Brookfield makes CAD750 million investment in TransAlta

TransAlta Corporation has announced an investment by Brookfield Renewable Partners and its institutional partners. This investment will ensure TransAlta will transition to 100% clean energy by 2025.

Under the terms of the agreement, Brookfield will invest CAD750 million (US$556 million) in TransAlta through the purchase of exchangeable securities, which will be convertible into an equity ownership interest in TransAlta’s Alberta Hydro Assets in the future at a value based on a multiple of the future Hydro Assets’ EBITDA. In addition, Brookfield has committed to purchase TransAlta common shares on the open market to increase its share ownership in TransAlta to 9%.

The Investment will occur in two tranches, US$350 million at closing, expected in May 2019, in the form of Exchangeable Debentures, and US$400 million at a second closing in October 2020 in the form of Redeemable Preferred Shares (together, the Exchangeable Securities). Both securities will have an annual coupon rate of 7.0% and will be convertible into an equity interest in an entity holding the hydro assets after December 31, 2024.

TransAlta and Brookfield intend to work together to complete TransAlta’s transition to clean energy, maximize the value of the Hydro Assets, and create long-term shareholder value.