Innergex Renewable offers to buy Alterra for USD 857m

Wind turbine. Author: Frédéric BISSON. License: Creative Commons, Attribution 2.0 Generic.

October 31 (Renewables Now) - Canadian firm Innergex Renewable Energy Inc (TSE:INE) said Monday it has agreed to acquire compatriot clean energy company Alterra Power Corp (TSE:AXY) for CAD 1.1 billion (USD 857m/EUR 737m), including the assumption of debt.

The deal, subject to approval by the target’s shareholders and other customary closing conditions, will diversify Innergex’s portfolio both in terms of technology and geography. It will add geothermal and hydro power assets in Iceland to the company’s mix and wind and solar capacity in the US, as well as hydro and wind in Canada.

Overall, Alterra owns 364 MW net of renewable power generation capacity in operation and 118 MW under construction. It also has 4,350 MW of projects in the pipeline. With the acquisition, Innergex's net power generation capacity will rise to 1,606 MW, pro forma the transaction, including power plants under construction.

“This transaction is highly strategic and accretive for Innergex as we believe it significantly accelerates Innergex's growth profile with a path to reach a net installed capacity of over 2,000 MW by 2020,” commented Innergex CEO Michel Letellier.

Under the arrangement agreement signed by the two parties, Alterra shareholders will be able to choose whether to receive CAD 8.25 in cash or 0.5563 Innergex common shares per Alterra common share. The price in cash is a premium of about 58% to the target company’s 20-day volume weighted average price as of October 27.

The aggregate consideration paid to all of Alterra shareholders will be 25% cash and 75% Innergex stock. The Innergex shares issuable to Alterra shareholders will give the latter a pro forma ownership of roughly 19% of the combined company. One member of the Alterra board will join Innergex’s board.

The deal needs to be approved by at least 66⅔% of Alterra common shares. Subject to securing the needed regulatory approvals and key third-party consents, closing of the transaction is expected in the first quarter of 2018.

Alterra’s board unanimously supports the acquisition by Innergex and recommends that Alterra shareholders give the green light to the transaction. Directors and senior officers, including executive chairman Ross Beaty, and certain related entities, together having 32% of Alterra’s shares, have committed to vote all of their shares in Alterra in favour of the acquisition deal at a Special Meeting planned for December.

The acquisition is expected to be accretive to Innergex's distributable cash flow per share once Alterra's projects currently under construction and some of the advanced-stage prospective projects are completed.


Innergex said it has already structured the financing of the cash portion of the deal. It will get a five-year loan of CAD 150 million from La Caisse de dépôt et placement du Québec (la Caisse) at “a competitive interest rate” which is to be fixed at closing. La Caisse has a stake in Innergex.

“In addition to supporting a Québec company's international expansion, this transaction is in line with la Caisse's focus on increasing its investments in low carbon assets,” said Marc Cormier, executive VP Fixed Income at la Caisse.

In addition, Innergex said two leading Canadian banks have committed to backstop its existing credit facilities, to implement the transaction and to boost the size of its revolving credit line up to CAD 700 million from CAD 425 million currently.

BMO Capital Markets and McCarthy Tetrault LLP serve as financial advisor and legal counsel, respectively, to Innergex.

National Bank Financial Inc and Marathon Capital are financial advisors for Alterra, while Borden Ladner Gervais LLP is providing legal counsel.

(CAD 1 = USD 0.78/EUR 0.67)

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Browse all articles from Tsvetomira Tsanova

Tsvet has been following the development of the global renewable energy industry for seven years now. She's got a soft spot for emerging markets.

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