Innergex signs agreement for acquisition of 62% stake in 590 MW wind portfolio

Innergex Renewable Energy Inc. has announced that it has signed a final agreement to acquire TransCanada’s 62% interest in five wind farms in the Gaspé peninsula in Quebec, known as Baie-des-Sables, Carleton, Gros-Morne, L’Anse-à-Valleau and Montagne Sèche, for total consideration of approximately CAD630 million (US$484.5 million).

The agreement also covers TransCanada’s 50% interest in the operating entities of the wind farms, Innergex currently owns the remaining interests in both the wind farms and operating entities.

With an aggregated gross installed capacity of 590 MW, the wind farms' expected long-term average annual power generation is approximately 1,780 GWh, enough to power about 80,900 Quebec households. All of the electricity produced by these wind farms is sold under existing power purchase agreements at fixed prices of which a portion is adjusted according to inflation indexes, for initial terms of 20 years, ending between 2026 and 2032, with Hydro-Québec.

Innergex has obtained commitments from two leading Canadian banks, BMO Capital Markets and TD Securities, to backstop its existing credit facilities and to provide two short-term credit facilities to cover the purchase price and transaction costs in its entirety. The financing has been structured to allow Innergex to maintain a solid investment-grade rating.

A first one-year term credit facility of CAD400 million (US$307.6 million) non-recourse to Innergex will allow the Corporation to put in place a non-recourse long-term financing at the project level based on the useful life of the assets. The 62% interest being acquired is currently debt-free.

A second one-year term credit facility of CAD240 million (US$184.6 million) will be reimbursed through the strategic divestment of a minority interest in the wind farms and of other assets which could further benefit Innergex. The company intends to find a partner to acquire, in a structured transaction, a stake in the wind farms which will increase shareholders’ return while optimizing the investment structure. Innergex will keep 100% ownership interest in the operating entities.

The deal is expected to close in the fourth quarter of 2018, subject to regulatory approvals, key third party consents and other customary closing conditions. TD Securities acted as financial advisor and McCarthy Tétrault LLP acted as legal counsel to Innergex in respect of the transaction.