Canadian Manufacturing

AltaGas to buy three California NG plants for US$642M

Deal will add 523 megawatts of capacity to company's network in U.S. state



CALGARY—AltaGas Ltd. is continuing to diversify its energy portfolio with a US$642 million natural gas plant deal.

The company has announced its subsidiary AltaGas Power Holdings Inc. has agreed to buy a portfolio of three natural gas-fired electrical generation facilities in northern California from Highstar Capital IV LP. The agreement includes a 330 megawatt facility in the San Joaquin Valley as well as two smaller plants. The total capacity changing hands in the deal is 523 megawatts.

“Having a diversified energy infrastructure business across North America gives us more opportunities for growth and for creating shareholder value,” David Cornhill, chairman and CEO of AltaGas, said. “The acquisition of these power facilities is an important addition to our business. Each asset has a power purchase agreement that will further enhance AltaGas’ stable earnings and cash flow.”

The company said the acquisition fits with its vision of being one of North America’s leading energy infrastructure companies and aligns with its strategy to increase its clean energy capacity. The buy also diversifies the company’s holdings in the Pacific U.S. state, as most of AltaGas’s assets had been clustered in Southern California previously.

To fund the acquisition, the company will issue $300 million in shares and utilize debt under its current capital structure. It also pointed to the “potential dispositions of non-core assets” as a possible source of cash.

The transaction is subject to customary closing conditions and is expected to close late in the fourth quarter of 2015

In addition to the $642 million deal, the company will also increase its dividend by $0.005, bringing its monthly payout to $0.165. The company has raised its dividend 12 per cent over the course of the year.

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