- $491.6M non-recourse construction and term project debt
- Three tranches with varying terms to maturity and principal payments
- Fixed interest rate of 4.22% and 4.46%
LONGUEUIL, QC, March 17, 2015 /CNW Telbec/ - Innergex Renewable Energy Inc. (TSX: INE) ("Innergex" or the "Corporation") announces that Boulder Creek Power Limited Partnership and Upper Lillooet River Power Limited Partnership have jointly closed a $491.6 million non-recourse construction and term project financing for the Boulder Creek and Upper Lillooet River run-of-river hydroelectric projects located in British Columbia, Canada. The developer of these projects is Creek Power Inc., a joint venture between Innergex (which owns 66.67%) and Ledcor Power Group Ltd. (which owns 33.33%).
"This is the largest project-level financing Innergex has ever secured. We are very satisfied with terms that provide for fixed-rate debt at an attractive rate over the life of the power purchase agreements for these projects. In addition, we were able to work with our lenders to optimize the cash flows that will be generated by the facilities over time", states Michel Letellier, President and Chief Executive Officer of the Corporation. "Construction is progressing well and the projects remain on time and on budget", adds Mr. Letellier.
The $491.6 million financing has been arranged by The Manufacturers Life Insurance Company as agent and lead lender, with the Caisse de Dépôt et placement du Québec and The Canada Life Assurance Company as lenders. It comprises three facilities, or tranches:
- A $191.6 million construction loan carrying a fixed interest rate of 4.22%; following the start of the facilities' commercial operations, it will convert into a 25-year term loan and the principal will be amortized over a 20-year period, starting in the sixth year;
- A $250 million construction loan carrying a fixed interest rate of 4.46%; following the start of the facilities' commercial operations, it will convert into a 40-year term loan and the principal will begin to be amortized after the 25-year term loan's maturity;
- A $50 million construction loan carrying a fixed interest rate of 4.46%; following the start of the facilities' commercial operations, it will convert into a 40-year term loan and its principal will be reimbursed at maturity.
Proceeds of the financing will be used to pay for the two projects' construction costs, as well as a loss of approximately $68.0 million realized upon settlement of the bond forward contracts used to fix the interest rate on the loans prior to closing and therefore protect the two projects' expected returns. This loss results from a decrease in benchmark interest rates between the date the bond forwards were entered into (between September and December 2013) and the valuation date (March 17, 2015) and is compensated by lower interest payments for the duration of the loans.
The Boulder Creek and Upper Lillooet River hydroelectric projects are located on Crown land, approximately 70 km northwest of Pemberton, British Columbia. Construction began in 2013 and commercial operation is expected to begin by the end of 2016. Boulder Creek will have an installed capacity of 25.3 MW and an average annual production estimated to reach 92,500 MWh. Upper Lillooet will have an installed capacity of 81.4 MW and an average annual production estimated to reach 334,000 MWh. All of the electricity these facilities will produce is covered by two 40-year fixed-price power purchase agreements with BC Hydro, which were obtained under that province's 2008 Clean Power Call Request for Proposals and which provide for an annual adjustment to the selling price based on a portion of the Consumer Price Index.
About Innergex Renewable Energy Inc.
Innergex Renewable Energy Inc. is a leading Canadian independent renewable power producer. Active since 1990, the Company develops, owns and operates run-of-river hydroelectric facilities, wind farms and solar photovoltaic farms and carries out its operations in Quebec, Ontario and British Columbia and in Idaho, USA. Its portfolio of assets currently consists of: (i) interests in 33 operating facilities with an aggregate net installed capacity of 687 MW (gross 1,194 MW), including 26 hydroelectric operating facilities, six wind farms, and one solar photovoltaic farm; (ii) interests in five projects under development or under construction with an aggregate net installed capacity of 208 MW (gross 319 MW), for which power purchase agreements have been secured; and (iii) prospective projects with an aggregate net capacity totaling 3,190 MW (gross 3,330 MW). Innergex Renewable Energy Inc. is rated BBB- by S&P. Its shares are listed on the Toronto Stock Exchange under the symbol "INE".
The Corporation's strategy for building shareholder value is to develop or acquire high-quality facilities that generate sustainable cash flows and provide an attractive risk-adjusted return on invested capital, and to distribute a stable dividend.
Forward-Looking Information Disclaimer
In order to inform readers of the Corporation's future prospects, this press release contains forward-looking information within the meaning of applicable securities laws ("Forward-Looking Information"). Forward-Looking Information can generally be identified by the use of words such as "projected", "potential", "expect", "will", "should", "estimate", "forecasts", "intends", or other comparable terminology that states that certain events will or will not occur. It represents the estimates and expectations of the Corporation relating to future results and developments as of the date of this press release. It includes future-oriented financial information, such as expected production and estimated project costs, to inform readers of the potential financial impact of the Boulder Creek and Upper Lillooet River development projects. Such information may not be appropriate for other purposes.
Forward-Looking Information in this press release is based on certain key expectations and assumptions made by the Corporation. The following table outlines Forward-Looking Information contained in this press release, the principal assumptions used to derive this information and the principal risks and uncertainties that could cause actual results to differ materially from this information.
Principal Risks and Uncertainties
For each facility, the Corporation determines a long-term average annual level of electricity production ("LTA") over the expected life of the facility, based on engineers' studies that take into consideration a number of important factors: for hydroelectricity, the historically observed flows of the river, the operating head, the technology employed and the reserved aesthetic and ecological flows; for wind energy, the historical wind and meteorological conditions and turbine technology; and for solar energy, the historical solar irradiation conditions, panel technology and expected solar panel degradation. Other factors taken into account include, without limitation, site topography, installed capacity, energy losses, operational features and maintenance. Although production will fluctuate from year to year, over an extended period it should approach the estimated long-term average.
Improper assessment of water, wind and sun resources and associated electricity production
Variability in hydrology, wind regimes and solar irradiation
Equipment failure or unexpected operations & maintenance activity
Estimated project costs, expected obtainment of permits, start of construction, work conducted and start of commercial operation for Development Projects or Prospective Projects
For each development project, the Corporation provides an estimate of project costs based on its extensive experience as a developer, directly related incremental internal costs, site acquisition costs and financing costs, which are eventually adjusted for projected costs provided by the engineering, procurement and construction (EPC) contractor retained for the project.
The Corporation provides indications regarding scheduling and construction progress for its development projects and indications regarding its Prospective Projects, based on its extensive experience as a developer.
Performance of counterparties, such as the EPC contractors
Delays and cost overruns in the design and construction of projects
Obtainment of permits
Interest rate fluctuations and availability of financing
Relationships with stakeholders
Regulatory and political risks
The material risks and uncertainties that may cause actual results and developments to be materially different from current expressed Forward-Looking Information are referred to in the Corporation's Annual Information Form in the "Risk Factors" section and include, without limitation: the ability of the Corporation to execute its strategy for building shareholder value; its ability to raise additional capital and the state of capital markets; liquidity risks related to derivative financial instruments; variability in hydrology, wind regimes and solar irradiation; delays and cost overruns in the design and construction of projects; uncertainty surrounding the development of new facilities; variability of installation performance and related penalties; and the ability to secure new power purchase agreements or to renew existing ones.
Although the Corporation believes that the expectations and assumptions on which Forward-Looking Information is based are reasonable, readers of this press release are cautioned not to rely unduly on this Forward-Looking Information since no assurance can be given that they will prove to be correct. The Corporation does not undertake any obligation to update or revise any Forward-Looking Information, whether as a result of events or circumstances occurring after the date of this press release, unless so required by legislation.
SOURCE Innergex Renewable Energy Inc.
For further information: Marie-Josée Privyk, CFA, SIPC, Director - Communications and Sustainable Development, 450-928-2550, ext. 222, [email protected], www.innergex.com