Transaction unlocks value in AQN as a regulated utility
Proceeds will be used to recapitalize the balance sheet and position the company for future growth
The Company will host a conference call to discuss second quarter results on 8:30 a.m. ET
OAKVILLE, ON, 9 August 2024 /PRNewswire/ – Algonquin Power & Utilities Corp. (TSX/NYSE: AQN) (“AQN” or the “Company”) today announced that it has entered into a definitive agreement to sell its renewable energy business (excluding hydroelectric) to a wholly owned subsidiary of LS Power (the “Purchaser”) for an aggregate consideration of up to 2.5 billion US dollars. All amounts are in United States Dollar.
“We are pleased to announce this important transaction with LS Power, which is the result of a highly competitive strategic sales process,” said Chris HuskilsonCEO of AQN. “This important milestone, together with our previously announced agreement to support the sale of our Atlantica shares, is the fulfillment of our plan to transform AQN into a pure-play regulated utility, optimize our regulated business activities, strengthen our balance sheet and improve the quality of our earnings. We are confident that our path to a pure-play regulated utility supports our goal of creating long-term value for our customers and shareholders.”
Mr Huskilson concluded: “The renewable energy business is a compelling and competitive business with great scale and strong assets. This strength is a direct result of the hard work and dedication of our employees over the past three-plus decades and I would like to thank them for being an integral part of this effort. AQN and LS Power will work closely together to ensure a smooth transition.”
Transaction details, approvals and timing of completion
To 9 August 2024the Company entered into an agreement to sell the Renewable Energy business (excluding hydropower) to the Buyer for a total consideration of up to 2.5 billion US dollars excluding debts, consisting of 2.28 billion US dollars in cash at closing (subject to certain closing adjustments) and up to 220 million US dollars in cash pursuant to an earn-out agreement relating to certain wind power assets (the “Earn Out”). The purchase price represents compelling value compared to other prior transactions. The Transaction was unanimously approved by the Company’s Board of Directors.
The sale is subject to the satisfaction of customary closing conditions, including approval by the U.S. Federal Energy Regulatory Commission and approval under applicable competition laws. The Company expects the transaction to close in the fourth quarter of 2024 or the first quarter of 2025 and will generate estimated cash proceeds of approximately $100,000. 1.6 billion US dollars (without earn out) after repayment of the construction financing and less taxes, transaction fees and other closing adjustments.
JP Morgan acted as exclusive financial advisor to AQN in connection with the transaction.
Second quarter financial results
In a separate press release, the company today announced financial results for the second quarter, June 30, 2024The conference call on the results will take place on 8:30 a.m. Eastern Time on FridayAugust 9, 2024, by Chief Executive Officer, Chris Huskilsonand Chief Financial Officer, Darren Myers.
About Algonquin Power & Utilities Corp. and Liberty
Algonquin Power & Utilities Corp., Liberty’s parent company, is a diversified international energy company with approximately 18 billion US dollars of total assets. AQN is committed to providing safe, reliable, cost-effective and sustainable energy and water solutions through its portfolio of investments in the generation, transmission and distribution of utilities to over one million customer connections, mostly in the United States And Canada. In addition, AQN owns, operates and/or has net interests in over 4 GW of installed renewable energy capacity. AQN’s common shares, Series A preferred shares and Series D preferred shares are listed on the Toronto Stock Exchange under the symbols AQN, AQN.PR.A and AQN.PR.D, respectively. AQN’s common shares and Series 2019-A subordinated notes are listed on the New York Stock Exchange under the symbols AQN and AQNB, respectively.
Visit AQN at www.algonquinpower.com and follow us on X.com @AQN_Utilities.
Caution regarding forward-looking information
Certain statements contained in this press release constitute “forward-looking information” within the meaning of applicable securities laws in the provinces and territories of Canada and the respective policies, regulations and rules thereunder, and “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”). The words “will” and “expects” (and grammatical variations of these terms) and similar expressions are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Certain forward-looking statements in this press release include, but are not limited to, statements regarding the sale of the Company’s non-hydro renewable energy business, including the expected timing, proceeds and impact on the Company. These statements are based on factors or assumptions applied in drawing a conclusion or making a forecast or projection, including assumptions based on historical trends, current conditions and expected future developments. Because forward-looking statements address future events and conditions, by their nature they require assumptions and involve inherent risks and uncertainties. AQN cautions that, while these risks and uncertainties are considered reasonable in the circumstances, actual results may differ materially from the expectations set forth in the forward-looking statements. There can be no assurance that the sale of the Company’s renewable energy business will be completed on the terms currently contemplated or otherwise, or that the intended benefits and objectives of such a transaction will be achieved. The forward-looking statements contained herein are intended to provide a better understanding of the Company and its business, operations, risks, financial performance, financial condition and cash flows at the periods indicated and to provide information about management’s current expectations and plans for the future. This information may not be appropriate for other purposes. Material risk factors and assumptions include those set forth in AQN’s Annual Information Form and Annual Management’s Discussion and Analysis for the year ended December 31, 2018. December 31, 2023and Management Discussion and Analysis for the three and six months ended June 30, 2024all of which are or will be available on SEDAR+ and EDGAR. Given these risks, undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof. Except as expressly required by law, AQN undertakes no obligation to update any forward-looking statements to reflect new information, current or otherwise.
SOURCE: Algonquin Power & Utilities Corp.
