Energy & Power
Innergex and Desjardins acquire 30.5MW Sainte-Marguerite-1 hydro facility
June 27, 2014 By Alyssa Dalton
June 27, 2014 – Innergex Renewable Energy and the Desjardins Group Pension Plan have completed the acquisition from Hydroméga Group of Companies of the Sainte-Marguerite-1 (SM-1) run-of-river hydroelectric facility located in Quebec.
“The acquisition of the SM-1 facility provides us with both immediate contributions to cash flows and a quality hydro asset with a very high long-term value,” said Michel Letellier, Innergex president and CEO. “Furthermore, we are very pleased to have developed a transaction structure that allows us to compete in acquiring renewable energy infrastructure assets at prevailing market prices, while leveraging the low capital cost and long-term horizon of a pension fund, as well as our expertise as an operator, to achieve an attractive after-tax internal rate of return for our shareholders. We intend to replicate this structure for future acquisitions of renewable energy assets.”
Sylvain Gareau, vice president responsible for the plan, said the company is proud to partner with Innergex for an investment of this nature.
“We have been associated with Innergex since its inception and this partnership is important, both for our organization and for our participants. Our portfolio of infrastructure assets is nearing the billion dollar mark and is growing rapidly. Over the last five years, we have become an important actor in this asset class in Canada,” he continued.
According to the parties, the acquisition will:
• Increase annualized free cash flow by about $5 million;
• Reduce Innergex’s payout ratio by about three percentage points on an annual basis;
• Add a high-quality, long-term hydro asset;
• Provide a new watershed with a regulated water flow;
• Carry perpetual land and water rights; and
• Introduce a new capital structure that optimizes the return on acquired assets.
As well, a deposit refund will reduce the outstanding balance of the revolving term credit facility, says Innergex.
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