On March 25, TransAlta Corporation announced an investment by Brookfield Renewable Partners and its institutional partners, of $750 million. The investment will support TransAlta’s goal of transitioning to 100% clean energy by 2025.
Under the terms of the agreement, Brookfield will invest $750 million in TransAlta through the purchase of exchangeable securities, convertible into an equity ownership interest in TransAlta’s Alberta Hydro Assets in the future, at a value based on a multiple of the future Hydro Assets’ EBITDA. Brookfield has also committed to purchase TransAlta common shares on the open market to increase its share ownership in TransAlta to 9%.
TransAlta has announced that they plan to direct $350 million of the investment to advance the company’s coal-to-gas transition strategy, up to $250 million to buy back shares over three years and the remainder to advance the development of existing and new growth projects and for general corporate purposes.
The investment will occur in two tranches, $350 million at closing, in May 2019, in the form of Exchangeable Debentures and $400 million at a second closing in October 2020 in the form of Redeemable Preferred Shares (together, the “Exchangeable Securities”). Both securities will have an annual coupon rate of 7.0% and will be convertible into an equity interest in an entity holding the hydro assets after December 31, 2024.