Pursuant to the agreement, Sprott Power will acquire each Shear Wind share for a cash consideration of $0.2213, which represents a premium to the 20-day volume-weighted trading price of approximately 20%, corresponding to an aggregate purchase price of approximately $33 million.
The acquisition places a value on the Shear Wind enterprise of approximately $79 million. In addition to the approximately $33 million consideration for the Shear Wind shares, Sprott Power is assuming approximately $51 million in debt (its share of Glen Dhu LP's long-term debt), offset by approximately $5 million in cash-on-hand following certain adjustments.
Shear Wind owns a 63.7 MW portfolio of operating and development assets in Nova Scotia, Canada. This portfolio includes a 51% interest in Glen Dhu Wind Energy LP, which operates the Glen Dhu wind farm and has a 20-year power purchase agreement (PPA) with NSPI, and a 100% interest in Fitzpatrick Mountain Wind Energy Inc., which operates the Fitzpatrick Mountain wind farm and has a 15-year PPA with NSPI.
The development assets portfolio comprises wind projects in various stages of development that have a potential aggregate installed capacity of over 860 MW.
In connection with the acquisition, Sprott Power has entered into working agreements with GAHC and Wind Canada Investments, pursuant to which, following the closing of the acquisition, Sprott Power and GAHC will complete an operating joint venture for the operating facilities, and Sprott Power and Wind Canada Investments will complete a development joint venture for the prospective projects. GAHC currently directly owns the remaining 49% of Glen Dhu LP.
Immediately following the acquisition, GAHC and Wind Canada Investments will make a cash payment of approximately $1.8 million to Sprott Power to increase GAHC's ownership of Glen Dhu LP by 2% (to a total of 51%) and to purchase a 50% interest in Fitzpatrick. This will result in Sprott Power's holding a 49% ownership interest in Glen Dhu LP and a 50% ownership interest in Fitzpatrick.
In addition, Sprott Power, indirectly through SP Development Limited Partnership, and Wind Canada Investments will enter into a new 50/50 joint development limited partnership for the prospective projects.
Sprott Power was advised by Canaccord Genuity Corp. and TD Securities Inc., and legal advice was provided by Cassels Brock & Blackwell LLP. Shear Wind was advised by Stikeman Elliott LLP and McInnes Cooper, and a fairness opinion was provided to its special committee and board by PricewaterhouseCoopers Canada LLP.
The acquisition is expected to proceed as a plan of arrangement under the Canada Business Corporations Act and to close in mid-October. The acquisition has been unanimously approved by the board of directors of Sprott Power and Shear Wind, and is subject to approval by Shear Wind shareholders, including approval of the minority shareholders.
More information on the terms of the deal is available here.