Capstone Infrastructure Corp. has agreed to acquire Renewable Energy Developers (ReD) (formerly Sprott Power Corp.) for approximately C$70 million. The transaction, supported by each company's board of directors, is subject to shareholder approval.
According to Capstone, the acquisition results in a larger infrastructure company with power generation facilities across Canada, including 79 MW of installed capacity for wind.
The transaction enables Capstone to access 35 MW of wind projects with 20-year power purchase agreements (PPAs) under development in Nova Scotia, Ontario, Saskatchewan and Quebec, and the option to acquire an additional net 44 MW in wind power projects with PPAs in Ontario. These projects will require equity funding from Capstone in the amount of approximately C$60 million over the next two years, with the balance of the projects' financing requirement to be satisfied with project level debt, Capstone notes.
Michael Bernstein, president and CEO at Capstone, explains the deal will further bolster Capstone's ability to source, pursue and execute earlier-stage power opportunities.
‘With ReD's advanced-stage development projects, which are expected to enter into construction in 2013, and the surplus cash Capstone is building up over 2013 and 2014, we see this transaction as a solid strategic match that will contribute to cashflow growth for Capstone,’ Bernstein says.
Capstone's portfolio includes investments in gas co-generation, wind, hydro, biomass and solar power generating facilities, representing approximately 370 MW of installed capacity, a 33.3% interest in a district heating business in Sweden and a 50% interest in a regulated water utility in the U.K.