NextEra Energy Partners, LP announced that it has entered into a definitive agreement with Canada Pension Plan Investment Board (CPPIB) for the sale of its portfolio of wind and solar generation assets in Ontario, Canada, for a total consideration of about $582.3 million. This includes the net present value of the O&M origination fee, subject to customary working capital and other adjustments, plus the assumption by the purchaser of approximately $689 million USD in existing debt.
The transaction includes the sale of six fully contracted wind and solar assets with an average contract life of about 16 years.
“We are pleased to reach this agreement with CPPIB for the sale of our Canadian portfolio, which we expect will be accretive to NextEra Energy Partners’ long-term growth,” said Jim Robo, chairman and chief executive officer. “The sale of these assets, at a very attractive 10-year average CAFD yield of 6.6%, including the present value of the O&M origination fee, highlights the underlying strength of the partnership’s renewable portfolio.”
An affiliate of NextEra Energy Resources will continue to operate all of the facilities included in the transaction under a 10-year services agreement with CPPIB.
“As discussed during our earnings call in January, we expect the sale of the Canadian portfolio to enable us to recycle capital back into U.S. assets, which benefit from a longer federal income tax shield and a lower effective corporate tax rate, allowing NextEra Energy Partners to retain more CAFD in the future for every $1 invested. We expect to accretively redeploy the proceeds from this transaction to acquire higher-yielding U.S. assets from either third parties or NextEra Energy Resources,” added Robo.
The transaction includes the sale of six fully contracted wind and solar assets, with an average contract life of approximately 16 years and 10-year average CAFD of $38.4 million. Located in Ontario, the portfolio has a combined total generating capacity of approximately 396 MW and consists of:
• Bluewater, a 59.9-MW wind generating facility;
• Conestogo, a 22.9-MW wind generating facility;
• Jericho, a 149-MW wind generating facility;
• Summerhaven, a 124.4-MW wind generating facility;
• Moore, a 20-MW solar energy generating facility; and
• Sombra, a 20-MW solar energy generating facility.
NextEra Energy Partners expects the sale to close during the second quarter of 2018. The transaction is subject to receipt of regulatory approvals and satisfaction of customary closing conditions.
NextEra Energy Partners continues to expect a Dec. 31, 2018, run rate for adjusted EBITDA of $1.00 billion to $1.15 billionand CAFD of $360 million to $400 million, reflecting calendar year 2019 expectations for the forecasted portfolio at year-end 2018.
Citi and CIBC Capital Markets are serving as financial advisors to NextEra Energy, and McCarthy Tétrault LLP and Gowling WLG (Canada) LLP are legal counsel.