Canadian renewable power producer Innergex Renewable Energy Inc (TSE:INE) and a unit of Hydro-Quebec have agreed to jointly acquire the Curtis Palmer run-of-river hydroelectric portfolio in New York for at least USD 310 million (EUR 265.3m).
Under the terms of the deal, Innergex and HQI US Holding LLC will each acquire a 50% stake in the portfolio from Atlantic Power. In addition to the upfront cash consideration, they could provide an earn-out provision based on the evolution of NYISO market pricing, the announcement says.
The portfolio in question comprises the 12-MW Curtis Mills and 48-MW Palmer Falls facilities in Corinth. They currently operate under a power purchase agreement (PPA) for energy, RECs and capacity with Niagara Mohawk Power Corporation. The contract will expire on December 31, 2027, or when a cumulative 10,000 GWh of electricity is delivered, which is expected to happen in 2026. After that, the plants will sell their output in the NYISO market.
The Curtis Palmer bundle is estimated to generate average annual adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of USD 42.5 million and average annual free cash flow of USD 39.5 million through the end of the PPA, without debt financing on a 100% basis.
The acquisition, which is the first under the strategic alliance between Innergex and Hydro-Quebec announced in February 2020, is seen to close in the final quarter of the year, subject to regulatory clearance. Innergex intends to fund its portion of the transaction with the proceeds from a newly-announced bought deal equity financing of common shares and a concurrent private placement of common shares to Hydro-Quebec. The concurrent equity offering is seen to raise CAD 175 million (USD 135.5m/EUR 116m), while the private placement should bring in a further CAD 43.5 million.
(USD 1.0 = EUR 0.857)
(CAD 1.0 = USD 0.774/EUR 0.663)
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