TransAlta, Canadian Hydro Developers Reach Acquisition Agreement After Increasing Offer

Posted by NAW Staff on October 05, 2009 No Comments
Categories : New & Noteworthy

After months of rejecting an acquisition bid, Canadian Hydro Developers Inc. and TransAlta Corp. have reached an agreement. TransAlta increased its initial offer of C$4.55 per share to C$5.25 per share. The amended offer, which has a total value of approximately C$1.6 billion, has the unanimous support of the boards of directors of both companies.

On a combined basis, TransAlta and Canadian Hydro will have a net generation capacity of 8,657 MW in operation. The renewables portfolio will include 1,900 MW in operation, or 22% of the combined portfolio. In addition, there are 543 MW under construction and nearly 500 MW in advanced-stage development.

Steve Snyder, TransAlta's president and CEO, says the deal ‘accelerates the expansion of TransAlta's renewable portfolio and will open the door to new and exciting opportunities for employees of both companies.’

The amended offer is subject to certain conditions, including the acquisition by TransAlta of approximately 66% of the outstanding Canadian Hydro common shares.

The Canadian Hydro board of directors has received verbal opinions from its financial advisors, FirstEnergy Capital Corp. and Societe Generale, that the consideration under the amended offer is fair, from a financial point of view, to Canadian Hydro's shareholders.
Initially, the transaction will be funded with new committed bank facilities fully underwritten by Royal Bank of Canada, which, along with existing credit facilities and internally generated cash, will provide funding to take up and pay for all the outstanding Canadian Hydro shares.

This initial funding will be replaced with permanent, long-term funding in the debt capital markets, underpinned by raising C$350 million to C$400 million of equity. The transaction will not impact TransAlta's dividend policy.

Goldman Sachs and RBC Capital Markets are TransAlta's financial advisors. Burnet, Duckworth & Palmer is TransAlta's legal advisor. FirstEnergy Capital Corp. and Societe Generale are Canadian Hydro's financial advisors. Blake, Cassels & Graydon is Canadian Hydro's legal advisor.

SOURCES: TransAlta, Canadian Hydro Developers

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