TransAlta Proposes All-Cash Offer To Acquire Canadian Hydro Developers

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Calgary, Alberta-based TransAlta Corp. says it intends to make an all-cash offer, through an acquisition entity, to acquire Calgary-based Canadian Hydro Developers at a price of C$4.55 per share.

TransAlta's offer represents a premium of approximately 30% to the volume weighted average trading price of Canadian Hydro Developers common shares on the TSX for the past 10 trading days. The proposed transaction has an enterprise value of approximately $1.5 billion.

Canadian Hydro Developers operates 694 MW of wind, hydro and biomass facilities in Alberta, Ontario, Quebec and British Columbia. It also has 252 MW of advanced-stage development projects in western and eastern Canada.

On a combined basis, TransAlta and Canadian Hydro Developers would have net generation capacity of 8,657 MW in operation. The renewables portfolio would include 1,900 MW in operation, or 22% of the combined portfolio. In addition, 572 MW are under construction, and over 600 MW are in advanced-stage development.

The transaction will be funded initially with new committed bank facilities, fully underwritten by Royal Bank of Canada, which, along with existing credit facilities and internally generated cash, will provide ample funding to take up and pay for all the outstanding Canadian Hydro Developers shares, according to TransAlta.

This initial funding will be replaced with permanent long-term funding in the debt capital markets, underpinned by raising an additional C$250 million to C$300 million of equity. Based on this approach TransAlta expects the rating agencies will confirm the company's current investment grade credit ratings. 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.

TransAlta expects to commence the offer on July 22. The offer will be open for acceptance for a period of 36 days and will expire on August 27 unless extended or withdrawn.

SOURCE: TransAlta Corp.

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