- Filing of certain prospectuses and communications in connection with business combination transactions (425)
21 Juni 2011 - 7:20PM
Edgar (US Regulatory)
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Filed by Atlantic Power Corporation
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Pursuant to Rule 425 under the Securities Act of 1933
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and deemed filed pursuant to Rule 14a-12
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under the Securities Exchange Act of 1934
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Subject Company: Atlantic Power Corporation
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Atlantic Power Corporations Commission File No: 001-34691
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On June 21, 2011, Atlantic Power Corporation began using the following slides in connection with investor presentations:
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1 Acquisition
of Capital Power Income LP June 21, 2011
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2 Disclaimer To
the extent any statements made in these materials contain information that is
not historical, these statements are forward-looking statements within the
meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and
Section 21E of the U.S. Securities Exchange Act of 1934, as amended
(collectively, "forward-looking statements"). These forward-looking
statements relate to, among other things, the expected benefits of the
proposed combination transaction between Atlantic Power Corporation (ATP),
Capital Power Income L.P. (CPILP) and the entity resulting from such
combination, such as accretion, the ability to pay dividends, enhanced cash
flow, growth potential, market profile and financial strength, the position
of the combined company, and the expected timing of the completion of the
transaction. Forward-looking statements can generally be identified by the
use of words such as "believe", "anticipate",
"expect", "estimate", "intend" and other
similar expressions. In addition, any statements that refer to expectations,
projections or other characterizations of future events or circumstances are
forward-looking statements. Although Atlantic Power and CPILP believe that the
expectations reflected in such forward-looking statements are reasonable,
such statements involve risks and uncertainties and undue reliance should not
be placed on such statements. Actual results may differ materially from those
expressed or implied in such statements. Important factors that could cause
actual results to differ materially from these expectations include, among
other things: (i) the failure to receive, on a timely basis or otherwise, the
required approvals by Atlantic Power shareholders, CPILP unitholders and
government or regulatory agencies (including the terms of such approvals);
(ii) the risk that a condition to closing of the transaction may not be
satisfied; (iii) the possibility that the anticipated benefits and synergies
from the proposed transaction cannot be fully realized or may take longer to
realize than expected; (iv) the possibility that costs or difficulties
related to the integration of Atlantic Power and CPILP operations will be
greater than expected; and other risk factors relating to the power industry,
as detailed from time to time in Atlantic Power's filings with the United
States Securities and Exchange Commission ("SEC") and the Canadian
Securities Administrators ("CSA"), and CPILP's filings with the
CSA. There can be no assurance that the proposed transaction will in fact be
consummated. All $ figures in the presentation are Cdn$ unless otherwise
noted.
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3 Additional
Information In connection with the proposed transaction, Atlantic Power
Corporation ("Atlantic Power") plans to file with a registration
statement on Form S-4 with the United States Securities and Exchange
Commission (SEC) that will include a joint proxy statement/management
circular of Atlantic Power and Capital Power Income L.P. (CPILP) that will
also constitute a prospectus of Atlantic Power. Atlantic Power and CPILP will
mail the joint proxy statement/prospectus to their respective stock and
unitholders. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS
AND ALL OTHER RELEVANT MATERIALS THAT MAY BE FILED WITH THE SEC WHEN THEY
BECOMES AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. You will
be able to obtain the joint proxy statement/prospectus, as well as other
filings containing information about Atlantic Power and CPILP, free of
charge, at the website maintained by the SEC at www.sec.gov, at the website
maintained by the Canadian Securities Administrators ("CSA") at
www.sedar.com or at Atlantic Power's website, www.atlanticpower.com or by
writing Atlantic Power at the following: Atlantic Power Corporation, 200
Clarendon Street, Floor 25, Boston, Massachusetts 02116, or telephoning
Atlantic Power at (617) 977-2400. The respective directors and executive
officers of Atlantic Power and CPILP, and other persons, may be deemed to be
participants in the solicitation of proxies in respect of the proposed
transaction. Information regarding Atlantic Powers' directors and executive
officers is available in its definitive proxy statement filed with the SEC on
May 2, 2011, and information regarding CPILP's directors and executive
officers is available in its Annual Information Form filed on March 11, 2011
at www.sedar.com. These documents can be obtained free of charge from the
sources indicated above. Other information regarding the interests of the
participants in the proxy solicitation will be included in the joint proxy
statement/prospectus and other relevant materials to be filed with the SEC
and CSA when they become available. This communication shall not constitute
an offer to sell or the solicitation of an offer to sell or the solicitation
of an offer to buy any securities, or a solicitation of any vote or approval,
nor shall there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction. No offer of
securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.
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4 Barry Welch
President and CEO Paul Rapisarda Managing Director of Acquisitions and Asset
Management Stuart Lee President Tony Scozzafava CFO
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Strategic
Rationale Creates a leading power infrastructure company, with high quality
contracted asset base and increased diversification by region, fuel type and
EBITDA contribution Combines Atlantic Powers proven management team with
CPILPs highly qualified operations personnel, creating the opportunity for
operational synergies across the combined asset base Doubles market
capitalization and improves access to capital to pursue growth Strengthens
dividend stability for the foreseeable future and provides immediate
accretion to cash available for distribution to shareholders Internalizes the
Manager for CPILP, aligning unitholder interests with those of Management for
purposes of continued growth 5 Combination Creates Leading $3.6 Bn Power
Infrastructure Company
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6 Transaction
Overview Consideration Financing Timing Description Atlantic Power Corporation
(Atlantic Power or ATP) is acquiring 100% of Capital Power Income LPs
(CPILP) equity CPILP unit holders will receive $19.40 per unit, consisting
of $17.25 paid by ATP and $2.15 paid by Capital Power Corporation (CPC) for
CPILPs North Carolina assets CPILP unit holders can elect to receive $19.40
in cash or 1.30 shares in ATP for each CPILP unit, subject to allocation
limits; share election can qualify as a tax free rollover, while the cash
portion will be taxable ATP is offering $506.5 MM in cash and approximately
31.4 MM shares in ATP Subject to court, unitholder, shareholder, and SEC
approval Estimated Closing: Q4 2011 Other CPC has signed a customary 90 day
lockup for any ATP shares that it will receive Dividend ATP intends to
increase its annual dividend 5% to Cdn$1.15/share following consummation of
the transaction $623MM committed bridge financing in place to fund cash
portion of the acquisition Intended permanent financing to include ~$200 MM
of equity and ~$423 MM of debt
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Pro Forma
Company Overview Large and diverse portfolio of assets, with 2,169 MW of net
generation across 31 facilities(1) Diversified by fuel and region Portfolio
complemented by a regulated transmission project in California Largely
contracted asset base provides predictable and stable revenue, margins and
cash flows Average remaining PPA life of 9.1 years 93% of generation
off-takers are investment grade rated based on MW 7 ATP CPILP PERC Facilities
Biomass Gas Hydro Biomass Gas Coal Transmission Wind Hydro (1) Includes
Piedmont which is currently under construction Extensive power generation
development, project operations, finance, M&A and asset management
experience which will be balanced by CPILPs day-to-day operational expertise
Well-maintained facilities with 2010 availability of 95% across the fleet 95%
of net capacity from clean power
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Combined ATP
Fuel Type & Geographic Diversification 8 ATP Geographic region by net
capacity (MW) Fuel type by net capacity (MW) CPILP(1) Combined ATP 1,245 MW
1,245 MW 924 MW 924 MW Note: Includes Piedmont which is currently under
construction Excludes North Carolina assets 2,169 MW 2,169 MW U.S. Central
13% U.S. Southeast 56% U.S. Southwest 2% U.S. Northeast 23% U.S. Northwest 6%
U.S. Central 23% U.S. Southeast 24% U.S. Southwest 8% U.S. Northeast 22% U.S.
Northwest 8% Canada 15% Hydro 9% Gas 83% Biomass 8% Wind 2% Coal 5% Hydro 6%
Gas 78% Biomass 9% Hydro 9% Bio mass 8% Gas 83% U.S. Central 30% Canada 26%
U.S. Southwest 13% U.S. Northeast 21% U.S. Northwest 10% Geographic region by
net capacity (MW)
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9 Focus on
Creating Shareholder Value: Financial and Strategic Plan 1 Sustain and grow
cash flows Optimize contractual agreements Optimize and expand existing
assets in portfolio Pursue development opportunities 2 Pursue accretive
acquisitions Actively seek and evaluate proprietary acquisition opportunities
in North America Focus on opportunities with contracted cash flows,
credit-worthy counterparties, minimal fuel price risk and attractive power
markets 3 Maintain financial flexibility Take advantage of access to public
markets in both U.S. and Canada Dual listing on TSX and NYSE increases
liquidity and broadens investor base, reducing cost of capital 4 Generate
shareholder value Stable, attractive dividend for yield-focused investors
Contracted business model for predictable cash flow generation
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10 ATP Track
Record of Growth/Dividends ATP management has a demonstrated track record of
pursuing accretive transactions and growing dividends ATP has increased its
dividend three times since its IPO Dividend increases are determined on the
basis of long-term sustainability ATP intends to increase dividend to
$1.15/share at the close of the transaction Pro forma dividend is stable for
the foreseeable future even assuming no additional acquisitions or organic
growth Pro forma payout ratio decreases significantly starting in 2012 Pro
Forma Dividend Stability ATP Historical Dividends CPILP Historical
Distributions ATP Historical Project Adjusted EBITDA from Acquisitions (C$/Share)
(C$/Unit) ($MM) 59.6 71.9 78.2 84.8 - 25 50 75 100 2007 2008 2009 2010 1.01
1.04 1.06 1.06 1.09 1.09 1.00 1.02 1.04 1.06 1.08 1.10 2005 2006 2007 2008
2009 2010 2.52 2.52 2.52 2.52 1.95 1.76 1.50 1.80 2.10 2.40 2.70 3.00 2005
2006 2007 2008 2009 2010
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Post
transaction, Atlantic Power will be the second largest publicly listed power
infrastructure company Pro-forma market capitalization of ~$1.7Bn Enterprise
value of ~$3.6Bn Access to public markets in both the U.S. and Canada Larger
size and broader-based shareholder ownership will improve access to capital
and facilitate the pursuit of sustained growth initiatives Scale Will Support
Growth 11 (1) All EBITDA figures per Bloomberg as at June 17, 2011, except
for ATP EBITDA which represents reported project-adjusted EBITDA from 2010
and utilizes the 2010 average exchange rate to convert from US$ to Cdn$ (2)
Reflects one-year average daily trading volume 2010 EBITDA(1) (MM) 250 323
130 174 149 70 70 62 52 Analyst Coverage 11 -- 12 8 8 15 13 15 7 Volume Traded(2)
(000s) 201.2 -- 190.0 87.9 148.0 407.7 106.7 40.8 126.0 Enhanced Capital
Markets Presence 3,689 3,601 2,133 1,931 1,462 1,297 1,287 945 662 - $500.0
$1,000.0 $1,500.0 $2,000.0 $2,500.0 $3,000.0 $3,500.0 $4,000.0 Brookfield
Renewable Power Fund Atlantic Power Combined Northland Power Corp. Capital
Power Income L.P. Atlantic Power Corp. Algonquin Power & Utilities Corp.
Innergex Renewable Energy Inc. Boralex Inc. Capstone Infrastructure Corp.
Enterprise Value ($ millions)
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12 Historical
Total Return Performance Historical Total Return ATP has outperformed its
peers on a total return basis since its inception in late 2004 Attributable
to managements dedication to growth and portfolio optimization SPTSUT: 92%
CPILP: 1% AMZ:137% SPTSX: 69% SP5UTIL: 56% ATP: 189% -60.0% -40.0% -20.0%
0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 140.0% 160.0% 180.0% 200.0% Nov-04
Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08
Nov-08 Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Total Return Atlantic
Power Corp. Capital Power Income LP S&P TSX S&P TSX Utilities Index
S&P Utilities Index Alerian MLP Index
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Combined
Contracted PPA Profile Supports Stable Cash Flow and Dividend 13 Power
Purchase Agreement Overview (1) Path 15 has a 30 year regulatory life and a
2004 COD (2) Excludes Path 15 Remaining PPA: 9.1 years Remaining Useful Life:
22.6 years Weighted Average(2) (1) 2034 2012 2012 2012 2013 2013 2013 2014
2014 2017 2017 2018 2018 2019 2019 2019 2020 2020 2020 2020 2022 2022 2022 2023
2023 2024 2027 2027 2028 2030 2037 2011 2015 2019 2023 2027 2031 2035 2039
Path 15 Kenilworth Badger Creek Nipigon Greeley Lake Auburndale Selkirk Tunis
Kapuskasing North Bay Pasco Williams Lake Naval Station Naval Training Center
North Island Gregory Delta Calstock Oxnard Manchief Frederickson Moresby Lake
Orlando Morris Chambers Curtis Palmer Mamquam Cadillac Idaho Wind Piedmont
Koma Kulshan PPA Term 2032
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14 Diversified
Portfolio with High Credit Quality Counterparties 99% of off-takers have investment
grade rating based on contributions to EBITDA; 64% are A- rated or higher No
single project accounts for more than 10% of pro forma EBITDA Quality assets
with high availability Off-taker Credit Rating (1) 2010 Adjusted EBITDA (2)
(1) Based on 2010 EBITDA (2) No project in the Other category contributes
more than 4% to EBITDA Historical Availability AAA 11% AA- to AA 15% BBB- to
BBB+ 35% BB- 1% N/R <1% A- to A+ 38% 93 95 95 93 92 95 80 85 90 95 100
2008 2009 2010 ATP CPILP Curtis Palmer 9% Path 15 8% Williams Lake 7% Other
41% Morris 5% Auburndale 10% Manchief 5% Chambers 6% Lake 9%
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15 Steps to
Close Regulatory approvals: Federal Energy Regulatory Commission (FERC)
Canadian Competition Act and Hart-Scott-Rodino (HSR) Antitrust Review
Investment Canada Atlantic Power and CPILP equity holder approvals ATP
requires shareholder approval by a majority of shares voting CPILP requires
unitholder approval by a majority of the units excluding units held by
Capital Power Corp Committed bridge is in place to ensure funding for closing
Target permanent capital raise: ~$200 MM Equity/ ~$423 MM Debt Expected
close: Q4 2011
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16 A Win-Win
Transaction for Stakeholders Accretive Transaction Improves Scale and Asset
Diversity Improves Future Growth Prospects Complements Existing Management
Team Enhances Liquidity and Access to Capital Stable Dividend into
Foreseeable Future
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17 Appendix
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18 Atlantic
Power: Summary of Operating Projects Operating projects are diversified
across geography and investment-grade utility customers Project Name Location
Type Total MW Economic Interest Net MW Electricity Purchaser Contract Expiry
S&P Credit Rating Auburndale Florida Natural Gas 155 100% 155 Progress
Energy Florida 2013 BBB+ Idaho Wind Idaho Wind 183 27.6% 50 Idaho Power
Company 2030 BBB Lake Florida Natural Gas 121 100% 121 Progress Energy
Florida 2013 BBB+ Pasco Florida Natural Gas 121 100% 121 Tampa Electric Co.
2018 BBB Cadillac Michigan Woody Biomass 39 100% 40 Consumers of Michigan
2028 BBB- Chambers New Jersey Coal 262 40% 89 Atlantic City Electric 2024
BBB+ 16 DuPont 2024 A Path 15 California Transmission N/A 100% N/A California
Utilities via CAISO N/A BBB+ to A Orlando Florida Natural Gas 129 50% 65
Progress Energy Florida 2023 BBB+ Selkirk New York Natural Gas 345 17.7% 49
Consolidated Edison 2014 A- 15 Merchant N/A N/R Gregory Texas Natural Gas 400
17.1% 59 Fortis Energy Marketing and Trading 2013 AA 4 Sherwin Alumina 2020
N/R 6 Merchant N/A N/A Badger Creek California Natural Gas 46 50% 23 Pacific
Gas & Electric 2012 BBB+ Koma Kulshan Washington Hydro 13 49.8% 6 Puget
Sound Energy 2037 BBB Piedmont Georgia Biomass 54 98.0% 52 Georgia Power
Company 2032 A Delta-Person New Mexico Natural Gas 132 40% 53 Public Service
of New Mexico 2020 BB- (1) Fitch rating on Reedy Creek Improvement District
Bonds.
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19 CPILP:
Summary of Operating Projects Project Name Location Type Total MW Economic
Interest Electricity Purchaser Contract Expiry S&P Credit Rating Calstock
Ontario Biomass 40 100% Ontario Electricity Financial Corp 2020 AA
Kapuskasing Ontario Natural Gas 62 100% Ontario Electricity Financial Corp
2017 AA Nipigon Ontario Natural Gas 44 100% Ontario Electricity Financial
Corp 2012 AA North Bay Ontario Natural Gas 64 100% Ontario Electricity
Financial Corp 2017 AA Tunis Ontario Natural Gas 69 100% Ontario Electricity
Financial Corp 2014 AA Mamquam B.C. Hydro 52 100% BC Hydro 2027 AA Moresby
Lake B.C. Hydro 6 100% BC Hydro 2022 AA Williams Lake B.C. Biomass 68 100% BC
Hydro 2018 AA Frederickson Washington Natural Gas 249 50% 3 Public Utility
Districts 2022 A Greeley Colorado Natural Gas 101 100% Public Service Company
of Colorado 2013 BBB+ Manchief Colorado Natural Gas 301 100% Public Service
Company of Colorado 2022 BBB+ Naval Station California Natural Gas 54 100%
San Diego Gas & Electric 2019 A+ Naval Training Centre California Natural
Gas 28 100% San Diego Gas & Electric 2019 A+ North Island California
Natural Gas 51 100% San Diego Gas & Electric 2019 A+ Oxnard California
Natural Gas 49 100% Southern California Edison 2020 BBB+ Curtis Palmer New
York Hydro 60 100% Niagara Mohawk 2027 A- Kenilworth New Jersey Natural Gas
30 100% Schering 2012 A- Morris Illinois Natural Gas 177 100% Exelon 2011 BBB
Equistar 2023 B+ CPILP shares a similar portfolio of assets which are
diversified across geography and investment-grade utility customers
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20 Growth
through Development Projects Frederickson 2 290 MW combined-cycled gas-fired
plant located adjacent to CPILPs current Frederickson facility 50/50
partnership with PSE Expected to be bid into a RFP process in 2012 with an
anticipated 2016 COD Manchief 2 202 MW internal-combustion gas-fired facility
located adjacent to CPILPs current Manchief facility Expected to be bid into
a RFP process in 2012 with an anticipated 2016-2017 COD Haida Gwaii 10.2 MW
hydro and wind-powered project located at CPILPs existing Moresby Lake
location Anticipated to replace diesel generation lower cost renewable
sources Expected to be into a RFP process in 2011 with an anticipated 2014 COD
Rollcast Energy ATP currently owns 60% of Rollcast Energy Inc. which is a
developer of biomass power plants in the southeastern U.S. Five 50 MW
projects in various stages of development, two of which have executed 20-year
PPAs with terms that provide for fuel cost pass-throughs Idaho Wind Partners:
183 MW (50 net); COD Q1 2011; 20 year PPA Piedmont Green Power: 53.5 MW
Biomass in GA; COD 2012; 20 year PPA Developing biomass projects through
Rollcast Energy affiliate in the U.S. Southeast Continuing to review
renewable projects in the U.S. (wind, solar and geothermal) Partnering with
experienced teams Considering wind and solar projects in Canada Policy
incentives via revenue enhancements; better than via tax benefits given our
tax position Goal to make investment at either late stage development,
construction or initial equity partys selldown
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21 Management
Team Proven track record of performance which will carry through to the newly
combined entity Strong independent board with extensive industry experience
in Canada and the US Name Experience Management Team Barry Welch CEO and
President Head of John Hancocks Bond & Corporate Finance Group IPP
developer with Thermo Electron Paul Rapisarda Managing Director 25 year Wall
Street career Involved in numerous advisory and principal transactions in the
energy and power sectors Board of Directors Irving Gerstein Member of Senate
of Canada; also on boards of Student Transportation Inc. and Medical
Facilities Corporation Ken Hartwick President, CEO and Director, Just Energy,
independent energy supplier in Canada and the US (TSX JE.UN) John McNeil
President, BDR North America Inc., Canadian consulting firm focused on
electricity and natural gas industries Holli Nichols Managing Director, SCF
Partners Formerly, Executive Vice President and CFO, Dynegy Inc R. Foster
Duncan Partner, SAIL Sustainable Partners, a cleantech investment firm
Formerly, Executive Vice President and CFO of Cinergy Corp and Managing
Member of KD Capital LLC, an affiliate of KKR Barry Welch President and CEO,
Atlantic Power
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Transaction
Sources & Uses of Financing 22 Note: Analysis conducted assuming a 1.30
exchange ratio, and $506.5 mm of cash to CPILP unitholders (1) $17.27 x 56.5
million CPILP units outstanding (2) As at June 17, 2011 (3) $14.96 x 31.3
million units issued to CPILP unitholders Total Purchase Price Cash Available
for Unitholders (C$ millions; except unit data) Gross Purchase Price $1,933.0
Purchase Price for Units (1) $975.2 Less: Assumed Debt and Preferred
Securities ($841.3) Add: Long-Term Debt (2) $616.3 Total Financing Required
$1,091.7 Add: Revolver (2) $52.8 Less: Shares Issued as Consideration
($468.7) Add: Preferred Securities (2) $225.0 Total Cash Required $622.9
Enterprise Value $1,869.4 Less: Transaction Fees ($51.1) Management Agreement
$10.0 Less: Management Agreement ($10.0) Ontario Land Transfer Tax $2.5 Less:
Ontario Land Transfer Tax ($2.5) Transaction Fees $51.1 Less: Retirement of
Revolver ($52.8) Gross Purchase Price $1,933.0 Net Cash Available for Transaction
$506.5 Sources of Financing Total Consideration Mix for Shareholders % $ Sources of Financing Cash Component 51.9% $506.5 CPILP Long Term Debt $616.3
Share Component 48.1% $468.7 CPILP Preferred Shares $225.0 $975.2 Debt
Issuance $422.9 Common Share Offering $200.0 Common Shares Issued to CPILP
Unitholders (3) $468.7 Total Sources of Financing $1,933.0
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Pro-Forma
Capital Structure 23 Pre- & Post-Transaction Capitalization (1) As at
June 17, 2011 assuming 68.6 million shares outstanding and a share price of
$14.96 (2) As at June 17, 2011 assuming 56.5 million units outstanding and a
unit price of $18.63 (3) As at June 17, 2011, based on 44.7 million shares
issued assuming a $14.96 share price ATP CPILP Adjustments Pro-Forma Debt
Senior/Project Debt $438.2 $616.3 $422.9 $1,477.5 Convertible Debentures
$204.0 $204.0 Credit Facility $52.8 ($52.8) Debt Portion of Prefs
$112.5 $112.5 Total Debt $642.2 $781.6 $370.1 $1,794.0 Market Value of
Equity Market Cap. $1,025.7 $1,052.0 ($1,052.0) $1,025.7 Equity Portion of
Prefs. $112.5 $112.5 Market Value of Issued shares $668.7 $668.7
Market Equity $1,025.7 $1,164.5 ($383.3) $1,806.9 Total Capitalization
$1,667.9 $1,946.1 ($13.1) $3,600.9 Debt / Capitalization Ratios 38.5% 40.2%
n/a 49.8% (1) (2) (3)
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