AltaGas Ltd. ("AltaGas") (TSX:ALA)(TSX:ALA.PR.A)(TSX:ALA.PR.U)
announced today that its indirect wholly owned subsidiary AltaGas
Power Holdings (U.S.) Inc. has entered into a purchase and sale
agreement with affiliates of LS Power Equity Advisors, LLC to
acquire Blythe Energy, LLC ("Blythe"), which owns a 507 MW natural
gas-fired combined cycle plant (the "Blythe Energy Center"),
associated major spare parts, and a related 230 kV 67-mile electric
transmission line in Southern California, for US$515 million (the
"Acquisition").
"The Acquisition of Blythe is an important addition to our power
business. The power purchase agreement provides stable earnings and
cash flow and with the infrastructure in place today, the facility
is well positioned to access two premium power markets in
California and Arizona in the future," said David Cornhill,
Chairman and CEO of AltaGas. "The addition of natural gas-fired
power generation to our energy infrastructure portfolio in the US
provides another platform for growth to meet the increasing demand
for clean sources of energy."
The Acquisition is expected to be accretive to earnings and cash
flow per share in 2014, the first full year of ownership, and is
expected to add approximately $50 million in incremental contracted
EBITDA per year.
The Blythe Energy Center is contracted under a Power Purchase
Agreement ("PPA") through to July 2020 with Southern California
Edison ("SCE"). Contract provisions match PPA revenues to all major
plant costs.
The Blythe Energy Center is well positioned upon expiry of the
PPA in 2020 to contract with other market participants due to its
location and ability to serve both the California Independent
System Operator ("CAISO") and Desert Southwest markets. The demand
for cleaner energy sources, including natural gas, continues to be
strong across North America and is a key driver for potential
future growth of the Blythe Energy Center. Blythe is located on an
owned 76-acre site which provides a significant geographic
footprint for potential future expansion.
Investment Highlights
Strategic Fit
-- The Acquisition fits with AltaGas' vision of being one of North
America's leading energy infrastructure companies and aligns with
AltaGas' strategy of adding stable, long life assets;
-- The Acquisition is consistent with AltaGas' strategy of increasing its
clean energy portfolio by adding gas-fired generation and enhancing
power market and counterparty diversity; and
-- It is expected that the Blythe Energy Center will provide a significant
US geographic footprint for AltaGas' power business, with opportunities
for future growth.
Stable Cash Flows
-- It is expected that the Acquisition will provide stable cash flows to
further support both AltaGas' dividend and capital growth projects; and
-- Cash flows are underpinned by the PPA with SCE.
Description of the Asset
The Blythe Energy Center is a natural gas-fired combined cycle
power plant located in Blythe, California. The facility employs
proven Siemens technology and has a low base load heat rate in the
range of 7,000 to 7,500 Btu/kWh, low emissions, responsive start
times and flexible ramp rates. The facility is one of the most
economic natural gas generating facilities on the CAISO dispatch
curve.
The facility is directly connected to Southern California Gas
and interconnects with SCE and the CAISO via a 67-mile transmission
line. The transmission line is capable of transmitting 1,100 MW and
has excess capacity to meet future load growth.
The facility is also interconnected with the El Paso Natural Gas
system and is situated to re-connect to the Western Area Power
Administration ("WAPA"), providing market access optionality upon
expiry of the PPA in 2020.
The Blythe Energy Center is operated pursuant to an Operating
and Maintenance agreement with NextEra Energy Operating Services
Inc. ("NextEra"). The initial term of this agreement expires in
November 2016. NextEra Energy Resources developed, constructed and
placed into service the Blythe Energy Center in 2003.
Acquisition Funding
The Acquisition will be financed consistent with AltaGas'
current capital structure. AltaGas will continue to maintain its
strong balance sheet and financial discipline and is committed to
maintaining its investment grade credit rating.
Transaction Closing
The transaction is subject to customary approvals including
regulatory approvals from the Federal Energy Regulatory Commission
of the United States government, and filings and approvals
including the expiration or termination of the applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of
1976. The acquisition is expected to close in the second quarter of
2013.
About AltaGas Ltd.
AltaGas is an energy infrastructure business with a focus on
natural gas, power and regulated utilities. AltaGas creates value
by acquiring, growing and optimizing its energy infrastructure,
including a focus on renewable energy sources. For more information
visit: www.altagas.ca.
This news release contains forward-looking statements. When used
in this news release, the words "may", "would", "could", "will",
"intend", "plan", "anticipate", "believe", "seek", "propose",
"estimate", "expect", and similar expressions, as they relate to
AltaGas or an affiliate of AltaGas, are intended to identify
forward-looking statements. In particular, this news release
contains forward-looking statements with respect to, among other
things, the anticipated benefits of the Acquisition, the closing of
the Acquisition, the maintenance of its investment grade rating,
business objectives, expected growth, results of operations,
business projects and opportunities and financial results. These
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements. Such statements reflect AltaGas' current views with
respect to future events based on certain material factors and
assumptions and are subject to certain risks and uncertainties,
including without limitation, changes in market, competition,
governmental or regulatory developments, general economic
conditions and other factors set out in AltaGas' public disclosure
documents. Many factors could cause AltaGas' actual results,
performance or achievements to vary from those described in this
news release, including without limitation those listed above.
These factors should not be construed as exhaustive. Should one or
more of these risks or uncertainties materialize, or should
assumptions underlying forward-looking statements prove incorrect,
actual results may vary materially from those described in this
news release as intended, planned, anticipated, believed, sought,
proposed, estimated or expected, and such forward-looking
statements included in, or incorporated by reference in this news
release, should not be unduly relied upon. Financial outlook
information contained in this press release about prospective cash
flows and EBITDA is based on assumptions about future events,
including economic conditions and proposed courses of action, based
on management's assessment of the relevant information currently
available. Readers are cautioned that any such financial outlook
information contained herein should not be used for purposes other
than for which it is disclosed herein. Such statements speak only
as of the date of this news release. AltaGas does not intend, and
does not assume any obligation, to update these forward-looking
statements. The forward-looking statements contained in this news
release are expressly qualified by this cautionary statement.
Contacts: AltaGas Ltd. Investment Community
1-877-691-7199investor.relations@altagas.ca AltaGas Ltd. Media
(403) 691-9873media.relations@altagas.ca www.altagas.ca
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