8% increase in consolidated long-term average annual production to 2,592 GWh
7% increase in net installed capacity to 617 MW
Purchase price of $28.6M paid cash, plus assumption of all project-level debt
Innergex Renewable Energy Inc. (TSX: INE) (“Innergex” or the “Corporation”) has completed the previously announced acquisition from Hydromega Group of Companies
(“Hydromega”) of the Magpie run-of-river hydroelectric facility located in Quebec, Canada.
Summary of asset acquired
Magpie is a 40.6 MW run-of-river hydroelectric facility located on Crown lands in the Minganie Regional County Municipality, in Northeastern Quebec. This facility began commercial operations in 2007, and all of the electricity it produces is sold to Hydro-Québec under a 25-year fixed-price power purchase agreement, which provides for an annual increase to the selling price of 1%. Magpie has an average annual production of approximately 185,000 MWh, enough to power almost 11,000 Quebec households each year.
The addition of this facility increases the Corporation’s net installed capacity by 7% to 617 MW and its consolidated long-term average annual production by almost 8% to 2,592 GWh. Magpie is expected to generate annualized revenues of approximately $10.6 million in 2013 (including payments received under the ecoENERGY program) and Adjusted EBITDA of approximately $8.2 million.
“We are very pleased with the acquisition of Magpie, which further strengthens our presence in hydro with a new, long-term facility, and further diversifies our hydro operations”, states Mr. Michel Letellier, President and Chief Executive Officer of the Corporation. “We look forward to developing our relationship with a new partner, the Minganie Regional County Municipality”, adds Mr. Letellier.
Terms of the acquisition
The Corporation has acquired 99.999% of the common units of the facility. However, the Minganie Regional County Municipality holds 30% of the voting units, as well as a convertible debenture with a nominal value of $3.0 million, which carries an annual interest payment of approximately $465,000, and a $2.0 million non-interest bearing debenture repayable over the next five years. The convertible debenture entitles the municipality to a 30% interest in the facility upon conversion of the debenture on January 1, 2025; once the non-interest bearing debenture has been repaid, the Corporation will have the option to trigger the conversion of this debenture at any time prior to this date.
The Corporation has paid the final purchase price of $28.6 million in cash and assumes project-level debt totalling $55.4 million, which includes $50.4 million in non-recourse financing with blended monthly payments of approximately $406,000 until 2017, and approximately $379,000 thereafter until 2031, for a blended fixed interest rate of 6.35%, as well as the two debentures held by the Minganie Regional County Municipality mentioned above. These debts will be adjusted to fair value upon consolidation by the Corporation. Net cash flows from the facility which have been accruing to the Corporation since August 31, 2012 are included in the cash balance transferred to the Corporation upon closing.
Letter of intent and deposit agreement
Concurrent with the announcement of the Magpie acquisition in July 2012, the Corporation signed an exclusive letter of intent with Hydromega to acquire its ownership interest in several other assets, including one 30.5 MW hydroelectric facility in Quebec, four hydroelectric projects under construction totaling 22.0 MW in Ontario, and one 10.0 MW hydroelectric project under development, also in Ontario.
For more information on: Innergex