Brookfield Renewable Energy Partners LP (TSX: BEP.UN) has agreed to acquire a portfolio of 19 hydroelectric stations in Maine from a subsidiary of NextEra Energy Resources LLC for a total enterprise value of approximately $760m, subject to typical closing adjustments.
The portfolio consists of 19 hydroelectric facilities and eight upstream storage reservoir dams primarily on the Kennebec, Androscoggin and Saco rivers in Maine, with a total capacity of 351 MW and expected average annual generation of about 1.6 million megawatt hours, Brookfield said Dec 21. The portfolio is one of the region’s largest independently-owned hydro portfolios of scale and includes the two largest hydro facilities in Maine.
The acquisition, said Brookfield, offers the company a strong fit with its existing 103 MW of operating capacity on the same river systems. All output from the facilities is currently sold into the New England wholesale power market. A number of facilities in the portfolio benefit from a recent modernization program that will enhance reliability, and increase capacity and long-term generation, the company noted. All of the facilities have Federal Energy Regulatory Commission licenses, in most cases expiring after 2025 and generally until 2036 or 2048.
“These proven generation assets are an ideal investment for us as they complement our existing hydro fleet in Maine where we have a long operating history,” said Richard Legault, President and CEO of Brookfield. “This high-quality, scale portfolio increases our footprint in the attractive New England market to nearly 1,000 MW of installed capacity. This transaction also provides a unique opportunity to leverage our operating platform while positioning us to participate in rising electricity prices over time.”
The portfolio has a total of $700m of non-recourse project debt in place. The debt indentures include a requirement to seek the consent of a majority of bondholders for change of control, in the absence of which the debt is to be repurchased pursuant to the terms of the applicable indentures. Brookfield said it would fund the purchase price, and repurchase of the existing debt, if applicable, from available cash resources and committed credit facilities.
As with previous investments, Brookfield expects to have institutional partners co-invest alongside it for up to 50% of the portfolio through a private fund sponsored by Brookfield Asset Management.
The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the first quarter of 2013.
Brookfield operates one of the largest publicly-traded, pure-play renewable power platforms globally. Its portfolio is primarily hydroelectric and totals about 5,300 MW of installed capacity. This portfolio is diversified across 69 river systems and 11 power markets in the U.S., Canada and Brazil.