Atlantic Power To Sell 521 MW Of Wind Generation Projects To TerraForm Power

(RTTNews) - Atlantic Power Corporation (AT, ATP.TO) announced an agreement to sell its wind generation projects to TerraForm Power, Inc. (TERP) for cash proceeds of about $350 million, subject to certain adjustments.

The company said these operating wind projects, representing 521 MW net ownership, are indirectly owned by its wholly-owned direct subsidiary, Atlantic Power Transmission, Inc., and will be acquired by TerraForm AP Acquisition Holdings, LLC, an indirect subsidiary of TerraForm.

These five wind farms are located in Idaho and Oklahoma will be transferred to TerraForm subject to the Purchase Agreement.

In addition to the receipt of approximately $350 million in cash proceeds, the company will deconsolidate approximately $249 million of project debt and about $239 million of non-controlling interest related to tax equity interests at Canadian Hills and the minority ownership interests at Rockland and Canadian Hills. On that basis, the total enterprise value or EV of the transaction is expected to be approximately $837 million, net of estimated reserves and other cash at the projects at closing.

Net proceeds to the Company from the transaction are expected to be approximately $338 million after estimated transaction fees and transaction-related taxes.  The Company's 2015 guidance provided on February 26, 2015 did not assume any potential asset sales.  The Company expects to update this guidance for the sale of its wind assets when it reports results for the first quarter of 2015 after the market closes on May 7, 2015.

In connection with the Purchase Agreement, the Company also entered into a Guaranty Agreement, under which it has agreed to guarantee the full and prompt payment of all payment obligations of the company under the Purchase Agreement.

TerraForm has secured fully committed bridge financing of up to $515 million to support the transaction. The company intends to fund the acquisition with a drop down warehouse facility in partnership with third party equity investors and its sponsor SunEdison. This transaction would provide TerraForm with increased visibility to long-term dividend growth from contracted operating assets.