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KKR to buy into 1.2-GW renewables portfolio by NextEra

Wind turbines at work. Author: Nick Cross. License: Creative Commons, Attribution-NoDerivs 2.0 Generic.

March 4 (Renewables Now) - NextEra Energy Partners LP (NYSE:NEP) announced today it will buy interests in a 611-MW portfolio of contracted US wind and solar projects for a total of USD 1.02 billion (EUR 899m) and then create a new, larger platform with participation from KKR (NYSE:KKR).

The Juno Beach, Florida-based limited partnership that was formed by NextEra Energy Inc (NYSE:NEE) has agreed to acquire three wind and three solar assets in various US states from a subsidiary of NextEra Energy Resources LLC. More details are available in the table below.

Interest being acquired Name Capacity Location
100% Ashtabula II Wind Energy Center 120 MW North Dakota
49.99% Marshall Solar Energy Center 62.25 MW Minnesota
49.99% Roswell Solar Energy Center 70 MW New Mexico
49.99% Silver State South Solar Energy Center 250 MW Nevada
100% Story County II Wind Energy Center 150 MW Iowa
100% White Oak Wind Energy Center 150 MW Illinois

This portfolio has a cash available for distribution (CAFD) weighted remaining contract life of some 15 years and an average credit rating of A/A2. The assets being acquired are seen to contribute adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of between USD 100 million and USD 115 million, as well as CAFD in the range of USD 97 million-107 million, each on a five-year average annual run-rate basis, starting on December 31, 2019.

The transaction is subject to regulatory clearance and is expected to close in the second quarter of the year.

Right after completing the purchases, NextEra Energy Partners plans to bundle the newly acquired assets alongside four freshly recapitalised wind farms into a new portfolio. Then KKR's third Global Infrastructure Investors Fund will pay USD 900 million in exchange for an equity interest in that portfolio.

The existing wind farms that will be contributed include the 99-MW Perrin Ranch Wind Energy Center in Arizona, the 120-MW Tuscola Bay Wind Energy Center in Michigan, the 62-MW Ashtabula III Wind Energy Center in North Dakota, and the 300-MW Stateline Holdings Wind Energy Center in both Oregon and Washington. At present, there is USD 220 million of existing non-recourse project debt outstanding on these assets and it will be recapitalised using proceeds from the KKR deal. The move is expected to increase by about USD 25 million the five-year average annual CAFD from these wind farms.

"This combined transaction completes NextEra Energy Partners' 2019 growth objectives and is expected to enable the portfolio to bridge any cash distribution restrictions resulting from the ongoing PG&E bankruptcy,” commented Jim Robo, chairman and CEO. He added that the partnership has now extended the earliest date on which it might need to sell common equity by one year through 2021. During this time, it can resort only to modest issuances under an at-the-market programme.

(USD 1.0 = EUR 0.882)

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Browse all articles from Ivan Shumkov

Ivan is the mergers and acquisitions expert in Renewables Now with a passion for big deals and ambitious capacity plans.

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