Capital Power to acquire Decatur Energy from LS Power Equity Partners

Capital Power Corporation (TSX: CPX) has entered into an agreement to acquire Decatur Power Holdings, LLC, which owns the Decatur Energy Center from LS Power Equity Partners III for US $441 million or $587 million, subject to working capital and other closing adjustments.

The acquisition is expected to close in June 2017, subject to regulatory approvals and satisfaction of other customary closing conditions. JP Morgan represented LS Power in connection with the sale of Decatur Energy.

Decatur Energy is a 795 megawatt (MW) natural gas-fired combined cycle power generation plant located in Decatur, Alabama that operates under a tolling agreement.

“The acquisition of Decatur Energy is a significant step in the execution of our growth strategy as it further strengthens our contracted cash flow profile and increases our geographical diversification,” said Capital Power’s President and CEO, Brian Vaasjo. “The facility has more than half of its 10-year contract term remaining with a high probability of re-contracting based on its history of re-contracting and the need for capacity in the region due to supply retirements and load growth.”

The acquisition will be financed by the net proceeds raised through a $183 million subscription receipt offering and the balance to be financed through debt utilizing a temporary expansion of Capital Power’s bank facilities followed by permanent financing with an issuance of long-term debt expected later this year.

Capital Power has entered into an agreement with a syndicate of underwriters co-led by RBC Capital Markets and Scotiabank to issue 7,375,000 subscription receipts, on a bought deal basis, at an issue price of $24.75 per Subscription Receipt for gross proceeds of approximately $183 million.

The bought deal financing is expected to close on or about April 24, 2017.

photo credit: LS Power


Ted Liu
Ted Liu, M.Sc. (Mining Enginering), MBA (Finance), is the Editor of Private Capital Journal, TechnologyMetals.ca, GoldSilverMetals.ca, and the former Editor of Canadian Private Equity. Ted has been passionately tracking Canadian private capital industry since 1992, most recently served as Research Director for Canadian Venture Capital and Private Equity Association (CVCA).
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