Pattern Energy Group Inc. has entered into an agreement to sell its minority interest in the K2 Wind project in Ontario to a consortium of investors led by Axium Infrastructure.
K2 is a 270 MW wind power facility located in the Township of Ashfield-Colborne-Wawanosh. The purchase price for Pattern’s 90 MW stake is C$216 million (approximately $166 million). The deal is part of Pattern’s accretive asset recycling strategy, the company says.
The facility, which began commercial operations in 2015, is a joint venture between Pattern Energy, an Axium-led consortium and Capital Power Corp. Capital Power has also agreed to sell its interest in the facility to the Axium consortium under the same agreement.
“K2 was a good candidate for recycling, given our minority interest,” says Mike Garland, CEO of Pattern Energy. “The sale demonstrates the confidence of Canadian investors in the Ontario market. The proceeds provide us an opportunity to redeploy capital into more accretive opportunities – improving our CAFD without issuing common equity. We have now sold two assets, El Arrayán and K2, at significant premiums to the multiple at which we trade in the markets.”
Pattern Energy expects to record a pretax gain of approximately $65.0 million to $69.0 million on the sale, subject to fourth-quarter results. Pattern Energy is also entitled to receive the cash flows from the facility through the end of calendar year 2018.
The company intends to use the net proceeds from the sale for general corporate purposes, which may include investments, acquisitions or the repayment of indebtedness.
The transaction is expected to close on or around Dec. 31, subject to customary closing conditions.