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AltaGas selling stake in 3 hydro facilities for C$922M to fund WGL acquisition

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AltaGas selling stake in 3 hydro facilities for C$922M to fund WGL acquisition

AltaGas Ltd. is selling an indirect 35% stake in three Northwest British Columbia hydroelectric facilities for C$922 million under a definitive agreement with a joint venture owned by Manulife Financial Corp. and Axium Infrastructure Inc.

The deal will help fund AltaGas' C$8.4 billion acquisition of WGL Holdings Inc., representing almost half of the approximate C$2 billion in asset sales to be raised, according to a June 13 news release. Proceeds from the sale of the stake in the facilities, along with securities offerings, are part of AltaGas' plans to repay a US$3 billion bridge facility for the WGL acquisition.

"We continue to be very confident in completing our long-term financing plan in the next several months, and with the sale of the Facilities and certain anticipated non-core assets, we expect over half of the [C$2] billion in targeted asset sales to be completed by mid-summer," AltaGas President and CEO David Harris said. "We also continue to advance discussions for the monetization of certain additional assets, which we expect to conclude in the third quarter."

The purchase price for the hydroelectric facilities implies a 2017 EBITDA multiple of approximately 27 times and total value of over C$2.6 billion on a 100% basis, AltaGas said. The hydroelectric facilities in the deal are the 195-MW Forrest Kerr, 16-MW Volcano Creek and the 66-MW McLymont Creek, which all have 60-year electricity purchase agreements with BC Hydro and Power Authority.

AltaGas will remain the majority holder of the hydro facilities. The deal, subject to closing adjustments and customary closing conditions, is expected to close prior to the end of June.

TD Securities Inc., J.P. Morgan and RBC Capital Markets are acting as joint financial advisers to AltaGas in connection with this transaction.

As for next steps in the WGL acquisition, AltaGas expects the District of Columbia Public Service Commission to issue a final order during the week of June 25. The PSC approval is the final regulatory hurdle for the deal, which is expected to close by June 30.