Capital Power Corp. has inked a deal to acquire the 875 MW gas-fired combined-cycle Goreway Power Station in Brampton, Ontario.
The deal emerged from an auction launched by TD Securities last November, as previously reported (PFR, 11/12).
Capital Power will pay C$387 million ($287.54 million) in cash for the project and assume C$590 million ($438.36 million) of project-level debt.
The sellers are two Japanese entities, Toyota Tsusho Corp. and JERA Co. The latter is a joint venture between Chubu Electric Power Co. and TEPCO Fuel & Power.
The deal is expected to close in the second quarter of 2019, subject to regulatory approvals.
"The Goreway facility is an excellent strategic fit to our growth plans given its size, excellent operating history, location, and remaining contract term to 2029," said Brian Vaasjo, president and ceo of Capital Power, in a statement.
The contract is a 20-year power purchase agreement with the Ontario Power Authority.
The Goreway plant is the second-largest gas-fired project in Canada. The largest—the 1,005 MW Greenfield Energy Centre in St. Clair Township, also in Ontario—is also for sale (PFR, 8/23).
Goreway has been online since June 2009 and is fitted with three upgraded General Electric 7FB.04 combustion turbines, three Deltak heat recovery steam generators and a single Siemens steam turbine.
Toronto Stock Exchange-listed Capital Power expects to finance the acquisition using a combination of debt and equity, primarily through a $130 million ($96 million) public share offering.
A syndicate of underwriters co-led by RBC Capital Markets and TD is preparing to sell 4.3 million shares at C$30.30 a share ($22.51).
The underwriters have been granted a greenshoe option to purchase an additional 645,000 shares at the offering price within 30 days of close, which is slated for May 8. If the greenshoe is exercised in full, gross proceeds will total approximately $149.8 million ($111.3 million).
The debt portion of the financing will come from "new or existing" sources, according to the announcement of the acquisition.
The Goreway project was originally financed in 2006 by Sithe Global Power, a developer backed by Blackstone Group and Reservoir Capital. TD and RBC Capital Markets co-led on the C$936.56 million ($816.6 million at the time) construction-to-five-year-term loan (PFR, 4/16/06).
The debt financing was twice oversubscribed, with 29 banks participating. It was the first major generation project to be built in Ontario for over 25 years.
Sithe sold 25% stakes in the project to Chubu and Toyota Tsusho in September 2009, a few months after bringing it online, and divested the remaining 50% to the same two investors in March 2011. Chubu transferred its 50% interest in Goreway to JERA along with the rest of its generation business in July 2016.
In the meantime, the project had been refinanced in July 2013, with TD acting as administrative agent on the C$832 million transaction.