power development company majority owned by Veolia (the "Acquisition").
"The Acquisition will add interests in three wind projects totaling 150 net MW, two in operation and one completing construction by year end," said Barry Welch, President and CEO of Atlantic Power. "These projects have 20-year and 25-year power purchase agreements ("PPAs") with investment grade off-takers, and are expected to generate $9 to $12 million of operating cash flow per year starting in 2013. In addition, the Company will acquire Ridgeline's development pipeline, which includes approximately 1,000 MW of solar and wind projects. The Ridgeline team will add substantial experience in renewable project acquisition, development, construction and asset management to the Company. The Ridgeline acquisition strengthens our ability to execute development stage projects which is one of our target growth areas. It also complements our other growth area, operating project acquisitions, as exemplified by the Capital Power Income LP transaction completed a year ago. In combination with cash flows from our existing diversified portfolio of assets, these growth initiatives will continue to support our dividend."
Ridgeline Energy currently has a wind and solar development pipeline of more than 20 projects in the U.S. totaling approximately 1,000 MW. Planned development expenditures in 2013 are focused on near-term opportunities where PPAs can be obtained quickly, including solar sites where investment tax credits remain available and construction could be completed as early as the first quarter of 2014. Wind development viability will depend on continued support from renewable portfolio standards in more than 30 states and a possible extension of production tax credits. While the amount of development expenditures could vary significantly depending on ongoing progress with the pipeline projects, the Company's current estimate is that the net impact of those investments along with cash flow from the operating projects will be approximately neutral in 2013 to 2015, and significantly accretive thereafter.
The Acquisition will increase the Company's ownership interest in the Rockland project to a 50% managing member interest from 30%, and add a 12.5% interest in Ridgeline's 125 MW Goshen North project. As part of the acquisition of Ridgeline, the Company will also acquire 100% of Meadow Creek, a 120 MW wind project currently under construction in Idaho, with a commercial operation date ("COD") expected in December 2012.
As part of the Acquisition, Atlantic Power will integrate Ridgeline's team of over 30 employees, which has a broad set of competencies essential for the successful identification, resource assessment, development (including permitting), construction and operation of large-scale renewable power projects. Ridgeline was responsible for developing Idaho's first utility scale wind project and has successfully developed three additional wind projects totaling 325 MW, including Rockland and Goshen North. As a part of Atlantic Power, this team will also assist the Company in its assessment and pursuit of other renewable acquisitions and in managing Atlantic Power's growing renewable energy portfolio.
The total cost of the Acquisition will be approximately $88 million, subject to working capital adjustments. The Company currently intends to fund the acquisition from the net proceeds of a planned issuance of convertible debt.
The Acquisition is subject to approval from the Federal Energy Regulatory Commission as well as other regulatory agencies. In addition to customary closing conditions, the Acquisition closing is subject to the Company obtaining financing and the Meadow Creek project achieving certain commercial operating milestones. The Acquisition is expected to close on or before December 31, 2012.