TransAlta Renewables Inc. Declares 5% Increase in Dividend and Announces the Closing of its Investment in Three Canadian Projects Owned by TransAlta Corporation
CALGARY, Alberta (January 6, 2016) – TransAlta Renewables Inc. (“TransAlta Renewables” or the “Company”) (TSX: RNW) announced the closing today of its investment in TransAlta Corporation’s (“TransAlta”) Sarnia Cogeneration Plant, Le Nordais wind farm and Ragged Chute hydro facility (the “Portfolio”) for a combined value of $540 million (the “Transaction”). The Portfolio consists of approximately 611 MW of highly contracted power generation assets located in Ontario and Quebec. The Transaction was originally announced on November 23, 2015. The shareholders of the Company (other than TransAlta and its related parties) approved the Transaction at a Special Meeting of Shareholders (the “Meeting”) held on January 6, 2016 in Calgary, Alberta. The Company’s investment consists of the acquisition of securities which track the net distributable profits of the generating facilities.
“This Transaction represents another step in the growth of the Company through the acquisition of stable cash flows that further support a growing dividend and provide incremental value to our shareholders,” said Brett Gellner, President of TransAlta Renewables. “We will continue to look for opportunities to grow the Company in 2016 but will remain disciplined in terms of returns and risk profile.”
In conjunction with the closing of the Transaction, the Board of Directors of the Company declared a dividend increase of 5% (an annualized dividend increase of $0.04 per common share) effective February 29, 2016 to holders of record at the close of business on February 1, 2016, resulting in cash dividends of $0.07333 per common share payable on February 29, 2016.
Pursuant to the Transaction, the Company completed the issuance of an aggregate of 17,692,750 subscription receipts (“Subscription Receipts”) at a price of $9.75 per Subscription Receipt for gross proceeds to TransAlta Renewables of approximately $172.5 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 of the Company (a “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 $0.07 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 January 4, 2016. The Dividend Equivalent Payment will be paid on January 29, 2016. 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 commencement of trading on January 7, 2016, will remain halted for the duration of the trading session and will be de-listed after the market closes.
In addition to cash proceeds of $172.5 million paid to TransAlta, TransAlta Renewables also issued 15.6 million Common Shares of TransAlta Renewables and $215 million in convertible unsecured subordinated debentures to TransAlta as consideration pursuant to the Transaction. Following close of the Transaction, TransAlta owns approximately 134.0 million Common Shares and approximately 26.1 million Class B Shares of TransAlta Renewables, representing approximately 64% of the outstanding voting shares of TransAlta Renewables.
All currency is expressed in Canadian dollars except where otherwise noted.
November 23, 2015- TransAlta Renewables agrees to invest $540 million in three Canadian projects owned by TransAlta and announces dividend increase of approximately 5%
This news release contains forward-looking statements within the meaning of applicable securities laws, including statements regarding the business and anticipated financial performance of TransAlta Renewables. All forward-looking statements are based on the Company’s beliefs and assumptions based on information available at the time the assumptions were made, management’s experience and perception of historical trends, current conditions and expected future developments, and other factors deemed appropriate in the circumstances. These statements are not guarantees of the Company’s future performance and are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward looking statements. In particular, this news release contains forward-looking statements pertaining to, among other things: expectations regarding the Transaction (as defined herein), including the effect, results and perceived benefits of the Transaction; expectations and plans for future growth; the conversion of the Subscription Receipts into Common Shares of the Company; the dividend increase and the payment of such dividends; the payment of the Dividend Equivalent Payment and the timing thereof and the timing associated with delisting the Subscription Receipts on the Toronto Stock Exchange. These forward-looking statements are subject to risks and uncertainties including risks associated with economic and competitive conditions. 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.
About TransAlta Renewables Inc.
TransAlta Renewables owns 16 wind and 12 hydroelectric power generation facilities, and holds economic interests in TransAlta’s Sarnia Cogeneration Plant, Le Nordais Wind Farm, Ragged Chute Hydro Facility, Wyoming Wind Farm and Australian Assets, having an aggregate installed generating capacity of 2,467 MW, in which it holds a net ownership interest of 2,291 MW. TransAlta Renewables’ economic interest in the Australian Assets consist of 425 MW of power generation from six operating assets, which are operational and contracted under long-term contracts, and the 150 MW 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.
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