Algonquin Power & Utilities Corp. Announces Successful Remarketing of 1.18% Senior Notes due 2026

Rhea-AI Summary

Algonquin Power & Utilities Corp. successfully remarkets $1,150,000,000 Senior Notes due June 15, 2026. The Notes will bear interest at 5.365% per year and the remarketing is expected to close on March 28, 2024. Proceeds will be used to purchase treasury securities and settle Purchase Contracts.

Insights

Financial Analyst

The recent announcement by Algonquin Power & Utilities Corp. regarding the successful remarketing of its Senior Notes represents a strategic financial maneuver that is likely to have a significant impact on the company's capital structure and liquidity. The increase in the interest rate from 1.18% to 5.365% reflects the changing market conditions and the company's response to these shifts. This adjustment in interest rates could potentially impact the company's interest expenses and overall financial health.

Investors should note that the proceeds from the remarketing are being used to purchase treasury securities, which will then be used to settle Purchase Contracts. This indicates a structured approach to managing the company's liabilities and could be seen as a positive step towards improving its balance sheet. However, the higher interest rate also suggests an increased cost of debt, which could affect the company's profitability in the short term. It is essential to monitor how this increased interest expense will be managed and whether the company's operational cash flow can support it.

Debt Market Analyst

Algonquin Power & Utilities Corp.'s decision to remarket its Senior Notes at a significantly higher interest rate is a move that resonates within the debt market space. The original issuance of notes at 1.18% was indicative of the historically low-interest-rate environment. However, the remarketing at a rate of 5.365% aligns with the current market trend of rising interest rates, which could be attributed to inflationary pressures or changes in monetary policy.

For the debt market and potential investors, this remarketing offers a glimpse into the creditworthiness of the company and the market's appetite for such securities. The successful closure of this remarketing, subject to customary conditions, will also be an indicator of investor confidence in the company's financial stability and its ability to manage debt effectively. This could influence the company's credit rating and, subsequently, its ability to raise capital in the future at favorable terms.

Energy Sector Analyst

From an energy sector perspective, Algonquin Power & Utilities Corp.'s remarketing of its Senior Notes is indicative of the industry's current financial environment. The utility sector is capital-intensive and companies often rely on the issuance of debt instruments to finance their operations and growth initiatives. The decision to remarket these notes and the subsequent use of proceeds to reduce existing indebtedness suggest a proactive approach to capital management within the sector.

Given the long-term nature of utility investments and the need for stable capital structures, the company's strategy to strengthen its financial position through debt management could be seen as a positive development. It is important for stakeholders to consider the implications of these financial decisions on the company's ability to invest in infrastructure and sustainable energy projects, which are critical for long-term growth in this sector.

OAKVILLE, ON, March 26, 2024 /PRNewswire/ - Algonquin Power & Utilities Corp. ("AQN" or the "Company") (TSX: AQN) (NYSE: AQN) announced today that it has successfully remarketed its U.S.$1,150,000,000 aggregate principal amount of 1.18% Senior Notes due June 15, 2026 (the "Notes"). The optional remarketing was conducted pursuant to the terms of a remarketing agreement dated February 29, 2024. The Notes were originally issued in June 2021 as a component of the Company's corporate units (the "Corporate Units").

Effective upon closing of the remarketing, the Notes will bear interest at 5.365% per year and will mature on June 15, 2026. The remarketing is expected to close on March 28, 2024, subject to customary closing conditions.

The Company conducted the remarketing on behalf of holders of the Corporate Units and will not directly receive any proceeds from the remarketing of the Notes. The proceeds from the remarketing of the Notes will be used, as an interim step prior to settlement of the purchase contracts issued as a component of the Corporate Units (the "Purchase Contracts"), to purchase a portfolio of treasury securities maturing on or before June 17, 2024. The Company expects that substantially all of the funds generated upon maturity of the treasury portfolio will be used on June 17, 2024, to settle the Purchase Contracts. Any remaining proceeds of the portfolio of treasury securities will be distributed to the holders of the Corporate Units. The Company intends to use the proceeds from the settlement of the Purchase Contracts to reduce existing indebtedness of the Company and its subsidiaries and for general corporate purposes.

The remarketing is being made to the public in each of the provinces and territories of Canada and in the United States by means of a short form base shelf prospectus dated March 8, 2024 and related prospectus supplement to be filed with applicable Canadian securities regulatory authorities and which will form part of the Company's effective shelf registration statement filed with the U.S. Securities and Exchange Commission (the "SEC"). The short form base shelf prospectus and the related prospectus supplement will contain important information about the Notes. Investors should read the short form base shelf prospectus and the related prospectus supplement before making an investment decision.

This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities, in any province, state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities law of any such province, state or jurisdiction. A prospectus supplement related to the remarketing will be filed with the SEC and applicable Canadian securities regulatory authorities in each of the provinces and territories of Canada and will be available on the SEC's website at http://www.sec.gov and on SEDAR+ at www.sedarplus.com. Copies of the Company's short form base shelf prospectus and the prospectus supplement relating to the remarketing may be obtained, when available, from CIBC World Markets Inc., RBC Dominion Securities Inc. and Merrill Lynch Canada, Inc., and in the United States from BofA Securities, Inc., CIBC World Markets Corp. and RBC Capital Markets, LLC.

About Algonquin Power & Utilities Corp.

Algonquin Power & Utilities Corp., parent company of Liberty, 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 Twitter @AQN_Utilities.

Caution Regarding Forward-Looking Information

Certain statements included in this press 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" 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 press release include, but are not limited to, statements regarding the expected closing of the remarketing, the use of the  proceeds of the remarketing and the use of the proceeds from the settlement of the Purchase Contracts. 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 Management Discussion & Analysis for the year ended December 31, 2023, 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 principal amount of the Senior Notes successfully remarketed by Algonquin Power & Utilities Corp.?

Algonquin Power & Utilities Corp. successfully remarketed $1,150,000,000 aggregate principal amount of 1.18% Senior Notes due June 15, 2026.

When will the Notes bear interest at 5.365% per year?

The Notes will bear interest at 5.365% per year upon closing of the remarketing.

When is the expected closing date for the remarketing?

The remarketing is expected to close on March 28, 2024.

How will the proceeds from the remarketing of the Notes be used?

The proceeds will be used to purchase a portfolio of treasury securities and settle Purchase Contracts.

Where is the remarketing being made to the public?

The remarketing is being made to the public in each of the provinces and territories of Canada and in the United States.