February 6 (Renewables Now) - Canadian electricity producer Hydro-Quebec has acquired a 19.9% stake in Innergex Renewable Energy Inc (TSE:INE) through a CAD-661-million (USD 498m/EUR 452m) investment that accompanies a newly-agreed strategic alliance between the two.
Innergex has issued 34.6 million common shares to its new strategic investor pursuant to a private placement at a price of CAD 19.08 apiece, which is a 5% premium to the 30-day volume weighted average price as at February 5. Hydro Quebec has agreed not to increase its shareholding in the renewable energy producer above 19.9% for a period of 24 months.
Almost half of the proceeds from this investment, or CAD 275 million to be exact, will be set aside for Innergex to bankroll the potential purchase of two operating plants in the US and Chile. The company said it is currently holding exclusive talks to acquire the specific assets and hopes to sign definitive agreements by the end of the quarter.
About CAD 50 million of the private placement proceeds will go towards financing the further development of the 200-MW Hillcrest solar photovoltaic (PV) project in Brown County, Ohio. Innergex said it anticipates securing debt financing for this project early in the second quarter of 2020. Construction work started recently and the plant is seen to be commissioned in the final quarter of the year. A long-term power purchase agreement (PPA) is already in place.
At the same time, Innergex plans to use CAD 70 million of the proceeds to fund its previous order for 125 MW of PV panels, which the company will deploy at existing projects. Innergex purchased those components to enable some 650 MW of projects to fully qualify for the 30% US federal Investment Tax Credit (ITC), it explained.
The remaining proceeds from the private placement will be allocated to fund working capital requirements and pay back outstanding debts.
As per the new long-term renewable energy partnership between the two companies, it will facilitate investments in the areas of wind and solar projects with battery storage or transmission, distributed generation, off-grid renewable energy networks, among others. The companies will present to each other investment opportunities in the targeted sectors outside of Quebec for an initial period of three years.
Hydro-Quebec has made an initial commitment of CAD-500-million to the strategic alliance.
“We are convinced that the combination of HydroQuébec’s know-how in electricity transmission, distributed generation and battery storage with Innergex’s expertise in wind, solar and small hydro project development internationally will yield attractive growth opportunities through the Strategic Alliance,” commented Michel Letellier, president and CEO of Innergex.
(CAD 1.0 = USD 0.753/EUR 0.684)