TransAlta to Acquire Heartland Generation from Energy Capital Partners at a Reduced Price of $542 Million
TransAlta has revised its agreement to acquire Heartland Generation from Energy Capital Partners for $542 million, reflecting an $80 million price reduction due to required asset divestitures of Poplar Hill and Rainbow Lake (97 MW net ownership). The transaction includes $232 million of low-cost debt and will add 1,747 MW of net capacity to TransAlta's portfolio. The deal values Heartland's portfolio at $270 per kilowatt with an expected EBITDA multiple of 5.4x. The acquisition is expected to generate $85-90 million in annual EBITDA and $20 million in annual corporate pre-tax synergies. Approximately 60% of revenues are contracted with a 15-year weighted-average remaining life. Closing is expected by December 4, 2024.
TransAlta ha revisionato il suo accordo per acquisire Heartland Generation da Energy Capital Partners per 542 milioni di dollari, riflettendo una riduzione di prezzo di 80 milioni di dollari a causa della necessità di cessioni patrimoniali di Poplar Hill e Rainbow Lake (97 MW di proprietà netta). La transazione include 232 milioni di dollari di debito a basso costo e aggiungerà 1.747 MW di capacità netta al portafoglio di TransAlta. L'accordo valuta il portafoglio di Heartland a 270 dollari per kilowatt con un multiplo EBITDA atteso di 5,4x. Si prevede che l'acquisizione genererà 85-90 milioni di dollari di EBITDA annuale e 20 milioni di dollari di sinergie annuali prima delle tasse per l'azienda. Circa il 60% dei ricavi è contrattato con una vita media residua pesata di 15 anni. La chiusura è prevista per il 4 dicembre 2024.
TransAlta ha revisado su acuerdo para adquirir Heartland Generation de Energy Capital Partners por 542 millones de dólares, reflejando una reducción de precio de 80 millones de dólares debido a las cesiones de activos requeridas de Poplar Hill y Rainbow Lake (97 MW de propiedad neta). La transacción incluye 232 millones de dólares de deuda a bajo costo y añadirá 1,747 MW de capacidad neta al portafolio de TransAlta. El acuerdo valora el portafolio de Heartland en 270 dólares por kilovatio con un múltiplo EBITDA esperado de 5.4x. Se espera que la adquisición genere 85-90 millones de dólares en EBITDA anual y 20 millones de dólares en sinergias corporativas anuales antes de impuestos. Aproximadamente el 60% de los ingresos están contratados con una vida media restante ponderada de 15 años. Se espera que la cierre ocurra para el 4 de diciembre de 2024.
TransAlta는 Energy Capital Partners로부터 Heartland Generation을 5억 4200만 달러에 인수하기 위한 계약을 수정하였으며, 이는 Poplar Hill 및 Rainbow Lake(97 MW 순소유)의 자산 매각 요구로 인해 8000만 달러의 가격 인하를 반영합니다. 이번 거래에는 2억 3200만 달러의 저비용 부채가 포함되며, TransAlta의 포트폴리오에 1,747 MW의 순 용량이 추가됩니다. 이번 거래는 Heartland의 포트폴리오를 킬로와트당 270달러로 평가하며, 예상 EBITDA 배수는 5.4배입니다. 인수는 연간 8500만-9000만 달러의 EBITDA 및 연간 2000만 달러의 법인 세전 시너지를 창출할 것으로 예상됩니다. 수익의 약 60%는 15년의 가중 평균 잔여 수명을 가진 계약으로 확보되어 있습니다. 거래 완료는 2024년 12월 4일로 예상됩니다.
TransAlta a révisé son accord pour acquérir Heartland Generation d'Energy Capital Partners pour 542 millions de dollars, reflétant une réduction de prix de 80 millions de dollars en raison de la cession d'actifs requise de Poplar Hill et Rainbow Lake (97 MW de propriété nette). La transaction comprend 232 millions de dollars de dettes à faible coût et ajoutera 1 747 MW de capacité nette au portefeuille de TransAlta. L'accord valorise le portefeuille de Heartland à 270 dollars par kilowatt avec un multiple EBITDA attendu de 5,4x. On s'attend à ce que l'acquisition génère 85-90 millions de dollars de EBITDA annuel et 20 millions de dollars de synergies d'entreprise annuelles avant impôts. Environ 60 % des revenus sont contractés avec une durée résiduelle moyenne pondérée de 15 ans. La clôture est prévue d'ici le 4 décembre 2024.
TransAlta hat seine Vereinbarung zur Übernahme von Heartland Generation von Energy Capital Partners für 542 Millionen US-Dollar überarbeitet, was eine Preisreduzierung von 80 Millionen US-Dollar aufgrund geforderter Vermögensverkäufe von Poplar Hill und Rainbow Lake (97 MW Nettobesitz) widerspiegelt. Die Transaktion umfasst 232 Millionen US-Dollar an kostengünstigen Schulden und wird TransAltas Portfolio um 1.747 MW Nettokapazität erweitern. Der Deal bewertet das Portfolio von Heartland mit 270 US-Dollar pro Kilowatt bei einem erwarteten EBITDA-Multiplikator von 5,4x. Die Übernahme wird voraussichtlich 85-90 Millionen US-Dollar anjährlichem EBITDA und 20 Millionen US-Dollar an jährlichen Unternehmenssynergien vor Steuern generieren. Etwa 60% der Einnahmen sind vertraglich mit einer gewogenen durchschnittlichen Restlaufzeit von 15 Jahren gesichert. Der Abschluss wird bis zum 4. Dezember 2024 erwartet.
- Acquisition adds 1,747 MW of net capacity to TransAlta's portfolio
- Expected annual EBITDA contribution of $85-90 million
- Corporate pre-tax synergies of $20 million annually
- 60% of revenues are contracted with 15-year weighted-average remaining life
- Portfolio valued at attractive $270 per kilowatt, below replacement cost
- 5.4x EBITDA multiple indicates favorable valuation
- Required divestiture of 97 MW of assets (Poplar Hill and Rainbow Lake)
- Additional debt assumption of $232 million
Insights
The revised acquisition of Heartland Generation at
Key financial strengths include
This acquisition significantly strengthens TransAlta's position in Alberta's evolving energy landscape by adding 1,747 MW of strategically vital assets. The portfolio mix is particularly valuable, combining 507 MW of cogeneration, 387 MW of peaking generation and 950 MW of natural gas-fired thermal generation. These fast-ramping, flexible assets are important for grid reliability as Alberta transitions toward more renewable energy.
The required divestiture of Poplar Hill and Rainbow Lake (97 MW) has minimal impact on the strategic value, as the remaining assets maintain strong market positioning. The Battle River Carbon Hub development opportunity aligns well with the industry's decarbonization trends.
CALGARY, Alberta, Nov. 14, 2024 (GLOBE NEWSWIRE) --
Highlights
- TransAlta and ECP have agreed to an
$80 million purchase price reduction to reflect two required asset divestitures representing 97 MW (net ownership) - Transaction revalued at approximately
$542 million , inclusive of the assumption of$232 million of low-cost debt, and subject to a further favourable economic adjustment of approximately$80 million , reflecting the economic benefit of the Heartland business arising since the effective date of the transaction of October 31, 2023, prior to working capital adjustments - Heartland portfolio valued at a net price of approximately
$270 per kilowatt, with an expected EBITDA multiple1 of approximately 5.4 times - Highly accretive to free cash flow, with an attractive cash yield upon closing underpinned by approximately
60% of revenues contracted with a weighted-average remaining life of 15 years - Corporate pre-tax synergies of approximately
$20 million per annum - Transaction to add 1,747 MW (net interest) of complementary capacity, including contracted cogeneration and peaking generation, legacy gas-fired thermal generation, transmission capacity, and potential hydrogen development opportunities, all of which will be critical to support reliability in the Alberta electricity market
- Enhances and further diversifies TransAlta’s competitive portfolio in the highly dynamic and shifting electricity landscape in Alberta
TransAlta Corporation (TSX: TA; NYSE: TAC) ("TransAlta" or "Company") announced today that it has entered into an amending agreement to the share purchase agreement (the "Amending Agreement") with an affiliate of Energy Capital Partners ("ECP"), the parent of Heartland Generation Ltd. and Alberta Power (2000) Ltd. (collectively, "Heartland"), relating to the previously announced acquisition of Heartland and its business operations by TransAlta (the "Transaction"). In order to meet the requirements of the federal Competition Bureau ("Bureau"), TransAlta has also entered into a consent agreement with the Commissioner of Competition pursuant to which TransAlta has agreed to divest Heartland's Poplar Hill and Rainbow Lake assets following closing of the Transaction (the "Divestitures"). Closing of the Transaction is expected to occur on or before December 4, 2024.
In consideration of the Divestitures, TransAlta and ECP have agreed to a purchase price reduction of
“We are pleased to be able to move forward with the Heartland acquisition in the coming weeks, and to incorporate Heartland's complementary assets within our Alberta portfolio. Consistent with our original investment thesis, the Alberta market will increasingly require low-cost, flexible and fast-responding generation to support grid reliability over the coming years. The transaction supports our competitive position in Alberta by ensuring we maintain a robust and diversified portfolio, which together with our energy marketing capabilities, complements and supports Alberta's electricity grid. The Heartland portfolio will contribute meaningful cash flows with significant value from our corporate synergies, even with the planned asset divestitures," said John Kousinioris, President and Chief Executive Officer of TransAlta.
Heartland owns and operates generation assets consisting of 507 MW of cogeneration, 387 MW of contracted and merchant peaking generation, 950 MW of natural gas-fired thermal generation, transmission capacity and a development pipeline that includes the 400 MW Battle River Carbon Hub.
Investment Highlights
The transaction is strategically attractive to TransAlta and provides the following benefits:
- Expands Flexible Generation Capabilities: Augments and diversifies TransAlta’s portfolio in Alberta's current energy-only market by expanding its flexible, fast-ramping capacity and marketing capabilities to enhance our ability to respond to changing market conditions stemming from the intermittency of increasing renewable generation.
- Maintains Attractive Transaction Metrics: The acquisition is highly accretive to free cash flow with an attractive multiple and strong cash yield. The Transaction, net of economic adjustment, values the portfolio of assets at approximately
$270 per kilowatt, well below the replacement cost of current and other forms of reliable generation, providing a low-cost expansion of our ability to deliver reliable generation to the market demands of Alberta. - Delivers Highly Contracted Cash Flow: Post-closing, the assets are expected to add approximately
$85 t o$90 million of average annual EBITDA2 after factoring synergies and the divestitures of Poplar Hill and Rainbow Lake. Approximately 60 per cent of revenues are under contract with high creditworthy counterparties which have a weighted-average remaining contract life of 15 years. - Near-term Synergies: TransAlta will continue to leverage corporate costs within our existing business which will provide estimated corporate pre-tax synergies of approximately
$20 million per annum. In addition, the combined portfolio will enable the Company to further optimize operations and supply chains through scale to achieve additional synergies. - Builds On Regional Expertise: The Company is well positioned to deliver significant value through our deep technical and local operational experience which, together with our 113-year history in Alberta, will ensure continuing safe and reliable generation in a dynamic and evolving landscape.
1 Expected EBITDA multiple is a metric calculated by dividing expected capital expenditures by average annual EBITDA. Readers are cautioned that our method for calculating expected EBITDA multiple may differ from methods used by other entities. Therefore, it may not be comparable to similar measures presented by other entities.
2 Average annual EBITDA is not defined and has no standardized meaning under IFRS. It is a forward-looking non-IFRS measure that is used to show the average annual adjusted EBITDA that is expected to generate following completion of the Transaction. It is unlikely to be comparable to similar measures presented by other companies and should not be viewed in isolation from, as an alternative to, or more meaningful than, our IFRS results. Please refer to the “Additional IFRS Measures and Non-IFRS Measures” section of our management’s discussion and analysis for the three and nine months ended September 30, 2024 (“MD&A”) for more information about the non-IFRS measures we use, including a reconciliation of adjusted EBITDA to Earnings before income tax, the most directly comparable IFRS measure, which section of the MD&A is incorporated by reference herein. The MD&A can be found on SEDAR+ (www.sedarplus.ca) under TransAlta’s profile.
About TransAlta Corporation:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydroelectric power. For over 113 years, TransAlta has been a responsible operator and a proud member of the communities where we operate and where our employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and the Future-Fit Business Benchmark, which also define sustainable goals for businesses. Our reporting on climate change management has been guided by the International Financial Reporting Standards (IFRS) S2 Climate-related Disclosures Standard and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. TransAlta has achieved a 66 per cent reduction in GHG emissions or 21.3 million tonnes CO2e since 2015 and received an upgraded MSCI ESG rating of AA.
For more information about TransAlta, visit our web site at transalta.com.
Cautionary Statement Regarding Forward-Looking Information
This news release contains "forward-looking information", within the meaning of applicable Canadian securities laws, and "forward-looking statements", within the meaning of applicable United States securities laws, including the United States Private Securities Litigation Reform Act of 1995 (collectively referred to herein as "forward-looking statements"). In some cases, forward-looking statements can be identified by terminology such as "plans", "expects", "proposed", "will", "would", "anticipates", "develop", "continue", "estimate", and similar expressions suggesting future events or future performance. In particular, this news release contains, without limitation, statements pertaining to: TransAlta's acquisition of Heartland; the anticipated benefits arising from such transaction, including that the transaction will be accretive to free cash flow and cash yield, that Heartland's assets will be supportive to grid reliability; the amount of pre-tax synergies; the acquisition EBITDA multiple of 5.4 times; the expected addition of
Note: All financial figures are in Canadian dollars unless otherwise indicated.
For more information:
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FAQ
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