Pattern Energy Group Inc. has entered into an agreement for the sale of its operations in Chile – consisting primarily of an 81 MW owned interest in the 115 MW El Arrayán Wind project – to affiliates of Arroyo Energy Investors.
Pattern Energy will receive cash consideration of $67 million. This price represents a cash available for distribution (CAFD) multiple that is greater than the CAFD multiple for projects the company has acquired in the past. Pattern Energy also expects to eliminate more than $1 million of annual overhead related to managing the business in Chile.
“The sale of El Arrayán Wind is an excellent result for us. The price represents a 30 percent uplift over El Arrayán Wind’s contribution to the company’s current value,” says Mike Garland, CEO of Pattern Energy. “While the purchase price demonstrates material embedded value in our assets, the primary reason for the sale was strategic. Chile was a good candidate for sale as it was one of the higher-cost operations in our fleet because of the distance from the rest of our operations and the different legal, tax and regulatory environments. The proceeds of the sale will go to either make further accretive investments, pay down debt, buy back stock or other corporate purposes.”
El Arrayán Wind is located approximately 400 kilometers north of Santiago on the coast of Chile. The facility commenced commercial operations in the second quarter of 2014, and approximately 70% of its production is contracted for sale through a long-term, fixed-for-floating hedge with Minera Los Pelambres.
The transaction is expected to close within 90 days, subject to customary closing conditions.
