BOSTON, Jan. 30, 2014 /PRNewswire/ -- Atlantic Power
Corporation (TSX: ATP; NYSE: AT) (the "Company"), today announced
that, as part of the Company's ongoing plans to address its
upcoming debt maturities and improve its financial flexibility,
Atlantic Power Limited Partnership ("APLP"), a wholly-owned
indirect subsidiary of the Company, launched the syndication of new
senior secured credit facilities, comprising up to $600 million in aggregate principal amount of
senior secured term loan facilities and up to $200 million in aggregate principal amount of
senior secured revolving credit facilities (collectively, the "new
credit facilities"). The Company and its subsidiaries expect to use
the new credit facilities to:
- replace the Company's existing US$150M senior secured revolving credit
facility;
- fund the optional prepayment or redemption of certain
outstanding debt securities issued by subsidiaries of the Company
referred to below;
- provide for ongoing working capital needs of APLP and its
subsidiaries;
- support APLP's and its subsidiaries' collateral support
obligations to contract counterparties;
- provide for general corporate purposes of APLP and its
subsidiaries;
- (subject to certain limitations) provide for ongoing working
capital needs, general corporate purposes, and collateral support
obligations to contract counterparties of Atlantic Power
Generation, Inc. ("APGI"), another wholly-owned subsidiary of the
Company;
- fund a debt service reserve, and pay transaction costs and
expenses; and
- (upon closing) make a distribution to the Company from
remaining proceeds of the term loans, which the Company may use for
any corporate purpose, including, in the discretion of the Company,
additional debt reduction which may, taking into account available
funds, market conditions and other relevant factors, include steps
to repurchase or redeem, by means of a tender offer or otherwise, a
portion of the Company's 9.0% senior unsecured notes due 2018 (the
"9.0% Notes").
The Company will optionally prepay or redeem in whole, at a
price equal to par plus accrued interest and applicable make-whole
premium, the following debt securities of its subsidiaries using
funds that will be available under the new credit facilities:
- the $190,000,000 aggregate
principal amount outstanding of 5.9% Senior Notes due 2014 issued
by Curtis Palmer LLC; and
- the $150,000,000 aggregate
principal amount outstanding of 5.87% Senior Guaranteed Notes,
Series A, due 2015 and the $75,000,000 aggregate principal amount
outstanding of 5.97% Senior Guaranteed Notes, Series B, due 2017
issued by Atlantic Power (US) GP.
The early prepayment of the Atlantic Power (US) GP securities
was facilitated by the Company's recent successful consent
solicitation under which one hundred percent of the noteholders
approved the issuer's solicitation of a waiver of the prepayment
notice provisions of the Note Purchase Agreement governing such
securities.
As previously disclosed in the Company's Quarterly Report on
Form 10-Q for the quarter ended September
30, 2013, the Company indicated that by the third quarter of
2014, it may trigger certain restrictions on its ability to make
dividend payments as a result of failing the fixed charge coverage
ratio included in the restricted payments covenant of the indenture
governing the 9.0% Notes, which must be at least 1.75 to 1.00,
measured on a rolling four quarter basis, including after giving
effect to certain pro forma adjustments. The Company currently
believes that primarily due to the aggregate impact of the
make-whole payment and charges for unamortized debt discount and
fee expenses associated with the early prepayment or redemption of
securities described above (all of which will be reflected as
charges to the Company's 2014 first quarter results), the Company
will fail to meet the fixed charge coverage ratio as early as late
February. As a consequence, further dividend payments, which are
paid at the discretion of the Company's board of directors, in the
aggregate cannot exceed the covenant's "basket" provision of the
greater of $50 million and 2% of
consolidated net assets (approximately $68
million at September 30, 2013)
until such time that the fixed charge coverage ratio were to be
satisfied.
The Company's existing senior secured credit facilities (the
"existing revolving credit facilities") contain certain guaranties,
which will be terminated in connection with the termination of the
existing revolving credit facilities. In addition, the terms of the
Company's 9.0% Notes provide that the guarantors of such existing
revolving credit facilities guarantee the 9.0% Notes. As a result,
upon termination of the existing revolving credit facilities and
the related guaranties, the guaranties under the 9.0% Notes will be
cancelled and the guarantors of the 9.0% Notes will be released
from all of their obligations under such guaranties.
The new credit facilities will be secured by a pledge of the
equity interests in APLP and its subsidiary guarantors, guaranties
from the APLP subsidiary guarantors, a pledge of certain material
contracts and certain mortgages over material real estate rights,
an assignment of all revenues, funds and accounts of APLP and its
subsidiary guarantors, and certain other assets. The new credit
facilities will not be otherwise guaranteed or secured by the
Company or any of its subsidiaries (other than the APLP subsidiary
guarantors).
APLP's existing $210 million
aggregate principal amount of 5.95% Medium Term Notes due
June 23, 2036 (the "MTNs") prohibit
APLP (subject to certain exceptions) from granting liens over any
of its assets (and those of its material subsidiaries) to secure
any indebtedness, unless the MTNs are secured equally and ratably
with such other indebtedness. Accordingly, in connection with the
execution of the new credit facilities, APLP will grant an equal
and ratable security interest in the collateral package securing
the new credit facilities in favor of the trustee for the benefit
of the holders of the MTNs.
The closing of the new credit facilities is subject to
syndication, the conclusion of negotiations, execution of final
documentation, receipt of requisite approvals and satisfaction of
customary closing conditions. There can be no assurance that APLP
will be successful in its syndication efforts or that APLP will be
able to enter into the new credit facilities.
The Company has appointed Goldman Sachs Lending Partners LLC and
Bank of America Merrill Lynch as joint lead arrangers for the new
credit facilities.
Subject to the conclusion of negotiations and execution of
definitive documentation, the following is a summary of certain
anticipated terms of the new credit facilities.
The new credit facilities will require APLP and its subsidiary
guarantors to maintain a leverage ratio of total debt to adjusted
EBITDA, and an interest coverage ratio of adjusted EBITDA to cash
interest expense. In addition, the new credit facilities will
include customary restrictions and limitations on APLP's and its
subsidiary guarantors' ability to (i) incur additional
indebtedness, (ii) grant liens on any of their assets, (iii) change
their conduct of business or enter into mergers, consolidations,
reorganizations, or certain other corporate transactions, (iv)
dispose of assets, (v) modify material contractual obligations,
(vi) enter into affiliate transactions, (vii) incur capital
expenditures, and (viii) make dividend payments or other
distributions, in each case subject to customary carve-outs and
exceptions and various negotiated thresholds.
If the Company experiences a change of control (as defined in
the new credit facilities), unless the Company elects to make a
voluntary prepayment of the term loans under the new credit
facilities, it will be required to offer each electing lender to
prepay such lender's term loans under the new credit facilities at
a price equal to 101% of par.
The new credit facilities will also be subject to customary
mandatory prepayment provisions, including:
- from proceeds of assets sales, insurance proceeds, and
incurrence of indebtedness, in each case subject to applicable
thresholds and customary carve-outs; and
- using 50% of excess cash flow from APLP.
Cautionary Note Regarding Forward-looking Statements
To the extent any statements made in this news release 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 and under Canadian
securities law (collectively, "forward-looking statements").
Certain statements in this news release may constitute
"forward-looking statements", which reflect the expectations of
management regarding the future growth, results of operations,
performance and business prospects and opportunities of our Company
and our projects. These statements, which are based on certain
assumptions and describe our future plans, strategies and
expectations, can generally be identified by the use of the words
"may," "will," "project," "continue," "believe," "intend,"
"anticipate," "expect" or similar expressions that are predictions
of or indicate future events or trends and which do not relate
solely to present or historical matters. Examples of such
statements in this press release include, but are not limited, to
statements with respect to the following:
- the successful syndication, negotiation (including the
definitive terms of relevant covenants) and execution of the new
credit facilities;
- the Company's general expectations regarding the use of
proceeds;
- the specific series of debt securities of the Company's
subsidiaries to be redeemed or prepaid, if at all; and
- the Company's potential compliance or non-compliance with the
fixed charge coverage ratio in the indenture governing the
Company's 9.0% Notes.
Forward-looking statements involve significant risks and
uncertainties, should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indications of whether or not or the times at or by which such
performance or results will be achieved. Please refer to the
factors discussed under "Risk Factors" in the Company's periodic
reports as filed with the Securities and Exchange Commission from
time to time for a detailed discussion of the risks and
uncertainties affecting our Company. Although the forward-looking
statements contained in this news release are based upon what are
believed to be reasonable assumptions, investors cannot be assured
that actual results will be consistent with these forward-looking
statements, and the differences may be material. These
forward-looking statements are made as of the date of this news
release and, except as expressly required by applicable law, the
Company assumes no obligation to update or revise them to reflect
new events or circumstances.
About Atlantic Power
Atlantic Power owns and operates a diverse fleet of power
generation assets in the United
States and Canada. Atlantic
Power's power generation projects sell electricity to utilities and
other large commercial customers largely under long-term power
purchase agreements, which seek to minimize exposure to changes in
commodity prices. Its power generation projects in operation have
an aggregate gross electric generation capacity of approximately
3,018 MW in which its aggregate ownership interest is approximately
2,098 MW. Its current portfolio consists of interests in
twenty-nine operational power generation projects across eleven
states in the United States and
two provinces in Canada.
Atlantic Power has a market capitalization of approximately
$400 million and trades on the New
York Stock Exchange under the symbol AT and on the Toronto Stock
Exchange under the symbol ATP. For more information, please visit
the Company's website at www.atlanticpower.com or contact:
Atlantic Power Corporation
Amanda Wagemaker, Investor
Relations
(617) 977-2700
info@atlanticpower.com
Copies of financial data and other publicly filed documents are
filed on SEDAR at www.sedar.com or on EDGAR at
www.sec.gov/edgar.shtml under "Atlantic Power Corporation" or on
the Company's website.
SOURCE Atlantic Power Corporation