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Altius Renewable Royalties Announces New US$40MM Financing of U.S. Solar Plus Battery Storage Developer With 1.8 GW Pipeline
Rhea-AI Impact
(Neutral)
Rhea-AI Sentiment
(Very Positive)
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Rhea-AI Summary
Altius Renewable Royalties Corporation (ATRWF) announced a transaction with Hodson Energy, LLC, through its subsidiary Great Bay Renewables LLC. This deal involves a US$40 million royalty investment in Hodson's solar and battery storage projects, expected to achieve an internal rate of return (IRR) of 8-12%. The investment will be deployed in tranches over three years, with a US$14 million initial investment. Great Bay will earn a 3% gross revenue royalty on projects, providing funding flexibility to Hodson.
Positive
Transaction enables Great Bay to establish a revenue stream with a 3% gross royalty on Hodson's projects.
Initial investment of US$14 million will support project advancement and portfolio expansion to 1.8 GWac.
Expectations of achieving an IRR of 8-12% align with prior disclosed metrics.
Negative
None.
ST. JOHN’S, Newfoundland and Labrador--(BUSINESS WIRE)--
Altius Renewable Royalties Corporation (“ARR”) (ARR:TSX, ATRWF: OTCQX) is pleased to announce that its jointly controlled subsidiary, Great Bay Renewables LLC (“Great Bay”), has entered into a transaction with U.S. renewable energy developer, Hodson Energy, LLC (“Hodson”), to gain future royalties related to Hodson’s portfolio of solar plus battery storage development projects. Great Bay is jointly controlled by ARR and certain funds managed by affiliates of Apollo Global Management, Inc.
New York-based Hodson is committing its entire portfolio of solar plus storage projects located primarily in the Mid-Atlantic region of the U.S. and any additional projects added in the future to this new royalty investment structure with Great Bay. Great Bay will receive a royalty on all projects developed and vended by Hodson until a minimum total return threshold is achieved. The targeted IRR threshold is consistent with the upper part of Great Bay’s previously disclosed 8-12% base hurdle rate range before factoring in potential longer-term option value realizations.
Transaction Terms
The US$40 million royalty investment into Hodson will be invested in tranches over approximately the next three years as Hodson achieves certain project advancement milestones, with an initial investment upon closing of US$14 million. Approximately US$9.8 million of the initial investment will be used to retire an existing development loan facility and acquire new projects, resulting in a 1.8 GWac total portfolio post-Great Bay investment.
As individual pipeline projects are developed, Great Bay will receive a 3% gross revenue royalty on each project. This will continue until a target minimum total royalty portfolio valuation threshold is achieved. Once created, individual royalties will apply during the full life of the respective projects. In addition to royalties, Great Bay has the option to receive a portion of the proceeds from project sales. Any cash Great Bay elects to receive under this option would count toward the target return. Great Bay also has the option to invest an additional $20 million as royalty financing in the future.
As part of the transaction, Great Bay also received warrants to purchase a minority interest in the common equity of Hodson.
Commenting on the new partnership with Hodson, Frank Getman, CEO of Great Bay, said “We are thrilled to add another high-quality developer to our developer royalty program. This is another example of Great Bay’s flexible, partner-like capital supporting a quality project developer as the broader renewables sector navigates the current challenges of interconnection delays, inflation, higher interest rates and supply chain issues. These challenges are creating a significant opportunity for our patient, long-term investment offering,” Getman added. “It’s ‘go-time’ right now for Great Bay.”
RS Gill, Founder and CEO of Hodson, added “We are excited to team up with Great Bay to help us build out our existing pipeline of high-quality projects and enter a new phase of growth. In addition to pursuing previously identified and new opportunities in the PJM and MISO territories, we now have the bandwidth and financial resources to explore new opportunities and relationships in Texas and the greater Southwest region. Great Bay’s financing structure makes us goal aligned and provides Hodson with the financial flexibility we need to pursue our strategic objectives.“
Great Bay was advised on this transaction by an advisory team from CCA Capital LLC led by Martin Pasqualini and a legal team at Pierce Atwood LLP led by Kris Eimicke. Hodson Energy was advised on this transaction by an advisory team from Verdonck Partners led by Patrick Verdonck and a legal team at Willcox Savage led by Brian Purcell and a legal team at Nelson Mullins led by Prem Malali.
About ARR
ARR is a recently formed renewable energy company whose business is to provide long-term, royalty level investment capital to renewable power developers, operators, and originators. ARR has 16 renewable energy royalties representing 3,510 MW of renewable power, diversified by wind, solar, stage of development or operations and regional power pool in the U.S.The Corporation combines industry expertise with innovative, partner-focused solutions to further the growth of the renewable energy sector as it fulfills its critical role in enabling the global energy transition.
Forward-looking information
This news release contains forward-looking information. The statements are based on reasonable assumptions and expectations of management and ARR provides no assurance that actual events will meet management's expectations. In certain cases, forward-looking information may be identified by such terms as "anticipates," "believes," "could," "estimates," "expects," "may," "shall," "will," or "would". Although ARR believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those projected. Readers should not place undue reliance on forward-looking information. ARR does not undertake to update any forward-looking information contained herein except in accordance with securities regulation.
What is the transaction between Altius Renewable Royalties and Hodson Energy about?
Altius Renewable Royalties Corporation's subsidiary, Great Bay Renewables, invested US$40 million in Hodson Energy to gain royalties from its solar and battery storage projects.
What is the initial investment amount in the transaction with Hodson Energy?
The initial investment amount is US$14 million, part of a US$40 million total investment planned over three years.
What is the royalty structure for Great Bay Renewables from Hodson Energy?
Great Bay will receive a 3% gross revenue royalty on each project developed by Hodson Energy.
What are the projected returns from the investment in Hodson Energy?
The targeted internal rate of return (IRR) from the investment is between 8-12%, based on previously disclosed metrics.
How will Hodson Energy benefit from this transaction?
Hodson Energy will receive financial flexibility and resource support for its project pipeline in the Mid-Atlantic region and beyond.
