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Pattern Energy to acquire interests in 2 operational wind farms

Pattern Energy Group Inc. agreed to acquire interests in two operational wind farms for US$293 million, plus the assumption of the related project finance loans.

"These acquisitions increase our portfolio by 13% to 4.4 gigawatts of operational capacity across 28 renewable energy facilities," said Pattern Energy Group CEO Mike Garland in an Oct. 11 statement.

The company committed to pay C$242.4 million at closing to acquire Pattern Energy Group LP.'s 50% interest in the 300-MW Henvey Inlet wind farm in Ontario. The company estimates an economic cost of C$252 million, following purchase price adjustments at term conversion.

As part of the deal, Pattern Energy is also buying from Pattern Energy Group LP a C$97 million loan outstanding with Nigig Power Corp., which owns the remaining 50% interest in Henvey Inlet. Pattern Energy will receive all distributions from Nigig Power's ownership interest until the loan is repaid.

Henvey Inlet started operating in September and has a 20-year power purchase agreement with the Independent Electricity System Operator. The deal is expected to close in the next 15 days.

Separately, Pattern Energy acquired the 51% class B membership interest of Pattern Energy Group 2 LP in the 220-MW Grady Wind Energy Center in New Mexico for approximately US$99.5 million. This represents an interest of 101 MW.

The remaining 49% class B interest will be acquired by the Public Sector Pension Investment Board.

Grady Wind started operations in the third quarter of 2019. It has a 25-year power contract with the Sacramento Municipal Utility District.

To help fund the acquisitions, Pattern Energy plans to raise US$260 million from a private placement of series A perpetual preferred stock.

The private placement to certain institutional investors, led by CBRE Caledon, is expected to close by Oct. 25, subject to customary closing conditions.

The preferred stock will pay cumulative cash dividends at an annual rate of 5.625%, based on the US$25 liquidation preference. The base dividend increases by 0.5% every year starting on the third anniversary of issuance to a maximum of four escalations, or 7.625%.