Short list: Canadian Deal of the Year 2020
Power Finance & Risk is pleased to announce the short list for the following award: Canadian Deal of the Year 2020.
We have highlighted six exceptional transactions that took place north of the border in 2020. Please let us know if your firm is missing from the credits.
Joint sponsors Macquarie Capital, Kineticor Resource Corp and OPTrust put together an impressive nearly C$1 billion debt package for their quasi-merchant 900 MW Cascade combined-cycle gas-fired plant in Alberta, while also bringing in two additional equity partners. The debt included a C$910 million construction loan, structured as a mini-perm loan with floating- and fixed-rate tranches, which priced at 350 bp over CDOR. The initial coordinating leads provided more than half of the debt, with DIF Capital Partners and Axium Infrastructure taking cash equity stakes in the C$1.5 billion greenfield plant. The Alberta Indigenous Opportunities Corp (AIOC) also facilitated an equity investment by six Alberta First Nations, through a $93-million loan guarantee.
The deal closed on August 27, 2020. Coverage here.
Sponsors: Macquarie Capital, Kineticor Resource Corp and OPTrust
Deal value: $1.6 billion
Term loan: C$835 million
Pricing: 350 bp over CDOR
Ancillary facilities: C$75.6 million
Tenor: Seven-and-a-half years
Equity: $680 million
Financial adviser and debt arranger: Macquarie Capital Markets Canada
Other financial advisers: Agentis Capital
Initial coordinating lead arrangers and joint bookrunners: ATB Financial, National Bank Financial, Nomura and MUFG
Coordinating lead arrangers: ING Capital and Siemens Financial Services
Joint lead arranger: Natixis
Lenders: National Bank of Canada, Alberta Treasury Branches, Nomura, MUFG, ING Capital, Siemens, Natixis, Canadian Western, Fiera Infrastructure private debt fund, Investec, LBBW, Meridian, Coast
Adviser on the interest rate and currency hedging program for the loans: Riverside Risk Advisors
Sponsors’ counsel: Torys
Counsel to OPTrust: Bennett Jones
Counsel to Kineticor Resource Corp: Osler, Hoskin & Harcourt
Counsel to Axium Infrastructure Partners: Davies Ward Phillips &
Counsel to DIF Capital Partners: DLA Piper (Canada)
Counsel to AIOC: Stikeman Elliott
First Nations: Alexis Nakota Sioux Nation, Enoch Cree Nation, Kehewin Cree Nation, O'Chiese First Nation, Paul First Nation and Whitefish (Goodfish) Lake First Nation
Counsel to First Nations: Duncan Craig (Edmonton), Witten, Biamonte and Bailey & Wadden
Lenders’ counsel: McCarthy Tétrault
Independent engineer: E3 Consulting Services
Market consultant: EDC Associates
Insurance consultant: Marsh
Construction and asset manager: Kineticor
Engineering, procurement and construction contractor: BPC, a joint venture between affiliates of PCL Construction and Overland Contracting Canada (a Black & Veatch company)
Maintenance support: Siemens
Other advisers: Backwoods Energy Services for the First Nations consortium, which itself received legal counsel from Miller Thomson (Calgary)
The largest deal by value in the Canadian market closed right at the start of 2020 when government-owned Hydro-Québec bought a substantial 19.9% minority interest in the country’s largest electricity producer, Innergex Renewable Energy. Hydro-Québec financed the acquisition through a private placement, while also committing C$500 million ($376 million) to a joint venture with the independent power producer. The joint venture will last three years and both parties are entitled to present opportunities for co-investment across a variety of renewable energy technologies outside of Québec.
The deal closed on February 5, 2020. Coverage here.
Sponsors: Hydro-Québec, Innergex Renewable Energy
Deal value: $497 million
Financial adviser to Innergex: National Bank Financial
Legal counsel to Innergex: McCarthy Tétrault
Financial adviser to Hydro-Québec: RBC Capital Markets
Legal adviser to Hydro-Québec: Norton Rose Fulbright
Goreway Power Station
Canadian independent power producer Capital Power Corp refinanced the debt on its 875 MW Goreway Power Station gas-fired combined-cycle facility in Brampton, Ontario with a notable C$563.5 million ($425.1 million) seven-year term loan. The project’s previous C$682.55 million loan was signed in September 2016 and was set to mature in September of that year. The project has a 20-year power purchase agreement with Ontario Independent Electricity System Operator expiring in June 2029.
The deal closed on January 21, 2020. Coverage here.
Sponsor: Capital Power Corp
Term loan: C$563.5 million ($425.1 million)
Tenor: Seven years
Lead arrangers: Mizuho, MUFG, RBC Capital Markets, SMBC and TD Securities
Lenders: BMO, Scotiabank and National Bank of Canada
Lenders’ counsel: Torys
Borrower’s counsel: Borden Ladner Gervais
Niagara Region Wind
Boralex refinanced its 230 MW Niagara Region Wind Farm in Ontario with an impressive C$805 million ($608 million) debt package provided by a seven-strong syndicate of banks. The sponsor had begun exploring a potential refinancing in early 2020, obtaining proposals for both long-term bond deals as well as bank loans, before eventually settling on a clubby 16-year deal. The Niagara wind farm was commissioned in 2016 and is held by a partnership between Boralex and the Six Nations of the Grand River indigenous community. Boralex operates the project and holds a 50% stake.
The deal close was announced in August 2020. Coverage here.
Deal value: C$805 million ($608 million)
Sponsor’s financial adviser: Plan A Capital
Lenders: KfW-IPEX Bank, CaixaBank, Fédération des Caisses Desjardins du Québec, Société Générale, Sumitomo Mitsui Trust Bank, Associated Bank, Crédit Industriel et Commercial
The Blackstone Group edged into the Canadian commercial and industrial energy storage market with its acquisition of Toronto-headquartered developer NRStor C&I in the first quarter of 2020. NRStor, which was subsequently rebranded as Aypa Power, has over 200 MWh of operational, under-construction and contracted projects and has been expanding from its home market of Ontario into the US. The deal was the culmination of a process run by Marathon Capital as NRStor's financial adviser.
The deal close was announced in March 2020. Coverage here.
Buyer: The Blackstone Group
Sellers: Fengate Capital Management and Lake Bridge Capital
Financial adviser to NRStor: Marathon Capital
Legal counsel to sellers: McCarthy Tétrault
Legal counsel to Blackstone: Kirkland & Ellis
CPPIB/ Pattern Energy Group
The Canadian Pension Plan Investment Board closed its take-private acquisition of renewable energy yield company Pattern Energy Group in a mammoth deal which valued the 4.4 GW wind and solar yieldco at $6.1 billion. To support its purchase, the Canadian pension fund manager committed to provide an up to $2.6 billion equity contribution and secured committed debt financing of $1 billion from a quintet of banks. CPPIB also signed a deal with Pattern’s private equity backer Riverstone Holding to bring the yieldco and its development affiliate, Pattern Development, together as an “integrated renewable energy company.” This was all achieved despite an intervention by activist investor Water Island Capital.
The deal closed in March 2020. Coverage here.
Sponsor: Pattern Energy Group
Deal value: $3.6 billion
Equity: $2.6 billion
Debt: $1 billion
Sponsor’s financial advisers: Evercore and Goldman Sachs
Sponsor’s legal adviser: Paul Weiss
Lenders: Bank of Montreal, Citi and Royal Bank of Canada
Financial adviser to CPPIB: BofA Securities
Legal adviser to CPPIB: Shearman & Sterling