Algonquin Power & Utilities Corp. Announces Settlement Rate for Corporate Units Issued in June 2021

Rhea-AI Summary

Algonquin Power & Utilities Corp. (TSX: AQN, NYSE: AQN) announced the settlement rate for its corporate units issued in June 2021. Holders will receive 3.3439 common shares per share purchase contract at an effective issuance price of $14.9526 per share. The settlement is based on the average volume-weighted price on the NYSE for the past 20 trading days, adjusted for certain events.

On June 17, 2024, holders will receive the shares following a $50 payment per unit, satisfied via proceeds from a Treasury portfolio linked to senior notes remarketed in March 2024. This will yield $1.15 billion for Algonquin, issuing approximately 76.9 million shares. Furthermore, on June 17, 2024, there will be a final cash distribution of $0.96875 per unit, and the corporate units will be delisted from the NYSE.

Positive

• Issuance of 76.9 million common shares will generate $1.15 billion in capital for Algonquin.
• Final quarterly cash distribution of $0.96875 per corporate unit provides immediate returns to unit holders.
• Settlement rate based on a calculated and transparent volume-weighted average price ensures fairness.
• Remarketing of senior notes successfully closed, indicating strong market confidence.

Negative

• Issuance of 76.9 million common shares may lead to shareholder dilution.
• Voluntary delisting from the NYSE could reduce market visibility and trading volume for corporate units.
• The effective issuance price of $14.9526 per share might be seen as undervalued if market conditions improve.

Insights

Financial Analyst

Algonquin Power & Utilities Corp. (AQN) announced the settlement rate for their corporate units issued in June 2021. As a Financial Analyst, it’s important to consider the capital inflow of $1.15 billion from the issuance of approximately 76.9 million Common Shares. This substantial inflow could significantly impact Algonquin’s liquidity and capital structure.

By receiving $1.15 billion, Algonquin is likely looking to use these funds for new projects or to reduce existing debt, which can boost financial stability. However, issuing 76.9 million shares will also dilute existing shareholders’ equity. This dilution could lead to a reduction in earnings per share (EPS), potentially affecting the stock price negatively in the short term.

The effective issuance price of $14.9526 per share is also noteworthy. Comparing this with the current stock price can provide insights into whether the market perceives this as a favorable deal. For example, if the current price is significantly lower, it may indicate concerns about future growth or profitability.

For investors, it’s important to monitor how Algonquin deploys these funds and whether the capital raised leads to tangible growth or efficiency improvements.

Market Research Analyst

From a market perspective, delisting the Corporate Units from the New York Stock Exchange (NYSE) on June 17, 2024, may have implications for market liquidity and investor sentiment. Delisting typically reduces the trading volume and liquidity of the security, which can be a concern for investors who value the ability to quickly buy or sell units.

The final quarterly cash distribution of $0.96875 per Corporate Unit is a factor to consider for income-focused investors. This payout aligns with the company’s historical commitment to providing steady returns, potentially maintaining investor confidence despite the upcoming changes.

It’s also essential to understand how Algonquin’s stock performs relative to the broader utility sector and overall market trends. AQN’s strategy to settle these units and raise capital is a common practice, but its success will depend on broader market conditions and the company’s operational performance.

For retail investors, keeping an eye on sector trends and comparing AQN’s yield and performance with peers can provide valuable context for these corporate actions.

OAKVILLE, ON, June 13, 2024 /PRNewswire/ - Algonquin Power & Utilities Corp. (TSX: AQN) (NYSE: AQN) ("AQN" or the "Company") today announced the settlement rate for the share purchase contracts that are components of its outstanding corporate units (the "Corporate Units") issued in June 2021. Holders of Corporate Units will receive 3.3439 common shares of AQN ("Common Shares") for each share purchase contract they hold, which results in an effective issuance price of $14.9526 per Common Share, with cash to be paid in lieu of any fractional shares. The settlement rate is based upon the average volume-weighted average price of the Common Shares on the New York Stock Exchange for the 20 consecutive trading days ending on June 13, 2024, as adjusted for certain adjustment events that have occurred since the issuance of the Corporate Units.

Consequently, on June 17, 2024, each holder of Corporate Units on that date will receive, following payment of $50.00 for each Corporate Unit held, 3.3439 Common Shares for each such unit. The holders' obligations to make such payments will be satisfied with proceeds of the Treasury portfolio purchased in connection with the successful optional remarketing that closed on March 28, 2024, of Algonquin's senior notes that formerly constituted a component of the Corporate Units.

Upon settlement of all outstanding share purchase contracts, Algonquin will receive $1.15 billion in exchange for approximately 76.9 million Common Shares.

In addition, on June 17, 2024, (i) each Corporate Unit holder of record on June 1, 2024 will receive the final quarterly cash distribution of $0.96875 payable per Corporate Unit and (ii) Algonquin will voluntarily delist the Corporate Units from the New York Stock Exchange.

About Algonquin Power & Utilities Corp.

Algonquin Power & Utilities Corp. is a diversified international generation, transmission, and distribution utility with approximately $18 billion of total assets. AQN is committed to providing safe, secure, reliable, cost-effective, and sustainable energy and water solutions through its portfolio of generation, transmission, and distribution utility investments to over one million customer connections, largely in the United States and Canada. In addition, AQN owns, operates, and/or has net interests in over 4 GW of installed renewable energy capacity. AQN's common shares, preferred shares, Series A, and preferred shares, Series D are listed on the Toronto Stock Exchange under the symbols AQN, AQN.PR.A, and AQN.PR.D, respectively. AQN's common shares, Series 2019-A subordinated notes and equity units are listed on the New York Stock Exchange under the symbols AQN, AQNB, and AQNU, respectively.

Visit AQN at www.algonquinpower.com and follow us on X.com @AQN_Utilities.

Caution Regarding Forward-Looking Information

Certain statements included in this news release constitute ''forward-looking information'' within the meaning of applicable securities laws in each of the provinces and territories of Canada and the respective policies, regulations and rules under such laws and ''forward-looking statements'' within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively, ''forward-looking statements"). The words "will", "should" and "expects" (and grammatical variations of such terms) and similar expressions are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Specific forward-looking statements in this news release include, but are not limited to, statements regarding: the settlement of the purchase contracts, including the proceeds to be received by Algonquin and the Common Shares to be issued and payments to be made to holders of Corporate Units. These statements are based on factors or assumptions that were applied in drawing a conclusion or making a forecast or projection, including assumptions based on historical trends, current conditions and expected future developments. Since forward-looking statements relate to future events and conditions, by their very nature they require making assumptions and involve inherent risks and uncertainties. AQN cautions that although it is believed that the assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that actual results may differ materially from the expectations set out in the forward-looking statements. Forward-looking statements contained herein are provided for the purposes of presenting information about management's current expectations and plans relating to the future and such information may not be appropriate for other purposes. Material risk factors and assumptions include those set out in AQN's Annual Information Form and Annual Management Discussion and Analysis for the year ended December 31, 2023, and Interim Management Discussion and Analysis for the three months ended March 31, 2024, each of which is available on SEDAR+ and EDGAR.  Given these risks, undue reliance should not be placed on these forward-looking statements, which apply only as of their dates. Other than as specifically required by law, AQN undertakes no obligation to update any forward-looking statements to reflect new information, subsequent or otherwise.

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SOURCE Algonquin Power & Utilities Corp.

FAQ

What is the settlement rate for Algonquin Power & Utilities' corporate units?

The settlement rate is 3.3439 common shares of AQN per share purchase contract.

When will the settlement of Algonquin Power & Utilities' corporate units take place?

The settlement will occur on June 17, 2024.

What is the effective issuance price for Algonquin Power & Utilities' common shares?

The effective issuance price is $14.9526 per common share.

How much capital will Algonquin Power & Utilities raise from the issuance of common shares?

Algonquin will raise approximately $1.15 billion from the issuance.

What will happen to Algonquin Power & Utilities' corporate units on June 17, 2024?

The corporate units will be delisted from the New York Stock Exchange on June 17, 2024.

What is the final cash distribution for holders of Algonquin Power & Utilities' corporate units?

The final cash distribution is $0.96875 per corporate unit.