Algonquin Power and Utilities Corp (Algonquin) and (TSX: EMA) Emera Inc. (Emera) announced today that they have entered into a strategic investment agreement (The Agreement) which establishes how Algonquin and Emera will work together to pursue specific strategic investments of mutual benefit. The Agreement builds on the strategic partnership effectively established between the two companies in April 2009.
The Agreement outlines “areas of pursuit” for each of Algonquin and Emera. For Algonquin, these include investment opportunities relating to unregulated renewable generation, small electric utilities and gas distribution utilities. For Emera, these include investment opportunities related to regulated renewable projects within its service territories and large electric utilities. In respect of opportunities encountered by either Algonquin or Emera that fit within the other’s business development “areas of pursuit”, they are committed to working together on such opportunities.
Consistent with the framework established by the Agreement, Emera has agreed to sell its 49.999% direct ownership in the California Pacific Electric Company (“CalPeco”) to Algonquin, subject to California regulatory approval. As consideration Emera will receive 8.211 million Algonquin shares in two tranches. Approximately half of the shares will be issued following regulatory approval of the Calpeco ownership transfer and the balance of the shares will be issued following completion of Calpeco’s first rate case which is expected to be completed in the first half of 2012.
As an element of the Agreement, Emera’s allowed common equity interest in Algonquin will be increased from 15% to 25%. Algonquin will seek shareholder approval at its upcoming annual and special general meeting currently scheduled for June 21, 2011.
“This agreement provides clarity and transparency to a business relationship which has existed between Algonquin and Emera for the past two years and is intended to maximize shareholder value for both parties by capitalizing on our respective strengths,” commented Ian Robertson, Chief Executive Officer of Algonquin. “The acquisition by Algonquin of 100% of the CalPeco utility business is consistent with these themes and builds upon the successes achieved to date between Algonquin and Emera.”
“Emera and Algonquin have worked well together since 2009,” said Chris Huskilson, President and Chief Executive Officer, Emera Inc. “Given Algonquin’s successful independent power history and expertise, it makes good sense for Emera to focus its investments in the development, ownership and operation of unregulated renewable electric generating facilities through Algonquin.”
This news release contains forward looking information. Actual future results may differ materially. Additional financial and operational information regarding Emera and Algonquin is filed electronically with various securities commissions in Canada through the System for Electronic Document Analysis and Retrieval (SEDAR).