TransAlta Renewables Responds to Fortescue Metals Group’s Notice to Repurchase the Solomon Power Station
CALGARY, Alberta (August 1, 2017) – TransAlta Renewables Inc. (“TransAlta Renewables” or the “Company”) (TSX: RNW) received notice today that Fortescue Metals Group (“FMG”) intends to repurchase the Solomon Power Station from TEC Pipe Pty Ltd, a wholly owned subsidiary of TransAlta Corporation (TSX: TA; NYSE: TAC), a right that FMG has under the Power Purchase Arrangement. TransAlta Renewables has an economic interest in the cash flows of the 125 MW Solomon Power Station.
The gross proceeds from the repurchase are estimated to be approximately US$335 million. TransAlta Renewables will utilize the proceeds in part to repay the credit facility used to fund the development of the South Hedland power station, for other future growth opportunities, and for general corporate purposes. TransAlta Renewables reaffirms its Cash Available for Distribution (“CAFD”) guidance for 2017, and expects CAFD for 2018 to be in line with the market expectations.
“We will continue to work with FMG to transition the Solomon facilities to them over the next three months.” said Brett Gellner, President. “The cash proceeds will be used to reduce indebtedness, fund near-term growth, and provide greater financial flexibility for future growth opportunities.”
FMG intends to assume operation and control of the power station in November 2017. TransAlta Renewables will continue to receive capacity payments up until that time.
About TransAlta Renewables Inc.
TransAlta Renewables is among the largest of any publicly traded renewable independent power producers (“IPP”) in Canada. Our asset platform and economic interests are diversified in terms of geography, generation and counterparties and consist of interests in 18 wind facilities, 13 hydroelectric facilities, eight natural gas generation facilities and one natural gas pipeline, representing an ownership interest of 2,441 MW of net generating capacity, located in the provinces of British Columbia, Alberta, Ontario, Québec, New Brunswick, the State of Wyoming and the State of Western Australia. Our objectives are to (i) provide stable, consistent returns for investors through the ownership of, and investment in, highly contracted renewable and natural gas power generation and other infrastructure assets that provide stable cash flow primarily through long-term contracts with strong counterparties; (ii) pursue and capitalize on strategic growth opportunities in the renewable and natural gas power generation and other infrastructure sectors; (iii) maintain diversity in terms of geography, generation and counterparties; and (iv) pay out 80 to 85 per cent of cash available for distribution to the shareholders of the Company on an annual basis.
Cautionary Statement Regarding Forward Looking Information
This news release contains forward looking statements, including statements regarding the business and anticipated financial performance of the Company that are based on the Company’s current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements can be identified by terminology such as “plans”, “expects”, “proposed”, “will”, “anticipates”, “develop”, “continue”, and similar expressions suggesting future events or future performance. In particular, this news release contains forward-looking statements, including certain financial outlooks, pertaining to, without limitation, the following: the repurchase payment from FMG; the timing of the repurchase of the Solomon Power Station by FMG; the use of the proceeds from the repurchase payment by the Company to reduce indebtedness, fund near-term growth and provide financial flexibility; and the effect of the repurchase of the Solomon Power Station on the Company’s CAFD. These forward-looking statements are not historical facts but reflect the Company’s current expectations concerning future plans, actions and results. These statements are subject to a number of risks and uncertainties that could cause actual plans, actions and results to differ materially from current expectations including, but not limited to: changes in tax, and other laws and regulations; changes in economic and market conditions; changes in the use of the proceeds of the repurchase made at the discretion of the Board of Directors of the Company; and other risks and uncertainties discussed in the Company’s materials filed with the Canadian securities regulatory authorities from time to time and as also set forth in the Company’s Management Discussion and Analysis for the year ended December 31, 2016 and 2017 Annual Information Form. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company’s expectations only as of the date of this news release. The purpose of the forward-looking statements contained herein is to give the reader information about management’s current expectations and plans and readers are cautioned that such information may not be appropriate for other purposes. The Company disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Note: All financial figures are in Canadian dollars unless noted otherwise.
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