Pattern Energy Group Inc. announced a deal May 24 to sell its interests in the 115-MW El Arrayán wind project in Chile for $67.0 million to affiliates of private equity firm Arroyo Energy Investment Partners LLC.
Pattern's operations in Chile primarily consist of its ownership of an 81-MW interest in the El Arrayán project. The wind farm entered commercial operation in 2014 and sells nearly 70% of its capacity to Minera Los Pelambres under a long-term fixed-for-floating hedge, according to a news release. It is roughly 400 kilometers north of Santiago on the Chilean coast.
The $67 million cash consideration represents a cash available for distribution, or CAFD, multiple greater than the CAFD multiple on projects Pattern said it has acquired in the past. Pattern also expects to eliminate more than $1 million in annual overhead related to managing the business in Chile.
"The price represents a 30[%] uplift over El Arrayán Wind's contribution to the company's current value," Pattern Energy CEO Mike Garland said. "[T]he primary reason for the sale was strategic. Chile was a good candidate for sale as it was one of the higher cost operations in our fleet because of the distance from the rest of our operations and the different legal, tax and regulatory environments. The proceeds of the sale will go to either make further accretive investments, pay down debt, buy back stock or other corporate purposes."
The marketing of the sale of El Arrayán occurred while Pattern Energy Group LP was marketing the sale of its Conejo Solar project, also located in Chile and which Arroyo is also acquiring. As a result, the conflicts committee of Pattern's board reviewed and approved the El Arrayán deal, according to the news release, and Pattern's waiver of right-of-first-offer rights related to Conejo Solar.
The parties expect to close the acquisition within 90 days.
