BOSTON, Sept. 16, 2014 /CNW/ --
- Update on outcome of strategic review
- Sale or merger of Company not in best interests of Company or
its stakeholders at this time
- Continue to operate independently and execute on business
plan
- Continue to assess other potential options, including asset
sales or joint ventures
- Dividend reduced to Cdn$0.12
annually from Cdn$0.40
- August dividend of Cdn$0.03333 to
be paid as scheduled on September
30
- Company to move to quarterly dividend rate of Cdn$0.03, with first quarterly dividend to be
declared in November and paid at the end of December 2014
- Company announces President and CEO transition and appoints
Director Ken Hartwick as Interim
President and CEO
- Targeting additional corporate expense reductions of
approximately $7 million annually,
for total run-rate savings of approximately $15 million annually in 2015
- Reaffirmed 2014 guidance for Project Adjusted EBITDA and
Free Cash Flow
- Strong liquidity as of June 30,
2014 of $261 million,
including $158 million of
unrestricted cash
Atlantic Power Corporation (NYSE: AT) (TSX: ATP) ("Atlantic
Power" or the "Company") announced today that as part of its
previously announced strategic review process, it has concluded
that a sale or merger of the Company is not in the best interests
of the Company or its stakeholders at this time. Atlantic
Power also announced a reduction in its dividend rate to
Cdn$0.12 from Cdn$0.40 on an annual basis.
With the assistance of its external financial advisors, Goldman,
Sachs & Co. and Greenhill & Co., LLC, Atlantic Power's
Board of Directors conducted a thorough review of the options
available to the Company with respect to a possible sale or
merger. The Board of Directors has determined that the
interests of the Company and its stakeholders are best served at
this time by continuing to operate as an independent company and
executing the Company's business plan, including the objectives of
enhancing the value of its existing assets through optimization
investments and commercial activities, delevering its balance sheet
to improve both its cost of capital and ability to compete for new
investments, and utilizing the Company's core competencies to
create proprietary investment opportunities. In addition, the
Company will continue to assess other potential options, including
asset sales or the contribution of assets to a joint venture in
order to raise additional capital for growth and/or debt
reduction.
The Company intends to continue to allocate a portion of its
Free Cash Flow to optimization investments in its existing projects
that are expected to produce attractive returns. As
previously disclosed, Atlantic Power is on target to invest
$17 million in such optimization
projects in 2014 (for total 2013-2014 investments of $27 million) to boost output, improve efficiency
and reduce costs, with an expected cash return of at least
$8 million annually beginning in
2015. As part of its commercial optimization efforts, the
Company is proactively seeking extensions of existing power
purchase agreements at several of its projects prior to their
expiration dates in 2018 and later. The Company also intends
to pursue external growth opportunities with accretive returns, to
the extent available.
The Company also intends to continue its efforts to reduce
general and administrative and other corporate expenses. In
particular, the Company disclosed in its second quarter ("Q2") 2014
earnings call presentation that it expected reductions in the areas
of development and other corporate expenses to exceed the
$8 million goal that was initially
communicated on the Company's Q2 2013 earnings call. Since
the Q2 2014 earnings call, the Company has identified additional
cost savings such that annual run-rate cost savings are expected to
total approximately $15 million in
2015 relative to 2013. Certain expenses related to today's
announcements may affect 2014 Free Cash Flow.
At June 30, 2014, the Company had
a strong liquidity position of $261
million, including $158
million of unrestricted cash, out of which the Company plans
to use $41 million to repay a
Cdn$45 million convertible debenture
maturity in October 2014. After that debt repayment, the
Company will not have any maturities of non-amortizing debt for
almost thirty months, when the next convertible debenture maturity
occurs in March 2017.
As discussed on the Q2 2014 earnings call, Atlantic Power
continues to expect 2014 Project Adjusted EBITDA of $280 to $305 million and Free Cash Flow of
$0 to $25 million, which is net of
approximately $52 to $55 million of
term loan amortization and approximately $17
million of discretionary optimization investments.
Revised Dividend Rate
As previously disclosed, the allocation of a significant portion
of the Company's available cash flow to mandatory debt amortization
reduces the amount of cash flow available for other corporate
purposes. As part of the strategic review process, the Board
of Directors, together with management, assessed the best uses of
currently anticipated Free Cash Flow in order to meet the Company's
objectives, including enhancing the value of existing assets,
delevering its balance sheet to improve both its cost of capital
and ability to compete for new investments, and providing a current
return to its shareholders. After taking into consideration
all of these objectives, the Board of Directors has determined to
set a dividend level of Cdn$0.12 per
share on an annual basis, equivalent to approximately US$13 million annually.
Going forward, Atlantic Power intends to pay dividends on a
quarterly basis. As previously announced, the monthly
dividend of Cdn$0.03333 declared
August 15, 2014 will be paid
September 30, 2014. The Company
will then move to a quarterly dividend rate of Cdn$0.03, with the first quarterly dividend to be
declared in November and paid at the end of December 2014.
President and CEO Transition
Atlantic Power's Board of Directors also announced today that it
has appointed Director Ken Hartwick,
51, as Interim President and CEO effective immediately, following
the mutual agreement for Barry Welch
to step down as President, CEO and a Director of the Company.
Mr. Hartwick will remain a member of Atlantic Power's Board.
He will not be a candidate for the permanent President and CEO
position and will continue his role as a member of the Board
following the appointment of a new President and CEO. The
Board has commenced a process to identify and evaluate candidates
to serve as the Company's next President and CEO and will promptly
engage a leading executive search firm to assist in the
process.
Mr. Hartwick has served as a member of the Board of Atlantic
Power since 2004 and has more than 15 years of management
experience in the energy sector and 20 years of experience in the
financial sector. Mr. Hartwick's experience in the energy
industry spans several markets, and he recently served as President
and CEO for Just Energy Group Inc., an integrated retailer of
commodity products that sells to residential and commercial
businesses.
"The Board, following a comprehensive review of options
available to Atlantic Power, has determined that the interests of
the Company and its stakeholders are best served at this time by
continuing to operate as an independent company and executing the
Company's business plan," said Irving
Gerstein, Chairman of the Board of Atlantic Power. "As
part of this process, and in order for the Company to be better
positioned to achieve its objectives, the Board has reset the
dividend. Additionally, we are pleased that Ken has agreed to
assume the role of Interim President and CEO and are confident that
his in-depth knowledge of Atlantic Power and his expertise as a
successful senior executive in the energy sector will allow us to
effect a seamless transition as we search for a permanent President
and CEO. Ken has been a valuable member of our Board since
2004. Under his leadership, Atlantic Power will focus on
enhancing the value of its existing assets, deleveraging the
balance sheet and utilizing the Company's core competencies to
create proprietary investment opportunities. Atlantic Power
has a diverse set of power generating assets and we are confident
that this is the best path forward to drive value for
shareholders. Lastly, we thank Barry for his years of service
and wish him the best in his future endeavors."
Project Adjusted EBITDA and Free Cash Flow are not recognized
measures under generally accepted accounting principles in
the United States ("GAAP") and do
not have standardized meanings prescribed by GAAP. Therefore,
these measures may not be comparable to similar measures presented
by other companies. The Company has not provided a
reconciliation of forward-looking non-GAAP measures due primarily
to variability and difficulty in making accurate forecasts and
projections, as not all information necessary for quantitative
reconciliation is available to the Company without unreasonable
efforts. As previously disclosed, the Company's Free
Cash Flow guidance for 2014 excludes approximately $49 million of costs related to its debt
refinancing and repurchase transactions and $8 million of Piedmont debt repayment.
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 2,945 MW in which its
aggregate ownership interest is approximately 2,024 MW. Its
current portfolio consists of interests in twenty-eight operational
power generation projects across eleven states in the United States and two provinces in
Canada.
Atlantic Power 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" or on Atlantic
Power's website. Supplemental investor information related to
the revised dividend rate and the outcome of the Company's
strategic review can be found in the Investors Section of the
Company's website.
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 the Company
and its projects. These statements, which are based on
certain assumptions and describe the Company's 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 Company will continue to assess other potential options,
including asset sales or the contribution of assets to a joint
venture in order to raise additional capital for growth and/or debt
reduction;
- the Company intends to continue to allocate a portion of its
Free Cash Flow to optimization investments in its existing projects
that are expected to produce attractive returns;
- the Company's ability to execute its business plan, including
the objectives of enhancing the value of its existing assets
through optimization investments and commercial activities,
delevering its balance sheet to improve both its cost of capital
and ability to compete for new investments, and utilizing the
Company's core competencies to create proprietary investment
opportunities;
- the Company is on target to invest $17
million in such optimization projects in 2014 (for total
2013-2014 investments of $27 million)
to boost output, improve efficiency and reduce costs, with an
expected cash return of at least $8
million annually beginning in 2015;
- the Company's ability to seek extensions of existing power
purchase agreements at several of its projects prior to their
expiration dates in 2018 and later;
- the Company intends to pursue external growth opportunities
with accretive returns, to the extent available;
- the Company intends to continue its efforts to reduce general
and administrative and other corporate expenses;
- the Company expects reductions in the areas of development and
other corporate expenses in 2014 to exceed the $8 million goal that was initially communicated
on the Company's Q2 2013 earnings call. Together with
subsequent savings expected to be realized in 2015, the Company
expects this will result in total run-rate cost savings of
approximately $15 million annually in
2015 relative to 2013;
- certain expenses related to today's announcements may affect
2014 Free Cash Flow;
- the Company plans to use $41
million to repay a Cdn$45
million convertible debenture maturity in October 2014;
- 2014 Project Adjusted EBITDA will be in the range of
$280 to $305 million;
- 2014 Free Cash Flow will be in the range of $0 to $25 million, excluding refinancing and debt
repurchase transaction costs and principal repayment of
Piedmont construction debt and
including $17 million of
discretionary optimization investments;
- the dividend to be paid on September 30,
2014 will be paid as scheduled;
- dividend payments will be made on a quarterly basis beginning
at the end of December 2014, if and
when declared by, and subject to the discretion of, the Company's
Board of Directors; and
- the results of operations and performance of the Company's
projects, business prospects, opportunities and future growth of
the Company will be as described herein.
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" and "Forward-Looking
Information" 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 the Company,
including, without limitation, the Company's ability to evaluate
and/or implement potential options, including asset sales or joint
ventures to raise additional capital for growth and/or potential
debt reduction, and the impact any such potential options may have
on the Company or the Company's stock price. 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. The financial outlook
information contained in this news release is presented to provide
readers with guidance on the cash distributions expected to be
received by the Company and to give readers a better understanding
of the Company's ability to pay its current level of distributions
into the future. Readers are cautioned that such information
may not be appropriate for other purposes.
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SOURCE Atlantic Power Corporation