CALGARY, July 28, 2017 /CNW/ - TransAlta Renewables Inc. ("TransAlta Renewables" or the "Company") (TSX: RNW) today announced that the South Hedland power station, located in the Pilbara Region of Western Australia, has begun commercial operation. The 150 MW combined-cycle natural gas power station is one of the most efficient power plants in Western Australia, providing low cost electricity and generating low greenhouse gas emissions.
"The commissioning of South Hedland expands our strategy of investing in long-term contracted assets and providing our customers with competitively priced, clean electricity," said Brett Gellner, President. "We are pleased to add Horizon Power as a key customer, and to expand our relationship with Fortescue Metals Group. The commissioning of South Hedland also allows us to deliver on our commitment to increase the dividend to our shareholders."
The South Hedland power station is expected to contribute approximately $80 million of EBITDA on an annualized basis from 25-year power purchase agreements with Horizon Power, the state-owned utility, and Fortescue Metals Group. The South Hedland power station is a key component of the electricity infrastructure in the region and will support economic development in the region. The station will supply Horizon Power's customers in the Pilbara region as well as Fortescue Metals Group's port operations.
Effective August 1, 2017, the 26.1 million Class B shares in the capital of TransAlta Renewables and held by TransAlta Corporation will convert to 26.4 million common shares. In accordance with the Class B share terms, the Class B shares are being converted at a ratio greater than 1:1 because the construction and commissioning costs for the project were below the referenced costs agreed upon between TransAlta Renewables and TransAlta Corporation. TransAlta Corporation's voting interest in the capital of TransAlta Renewables will remain at 64% upon conversion.
As a result of commissioning the facility, the Board of Directors of TransAlta Renewables has approved an increase in the dividend of $0.06 per year or approximately 7%. The Board has, therefore, declared a dividend of $0.07833 per common share payable on September 29, 2017, October 31, 2017 and November 30, 2017, to shareholders of record at the close of business on September 1, 2017, October 2, 2017 and November 1, 2017, respectively, up from $0.07333 previously.
About TransAlta Renewables Inc.
TransAlta Renewables is among the largest of any publicly traded renewable independent power producers ("IPP") in Canada. Our asset platform and economic interests are diversified in terms of geography, generation and counterparties and consist of interests in 18 wind facilities, 13 hydroelectric facilities, eight natural gas generation facilities (including South Hedland) and one natural gas pipeline, representing an ownership interest of 2,441 MW of net generating capacity, located in the provinces of British Columbia, Alberta, Ontario, Québec, New Brunswick, the State of Wyoming and the State of Western Australia. Our objectives are to (i) provide stable, consistent returns for investors through the ownership of, and investment in, highly contracted renewable and natural gas power generation and other infrastructure assets that provide stable cash flow primarily through long-term contracts with strong counterparties; (ii) pursue and capitalize on strategic growth opportunities in the renewable and natural gas power generation and other infrastructure sectors; (iii) maintain diversity in terms of geography, generation and counterparties; and (iv) pay out 80 to 85 per cent of cash available for distribution to the shareholders of the Company on an annual basis.
Cautionary Statement Regarding Forward Looking Information
This news release contains forward looking statements, including statements regarding the business and anticipated financial performance of the Company that are based on the Company's current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements can be identified by terminology such as "plans", "expects", "proposed", "will", "anticipates", "develop", "continue", and similar expressions suggesting future events or future performance. In particular, this news release contains forward-looking statements, including certain financial outlooks, pertaining to, without limitation, the following: the ability of the South Hedland power station to provide low cost electricity and generate low greenhouse gas emissions; the EBITDA contribution of South Hedland; the conversion of the Class B shares and the number of common shares to be issued upon conversion; the ownership level of TransAlta Corporation in TransAlta Renewables; and the payment of dividends. These forward-looking statements are not historical facts but reflect the Company's current expectations concerning future plans, actions and results. These statements are subject to a number of risks and uncertainties that could cause actual plans, actions and results to differ materially from current expectations including, but not limited to: changes in tax, environmental, and other laws and regulations; disputes with counterparties; operational breakdowns, failures, or other disruptions; changes in economic and market conditions; and other risks and uncertainties discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time and as also set forth in the Company's MD&A for the year ended December 31, 2016 and 2017 Annual Information Form. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company's expectations only as of the date of this news release. The purpose of the financial outlooks contained herein is to give the reader information about management's current expectations and plans and readers are cautioned that such information may not be appropriate for other purposes. The Company disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Note: All financial figures are in Canadian dollars unless noted otherwise.
SOURCE TransAlta Renewables Inc.
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