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Pattern Energy (PEGI) Plans $125M Common Stock Offering; Previews Q2 Results

July 21, 2015 4:22 PM EDT
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Pattern Energy (NASDAQ: PEGI) announced that it intends to offer, subject to market and other considerations, up to $125 million of shares of its Class A common stock in an underwritten public offering (the "Equity Offering"). The Company expects to grant the underwriters of the Equity Offering a 30-day option to purchase up to an additional 15% of the entire offering amount solely to cover over-allotments, if any.

The Company intends to use the net proceeds from the Equity Offering, together with the net proceeds from a concurrent private offering of $225 million aggregate principal amount of convertible senior notes, for the repayment of a portion of the outstanding indebtedness incurred in connection with the Company's purchase of interests in the K2, Lost Creek and Post Rock wind projects, the acquisition of non-controlling interests in the Gulf Wind project (described below), the prepayment of Gulf Wind project level indebtedness and general corporate purposes.

The Equity Offering is being made through an underwriting group led by BMO Capital Markets, BofA Merrill Lynch and Citigroup, as joint book-running managers of the offering and the representatives of the underwriters.

Proposed Acquisition of Remaining 170 MW of Gulf Wind

The Company also announced that it intends to acquire the remaining 170 MW of the 283 MW Gulf Wind facility in Kenedy County, Texas.

A subsidiary of Pattern Energy has entered into a Purchase Agreement with Pattern Energy Group LP, a Delaware limited partnership ("Pattern Development"), to purchase Pattern Development's retained interest in the Gulf Wind facility for a cash purchase price of $13.0 million. A subsidiary of Pattern Energy has also entered into a Purchase and Sale Agreement with MetLife Capital, Limited Partnership, a Delaware limited partnership (the "Seller"), to purchase 100 percent of the Seller's interest in the Gulf Wind facility for a cash purchase price of approximately $72.8 million. Upon completion of these acquisitions, the Company will own 100 percent of the Gulf Wind facility and its owned interest across its entire portfolio will increase to 2,282 MW.

These acquisitions, upon completion, will expand the Company's ownership of a facility located in a strong wind resource area. The Pattern Energy team has been operating the facility since it went into commercial operation in 2009. The Company expects to prepay 100 percent of the outstanding balance of the Gulf Wind facility's term loan upon, or shortly after, the closing of the two acquisitions. The outstanding balance of such project debt is approximately $154.1 million.

Quarterly Dividend

On July 21, 2015, the Company declared an increased dividend for the third quarter 2015, payable on October 30, 2015, to holders of record on September 30, 2015, in the amount of $0.3630 per Class A share, which represents $1.452 on an annualized basis. This is a 3 percent increase from the second quarter 2015 dividend of $0.3520.

2015 Second Quarter Outlook

The Company estimates that its cash available for distribution for the three months ended June 30, 2015 will be in the range of approximately $26.0 million to $28.0 million, although it has not yet completed its quarter-end procedures or finalized its results of operations for the three months ended June 30, 2015. In addition, the Company estimates that its proportional MWh sold for the three months ended June 30, 2015 was approximately 1.2 million MWh which, after adjusting for certain reimbursements that the Company receives for curtailment or other contractual provisions, is approximately 10% below the Company's long-term expectations. These estimates and the estimates of the underlying components thereof, were prepared by, and are the responsibility of, the Company's management. While these estimates are presented with numerical specificity and considered reasonable by management, actual results may differ. Investors should not place undue reliance on these estimates, and they should not be regarded as a representation that estimated results will be achieved. Cash available for distribution is a non-U.S. GAAP financial measure.

The following table provides a reconciliation of the range of the Company's estimated net cash provided by operating activities to the range of its estimated cash available for distribution for the three months ended June 30, 2015:

(U.S. dollars, thousands)

Three months endedJune 30, 2015

Estimated net cash provided by operating activities

$

23,700 - 35,700

Estimated changes in current operating assets and liabilities

9,600 - (400)

Estimated network upgrade reimbursement

600

Release of restricted cash(a)

1,500

Estimated operations and maintenance capital expenditures

(300)

Estimated transaction costs for acquisitions

900

Estimated distributions from unconsolidated investments

7,800

Other

(100)

Less:

Estimated distributions to noncontrolling interests

(800)

Estimated principal payments paid from operating cash flows

(16,900)

Estimated cash available for distribution

$

26,000 - 28,000

(a)

To fund project and general and administrative costs.



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