NextEra Energy Partners, or NEP, has exercised its option to acquire 100% of the minority stake in a 1,388-MW solar and wind portfolio for a total consideration of approximately $885 million.
The transaction is in accordance with a 2018 convertible equity portfolio financing with a fund managed by BlackRock Inc.'s Global Energy & Power Infrastructure II Advisors LLC.
In September 2018, NEP agreed to acquire the portfolio from NextEra Energy Resources LLC. The portfolio consists of the 20-MW Mountain View Solar Plant in Clark County, Nev., and the following wind projects: the 120-MW Bluff Point facility in Jay and Randolph counties, Ind.; the 98-MW Breckinridge project in Garfield County, Okla.; the 150-MW Carousel facility in Kit Carson County, Colo.; the 90-MW Cottonwood project in Webster County, Neb.; the 46-MW Golden Hills North facility in Alameda County, Calif.; the 200-MW Javelina II facility in Webb County, Texas; the 206-MW Kingman I and II facilities in Kingman County, Kan.; the 208-MW Ninnescah facility in Pratt, Kingman and Sedgwick counties, Kan.; and the 250-MW Rush Springs facility in Grady and Stephens counties, Okla.
Under the initial transaction, the fund paid $750 million in cash in exchange for an equity interest in the entity that would own the renewables portfolio that was being acquired by NEP. The agreement provided NEP with the right to buy out the fund's equity interest for a fixed payment, resulting in a pretax return to the fund of 7.75%.
"Relative to issuing the same amount of common equity in 2018 to fund our growth needs, this innovative financing has now allowed us to issue more than 50% fewer units while retaining the more than 80% increase in the NextEra Energy Partners unit price over the last three years," said NEP Chairman and CEO Jim Robo. "Our decision to buy out of the remaining equity interest in this portfolio of high-quality, contracted renewable energy assets is reflective of the strong performance of the underlying assets in the portfolio and attractiveness of its cash flows and further supports execution of NextEra Energy Partners' long-term growth objectives."
The $885 million payment for the latest buyout will consist of approximately 7.25 million newly issued NextEra Energy Partners common units and approximately $265 million in cash. NEP expects the buyout to close on Nov. 19.
NEP will fund the cash portion of the buyout with available capacity under a credit facility, with plans to issue project-level debt in the near term.
NEP was formed by NextEra Energy Inc., which also is the parent of NextEra Energy Resources.
