Altius Renewable Royalties Corp. (ARR), a recently formed subsidiary of Canada’s Altius Minerals Corp., has entered into a transaction with Dallas-based Tri Global Energy LLC (TGE) to gain future royalties related to a portfolio of wind development projects.
Altius Minerals directly and indirectly holds diversified royalties and streams that generate revenue from 15 operating mines in Canada and Brazil. Its new $30 million royalty investment into TGE will be invested in tranches over approximately the next three years as TGE achieves certain project advancement milestones, with an initial investment upon closing of $7.5 million.
TGE is committing its current portfolio of over 1.5 GW of development projects, excluding projects already vended, and any additional projects added in the future, to this new royalty investment structure with Altius, until a minimum total royalty portfolio valuation threshold is achieved. The currently committed development portfolio includes projects located in Texas, Nebraska and Illinois.
As individual pipeline projects are developed, ARR will receive a 3% gross revenue royalty on each project. This will continue until a target minimum total royalty portfolio valuation threshold is achieved.
Funding for the TGE transaction will be provided from Altius’ available cash on hand. Depending upon the scale of the overall opportunity set that develops for ARR, Altius may also consider adding additional future investment partners as either direct subsidiary level participants or through the creation of limited partnership structures.
As part of its founding, ARR has acquired a private company, Great Bay Renewables Inc. (GBR), which holds a paying royalty on the 4.7 MW Clyde River hydroelectric/solar facility in Vermont. Importantly, the GBR management will also continue as the operational management team of ARR and lead the business of further introducing the renewable energy royalty financing concept within the U.S. and elsewhere.
“This transaction with Altius will accelerate our development and allow us to extend our involvement in these projects though their financial closings,” says John Billingsley, chairman and CEO of TGE. “This investment will help power the company forward through 2021 and beyond. I believe the time is right for innovative financing products like the renewable royalty investment provided by Altius.”