Capital Power completes acquisition of the La Paloma facility, anticipates closing the Harquahala facility acquisition mid-February and exchanges subscription receipts into common shares
EDMONTON, Alberta – Capital Power Corporation (TSX: CPX) (“Capital Power” or the “Company”) is pleased to announce the closing today of the acquisition of 100% of the equity interests in CXA La Paloma, LLC (“La Paloma”), owner of the 1,062 MW La Paloma natural gas-fired generation facility in Kern County, California (the “La Paloma Acquisition”).
In addition, Federal Energy Regulatory Commission (“FERC”) approval for the acquisition by a 50/50 partnership between Capital Power Investments, LLC and an affiliate of a fund managed by BlackRock’s Diversified Infrastructure business (“BlackRock”) of 100% of the equity interests in New Harquahala Generation Company, LLC (“Harquahala”) has been received and the closing of that acquisition is expected shortly, subject to normal closing conditions (the “Harquahala Acquisition” and, together with the La Paloma Acquisition, the “Acquisitions”). Harquahala owns the 1,092 MW Harquahala natural gas-fired generation facility in Maricopa County, Arizona. The Harquahala closing is anticipated in conjunction with the closing of approximately US$442 million of combined term loans, letter of credit loans and revolving loans.
The Acquisitions were previously announced on November 20, 2023. The net purchase price for the Acquisitions attributable to Capital Power is US$1.1 billion, subject to working capital adjustments. Capital Power partially financed the Acquisitions with the net proceeds of an offering of subscription receipts (the “Subscription Receipts”) for approximately $400 million, which closed on November 28, 2023 and consisted of a $300 million bought public offering and a $100 million private placement with Alberta Investment Management Corporation (“AIMCo”). Capital Power also financed the Acquisitions with the net proceeds from a public offering of $850 million principal amount of unsecured medium term notes in Canada which closed on December 15, 2023. Capital Power will be responsible for the operation, maintenance and asset management of the facilities relating to the Acquisitions and will receive an annual management fee for the Harquahala facility.
With the closing of the La Paloma Acquisition having occurred, each Subscription Receipt will be automatically exchanged in accordance with their terms, without payment of additional consideration and without further action on the part of the holders thereof, for one common share of Capital Power (“Common Share”). Trading in the Subscription Receipts is expected to be halted and the Subscription Receipts will be delisted from the TSX at the close of trading today.
Facilities Overview
Located in the U.S. WECC region1, the Acquisitions are strategically positioned within their markets and create additional growth opportunities for both the Company’s gas-fired and renewable generation businesses. Capital Power intends to leverage its deep knowledge and experience in plant operations to commercially optimize these assets and help drive long-term value as part of its broader fleet. Capital Power’s fleet of flexible and reliable gas-fired generation assets is the 5th largest in North America2 with the addition of the Acquisitions and the recently closed Frederickson 1 Generating Station acquisition.
| La Paloma | Harquahala | |
| Nameplate Capacity: | 1,062 MW | 1,092 MW |
| Location: | Kern County, California | Maricopa County, Arizona |
| Commercial Operation Date: | 2003 | 2004 |
| Commercial Arrangement: | Resource adequacy contracts through 2029 with multiple investment grade utilities and load serving entities | 100% contracted tolling agreement through 2031 with an investment grade utility |
| Equipment: | 4 Alstom GT24B CTs 4 Alstom/CE HRSGs 4 Alstom VAX STs |
3 Siemens 501G CTS 3 Nooter/Erikson HRSGs 3 Siemens STs |
| Availability3 : | 93.7% | 98.8% |
| Natural Gas Source: | Mojave Pipeline Company LLC | El Paso Natural Gas Company LLC |
| Interconnection: | PG&E | SRP; existing unutilized interconnection capacity includes 1,100 MW at the Hassayampa substation |
| Site: | 443 acres total with 412 acres available for development | 640 acres total with 496 acres available for development |
All references to dollar amounts contained herein are to Canadian dollars unless otherwise indicated.
- Western Electricity Coordinating Council
- Based on net unregulated capacity utilizing S&P Global Market Intelligence database of gas-fired generation operators (November 2023) and referenced against publicly disclosed sources where available.
- Measured as availability less forced outage factor (1-FOF) while under contract, excluding planned outages.
U.S. Securities Laws Disclosures
The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
This announcement does not constitute an offer of securities for sale in the United States, nor may any securities referred to herein be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), and the rules and regulations thereunder. The securities referred to herein have not been registered pursuant to the U.S. Securities Act or any state securities laws, there is no intention to register any of the securities in the United States or to conduct a public offering of securities in the United States.
Forward-looking Information
Certain information in this news release is forward-looking within the meaning of Canadian securities law as it relates to anticipated financial and operating performance, events or strategies. The forward-looking information or statements are provided to inform the Company’s shareholders and potential investors about management’s assessment of Capital Power’s future plans and operations. This information may not be appropriate for other purposes. The forward-looking information in this press release is generally identified by words such as will, anticipate, believe, plan, intend, target, and expect or similar words that suggest future outcomes.
Material forward-looking information in this press release includes: (i) expectations regarding the Acquisitions and the anticipated benefits (including future growth opportunities), operational impacts (including to the Company’s net gas-fired operating capacity and geographic diversification) (ii) expectations regarding the Company’s partnership and commercial arrangements with BlackRock with respect to Harquahala; (iii) expectations regarding the Company’s financing plans, transaction closing time with respect to the Harquahala Acquisition; and (iv) expectations regarding the Company’s sources of funding.
These statements are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate, including its review of the Acquisitions and re-contracting opportunities. The material factors and assumptions used to develop these forward-looking statements relate to: (i) electricity and other energy prices, (ii) anticipated performance of La Paloma and Harquahala, (iii) re-contracting opportunities, (iv) status of and impact of policy, legislation and regulations, (v) effective tax rates, (vi) anticipated facility performance, (vii) financing assumptions, including indebtedness and anticipated interest rates, and (viii) anticipated sustaining capital expenditures at the facilities.
Whether actual results, performance or achievements will conform to the Company’s expectations and predictions are subject to a number of known and unknown risks and uncertainties which could cause actual results and experience to differ materially from the Company’s expectations. Such material risks and uncertainties are: (i) changes in electricity, natural gas and carbon prices in markets in which Capital Power operates and the use of derivatives; (ii) regulatory and political environments including changes to environmental, climate, financial reporting, market structure and tax legislation; (iii) disruptions, or price volatility within our supply chains; (iv) generation facility availability, wind capacity factor and performance including maintenance expenditures; (v) ability to fund current and future capital and working capital needs; (vi) acquisitions (including the Acquisitions) and developments including timing and costs of regulatory approvals and construction; (vii) changes in the availability of fuel; (viii) ability to realize the anticipated benefits of acquisitions (including the Acquisitions); (ix) limitations inherent in the Company’s review of acquired assets; (x) changes in general economic and competitive conditions, including inflation; (xi) changes in the performance and cost of technologies and the development of new technologies, new energy efficient products, services and programs; and (xii) the risks and uncertainties discussed under the heading Risks and Risk Management in the Company’s 2022 Integrated Annual Report, which is available under the Company’s profile on SEDAR+ at www.sedarplus.com and on the Company’s website at www.capitalpower.com.
Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the specified approval date. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.
Territorial Acknowledgement
In the spirit of reconciliation, Capital Power respectfully acknowledges that we operate within the ancestral homelands, traditional and treaty territories of the Indigenous Peoples of Turtle Island, or North America. Capital Power’s head office is located within the traditional and contemporary home of many Indigenous Peoples of the Treaty 6 region and Métis Nation of Alberta Region 4. We acknowledge the diverse Indigenous communities that are located in these areas and whose presence continues to enrich the community.
About Capital Power
Capital Power is a growth-oriented power producer committed to net zero by 2045. Our balanced approach to the energy transition prioritizes reliable, affordable and decarbonized power that communities across North America can depend on.
Capital Power owns approximately 8,800 MW of power generation capacity at 31 facilities across North America Projects under construction include approximately 140 MW of renewable generation capacity and 512 MW of incremental natural gas combined cycle capacity from the repowering of Genesee 1 and 2 in Alberta, as well as approximately 350 MW of natural gas and battery energy storage systems in Ontario and approximately 70 MW of solar capacity in North Carolina in advanced development.