Innergex Renewable Energy (OTC:INGXF), an operator of hydroelectric facilities and wind energy projects in North America, said Monday it has agreed to acquire privately-held Cloudworks Energy in a stock and cash deal worth $185 million.
Innergex will pay Cloudworks Energy shareholders $145.7 million in cash and $39.3 million in common shares, which will be issued through a private placement.
To finance the cash portion of the deal, Innergex will issue 16.1 million subscription receipts at a price of $9.35 per receipt. BMO Capital Markets and National Bank Financial have agreed to underwrite the deal on a bought-deal basis. Up to $156 million can be raised if the underwriters exercise their over-allotment option.
Shareholders of Vancouver-based Cloudworks are also entitled to receive additional performance-based payments.
Cloudworks’ portfolio consists of a 50% interest in six hydroelectric facilities having a combined gross installed capacity of 150 MW; full ownership of 76 MW hydroelectric projects under development with 40-year power purchase agreements; and full ownership of hydroelectric projects in various stages of development with a potential total installed capacity of over 800 MW.
The six hydroelectric facilities, or The Harrison Operating Facilities as they are collectively called, have a total installed capacity of 150 MW. All the power generated is sold to BC hydro under two 40-year purchasing power agreements. The facilities are expected to generate about $47 million in revenues annually. CC&L Infrastructure and Fengate Capital Management indirectly own the remaining 50% of these facilities.
Meanwhile, the 76 MW hydroelectric projects are expected to generate about $35 million in annual revenues once the projects start operations in 2017.
Innergex’s CEO, Michel Letellier, said the assets will help the company diversify its revenues and increase its installed capacity by as much as 23% to 401 MW from 326 MW.
In addition to the $185 million purchase price, Innergex’s will also assume about $35 million in net debt.
The deal, subject to regulatory approvals and other customary closing conditions, is expected to close around March 31.