First Wind, Algonquin and Emera Announce Partnership Involving First Wind’s Northeast Projects
First Wind Holdings, LLC (First Wind), (TSX: AQN): Algonquin Power and Utilities Corp. (Algonquin) and (TSX: EMA) Emera Inc. (Emera) announced today that they have entered into an agreement to jointly construct, own and operate wind energy projects in the Northeast U.S.
First Wind has a 370 Megawatt (MW) portfolio of wind energy projects in the Northeast U.S. including five operating projects and two projects near operation. These assets will become part of an operating company of which First Wind will own 51%. Emera and Algonquin are entering into a separate joint venture (Northeast Wind), which will own 49% of the operating company. Emera will initially own 75% of Northeast Wind and Algonquin will own the balance. Northeast Wind will invest a total of $333 million to acquire the 49% ownership of the operating company. This includes a $150 million loan to the operating company. The loan will be repaid within 5 years, or convert to equity in future projects.
First Wind will work with Algonquin and Emera to grow the operating company. In addition to its ownership interest in the operating company, First Wind will serve as its managing partner and will continue to operate the projects. First Wind will continue to develop Northeast projects and once these projects meet certain eligibility criteria they will transfer to the operating company.
“This is an excellent strategic partnership that brings together the region’s leading wind company with some of the region’s leading power and utilities companies. This partnership will help bring further growth of well-sited and well-run wind energy projects in the region in the future,” said Paul Gaynor, CEO of First Wind. “This agreement will support First Wind’s plans to grow and develop and invest in new projects in the Northeast and across the country.”
“This investment is an excellent means for Algonquin to partner with Emera and expand our reach into the New England renewable energy market with a strong portfolio of attractive wind projects,” stated Ian Robertson, CEO, Algonquin. “This transaction augments Algonquin’s growth strategy and affords us the opportunity to lever our expertise alongside the First Wind development team and expand our participation with Emera in the New England ISO electricity market.”
“This investment provides Emera and Algonquin with the opportunity to partner with the largest operator of wind assets in New England,” stated Chris Huskilson, President and CEO, Emera Inc. “This partnership brings together Algonquin’s renewable generation experience, Emera’s financial capacity and marketing experience with First Wind’s development expertise and is consistent with our renewables strategy in the region.”
Emera will finance the transaction through existing credit facilities subject to lender approval.
Algonquin’s financing plans include an agreement with Emera for Emera to acquire $37 million of subscription receipts in Algonquin at a price of $5.37 per share. This provides Emera with the opportunity to increase its ownership interest in Algonquin up to 25%, subject to Algonquin shareholder approval.
The transaction is expected to be immediately accretive to both Emera and Algonquin.
The transaction requires certain state and federal regulatory approvals, among others, and is expected to close by the end of the year.