Pattern Energy Group announced it has entered into an agreement for the sale of the company’s 90-MW minority owned interest in the K2 Wind power facility in Ontario for a purchase price of $216.0 CAD ($166.0 million U.S.), to a consortium of investors led by Axium Infrastructure.
“K2 was a good candidate for recycling given our minority interest. The sale demonstrates the confidence of Canadian investors in the Ontario market. The proceeds provide us an opportunity to redeploy capital into more accretive opportunities—improving our CAFD without issuing common equity,” said Mike Garland, CEO of Pattern Energy. “We have now sold two assets, El Arrayán and K2, at significant premiums to the multiple at which we trade in the markets.”
K2 Wind is one of the largest wind-power facilities in Canada.
Pattern Energy expects to record a pretax gain in the range of approximately $65.0 million U.S. to $69.0 million U.S. on the sale, subject to fourth quarter results. Pattern Energy is also entitled to receive the cash flows from the facility through the end of calendar 2018.
K2 is a 270-MW wind power facility located in the Ashfield-Colborne-Wawanosh Township and commenced commercial operations in June 2015. The facility is a joint venture between Pattern Energy, an Axium-led consortium and Capital Power Corporation. Capital Power Corporation has also agreed to sell its interest in the facility to the Axium Consortium under the same agreement.
The Company intends to use the net proceeds from the sale for general corporate purposes, which may include: funding investments, acquisitions or the repayment of indebtedness.
The transaction is expected to close on, or around, December 31, 2018, subject to customary closing conditions.
Transaction highlights:
- Sale reflects the significant intrinsic value of the assets in the portfolio compared to the value ascribed to the business in the public markets
- Sale of the interest allows the Company to acquire or invest in more accretive assets
- Success of the Company’s accretive asset recycling strategy
- $65 million U.S. to $69 million U.S. gain on sale
- Sold at 15 times multiple of the ten-year average cash available for distribution
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