Power Finance & Risk is pleased to announce the short list for the following award: Canadian Deal of the Year 2019.

We have highlighted four exceptional transactions that took place north of the border in 2019. Please let us know if your firm is missing from the credits.

MTP Finco (Missisagi Power Trust)

Evolugen (formerly Brookfield Renewable Canada) tested the limits of Canadian investors' appetite for delayed-draw private placements when it issued a dual-tranche project bond to refinance a 488 MW hydro portfolio in Ontario. Not wanting to miss out on low rates, the sponsor raised enough debt to almost double the portfolio's leverage, but applied a one-year delayed-draw feature to about half of the issuance, to avoid being subject to prepayment penalties on the existing debt. The deal reached first close on December 2. Coverage here.

Sponsor: Evolugen

Total debt: C$628.3 million

Tenor: 10 years

Placement agents: Scotiabank, National Bank Financial

Rating: BBB

Rating agency: DBRS Morningstar

Green rating: E1 (S&P Global Ratings)

Issuer’s counsel: Torys

Investors’ counsel: McCarthy Tétrault

Independent engineer: Hatch

Market consultant: London Economics International


Heartland Generation

Following a strategic review that was announced in September 2018, ATCO subsidiary Canadian Utilities Ltd sold most of its conventional power fleet to Energy Capital Partners, which financed the 1.25 GW acquisition with a C$323 million term loan and $145 million in ancillary facilities. MUFG arranged the debt, which was oversubscribed, attracting interest not only from Canadian banks but also South Korea’s Kookmin Bank. The deal closed on September 30. Coverage here.

Seller: Canadian Utilities Ltd (ATCO)

Buyer/sponsor: Energy Capital Partners

Enterprise value: C$835 million

Debt: C$468 million

Coordinating lead arranger: MUFG

Lenders: Kookmin Bank, ATB Financial, CIBC, National Bank of Canada, Canadian Western Bank, Siemens

Seller’s counsel: Bennett Jones

Buyer/borrowers’ counsel: Latham & Watkins, Blake Cassels & Graydon

Lenders’ counsel: McCarthy Tétrault

Innovate Energy

When the Canadian government put the modernization of Ottawa’s district energy system out to tender, it placed restrictions on the use of long-term private capital, which required the winning consortium, Innovate Energy, to structure the project in a way not done before in the Canadian PPP market. The district energy system heats 80 buildings and cools 67, including parliament buildings. The deal closed on May 29.

Consortium: Engie Services Canada, PCL Constructors Canada, PCL Investments Canada, Black & McDonald, WSP Canada

Architect: BBB Architects Ottawa

Contract value: C$2.6 billion

Concession term: 35 years

Nominal equity:  C$100 million

Revolving credit facility: C$500 million

Lenders: ATB Financial, Bank of Nova Scotia, Desjardins, HSBC, SMBC, TD Bank

Financial adviser to government: PwC

Financial adviser to consortium: TD Securities

Government’s counsel: Norton Rose Fulbright

Consortium’s counsel: Davies

Lenders’ counsel: Fasken

Independent oversight: EY

Technical and design consultant to government: Stantec

Lenders’ technical adviser:  BTY

Insurance consultant: Marsh

Fairness monitor: Knowles Consultancy

Northwest Hydro

Axium Infrastructure and Manulife Financial Corp issued a dual-tranche private placement to finance their joint acquisition of a stake in a portfolio of run-of-river hydro facilities from AltaGas Canada, building on a similar deal the previous year. The two investors now own a 90% stake in the 277 MW portfolio, which has 60-year fully indexed power purchase agreements with triple-A-rated BC Hydro. The remaining 10% of the portfolio is held by TriSummit Utilities (formerly AltaGas Canada). The acquisition and project bonds closed on March 13. Coverage here.

Seller: AltaGas Canada (now TriSummit Utilities)

Buyers/sponsors: Axium Infrastructure, Manulife Financial Corp

Total value: C$1.39 billion

Total debt: $1.084 billion

Placement agent: RBC Capital Markets

Sell-side financial advisers: TD Securities, JP Morgan

Issuer’s counsel: Davies

Investors’ counsel: McCarthy Tétrault

Rating agency: DBRS Morningstar

Independent engineer: WSP

Insurance consultant: Moore-McNeill

Model auditor: BDO

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