TransAlta Renewables Inc. Declares 9% Increase in Dividend and Closing of its Investment in TransAlta Corporation’s Western Australian Portfolio
CALGARY, ALberta (May 7, 2015) – TransAlta Renewables Inc. (“TransAlta Renewables” or the “Company”) (TSX: RNW) announced the closing today of its investment in an economic interest based on the cash flows of TransAlta Corporation’s Australian assets (the “Transaction”). The portfolio, held by TransAlta Energy (Australia) Pty Ltd, consists of 575 MW of power generation from six operating assets and the South Hedland project currently under construction, as well as the recently commissioned 270 km gas pipeline. The combined value of the Transaction is approximately $1.78 billion. The Transaction was originally announced on March 23, 2015.
The shareholders of the Company (other than TransAlta Corporation and its related parties) approved the Transaction at a Special Meeting of Shareholders (the “Meeting”) held on May 7, 2015 in Calgary, Alberta. The shareholders of the Company also approved an amendment to the Company’s articles to create a new class of common shares (the “Class B Shares”) designated as “Class B Shares”.
“We are very pleased to finalize the Transaction as it adds significant scale and diversity to the Company. It also allows us to immediately increase the dividend by 9% to an annualized rate of $0.84 per share, and positions us to increase the dividend again in 2017 once the South Hedland project is complete,” said Brett Gellner, President of TransAlta Renewables. “Going forward, we are also well positioned to continue to grow in Australia, acquire other assets from our sponsor and majority owner, TransAlta Corporation, and pursue third party acquisitions.”
In conjunction with the closing of the Transaction, the Board of Directors of the Company declared dividends of $0.07 per common share payable on each of June 30, 2015, July 31, 2015 and August 31, 2015 to shareholders of record at the close of business on June 1, 2015, July 2, 2015 and August 4, 2015 respectively, resulting in an annualized dividend amount of $0.84 per share.
Pursuant to the Transaction, the Company completed the issuance of an aggregate of 17,858,423 subscription receipts (“Subscription Receipts”) at a price of $12.65 per Subscription Receipt for gross proceeds to TransAlta Renewables of approximately $225.9 million (“the Offering”) which were used to finance a portion of the Transaction. With the closing of the Transaction, each holder of Subscription Receipts will receive, without payment of additional consideration or further action, one Common Share for each Subscription Receipt held. The holders of Subscription Receipts, immediately prior to the time of conversion into Common Shares, will also receive a payment of $0.06416 per Subscription Receipt payable in cash, less any applicable withholding taxes (the “Dividend Equivalent Payment”), representing the dividend that was declared and payable to shareholders of record at the close of business on May 1, 2015. The Dividend Equivalent Payment will be paid on May 29, 2015. Holders of Subscription Receipts are not required to take any action in order to receive their Common Shares and the Dividend Equivalent Payment. The Company expects that trading in the Subscription Receipts on the Toronto Stock Exchange will be halted prior to the opening of the market on May 8, 2015, will remain halted for the duration of the trading session and will be de-listed after the market closes.
TransAlta received net cash proceeds of $216.9 million as well as approximately $1,067 million as consideration pursuant to the Transaction through a combination of Common Shares and Class B Shares. The Class B Shares provide voting rights equivalent to the Common Shares, are non-dividend paying and will convert into Common Shares once the South Hedland project is fully completed and commissioned. The number of Common Shares which TransAlta will receive on the conversion of the Class B Shares will be adjusted to reflect the actual amount funded by TransAlta Renewables for the construction and commissioning of the South Hedland project relative to the budgeted costs. TransAlta Renewables will fund these costs, estimated at approximately $490 million, through a combination of internally generated cash flow and borrowings under a credit facility. TransAlta Corporation owns approximately 138.9 Common Shares and approximately 26.1 million Class B Shares of TransAlta Renewables, representing approximately 76% of the outstanding voting shares of TransAlta Renewables.
All currency is expressed in Canadian dollars except where otherwise noted.
March 23, 2015
About TransAlta Renewables Inc.
TransAlta Renewables owns 29 wind and hydroelectric power generation facilities, including our economic interest in Wyoming Wind, having an aggregate installed generating capacity of 1,376 MW, in which it holds a net ownership interest of approximately 1,255 MW. As a result of the Transaction, TransAlta Renewables also acquired an economic interest based on the cash flows derived from certain Australian assets consisting of 575 MW of power generation from six operating assets and the South Hedland project that is currently under construction, as well as the recently commissioned 270 km gas pipeline. TransAlta Renewables’ power generating capacity is among the largest of any publicly-traded renewable independent power producer (“IPP”) in Canada, with more wind power generating capacity than any other Canadian publicly-traded IPP. TransAlta Renewables’ strategy is focused on the efficient operation of its portfolio of assets and expanding its asset base through the acquisition of high-quality contracted renewable and natural gas power generation facilities and other infrastructure assets. Our objectives are to (i) create stable, consistent returns for investors through the ownership of contracted renewable and, potentially, natural gas power generation and other infrastructure assets that provide stable cash flow through long-term contracts with creditworthy counterparties, including TransAlta Corporation; (ii) pursue and capitalize on strategic growth opportunities in the renewable and, natural gas power generation and other infrastructure sectors; and (iii) pay out a portion of cash available for distribution to the shareholders of the Company on a monthly basis.
Cautionary Statement Regarding Forward Looking Information
This news release may contain forward looking statements, including statements regarding the business and anticipated financial performance of the Company. 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, environmental, and other laws and regulations; competitive factors in the renewable power industry; operational breakdowns, failures, or other disruptions; changes in economic and market conditions; expectations regarding the Transaction (as defined herein), including the effect, results and perceived benefits of the Transaction, the expected increase to the dividend following the South Hedland project being fully commissioned; the timing and completion and commissioning of projects under development, including the South Hedland project and the costs thereof; expectations and plans for future growth, including expansion into existing and new markets and other forms of power generation and acquisition activities, including future growth in Australia, additional investment opportunities with TransAlta Corporation, and by acquiring assets from third parties; the timing associated with delisting the Subscription Receipts on the Toronto Stock Exchange; 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 and 2015 Annual Information Form for the year ended Dec. 31, 2014, which are available on SEDAR under the profile of the company at www.sedar.com. 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 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.
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