May 2 (Renewables Now) - TransAlta Corp (TSE:TA), the Calgary-based utility that wants to invest more in renewables, has formally received an initial investment of CAD 350 million (USD 260m/EUR 232m) from Brookfield Renewable Partners LP (TSE:BEP.UN).
As announced in late March, the renewables arm of Brookfield Asset Management Inc (TSE:BAM.A) will make a CAD-750-million capital injection in TransAlta by purchasing exchangeable securities. The newly-closed transaction represents the first tranche of that strategic investment, with the remaining CAD 400 million expected in October 2020.
Under the terms of the March deal, Brookfield Renewable Partners is receiving securities that are convertible, after December 31, 2024, into an equity ownership interest in TransAlta’s Alberta hydropower assets. This will be done at a value based on a multiple of the hydro assets’ future earnings before interest, tax, depreciation and amortisation (EBITDA).
The initial close of the financing transaction comes after on Friday TransAlta’s shareholders elected all of the management’s director nominees, including two experienced Brookfield executives, Harry Goldgut and Richard Legault. This happened despite the launch of legal action against the company by one of its largest shareholders -- Mangrove Partners. The investment manager is unhappy with the Brookfield partnership and called the deal “rushed, defensive and improvident”.
TransAlta expects the move to generate value in the near-term. The partnership aligns with its strategy to focus on converting coal units to gas and investing in renewables. The utility says it already is one of Canada's largest producers of wind power and Alberta's largest hydropower producer.
"We are moving swiftly to put capital to work including advancing our coal-to-gas conversions,” commented Dawn Farrell, CEO of TransAlta.
(CAD 1.0 = USD 0.744/EUR 0.664)