CALGARY, Alberta – TransAlta Corporation has announced its entry into a definitive share purchase agreement with an affiliate of Energy Capital Partners. The agreement will see TransAlta acquiring the parent of Heartland Generation Ltd. and Alberta Power (2000) Ltd., marking a significant expansion of TransAlta’s operations. The acquisition, valued at approximately $658 million, includes the assumption of $268 million of low-cost debt. The acquisition is priced at $390 million, with adjustments based on working capital and other factors. The transaction is expected to be highly accretive to free cash flow and cash yield upon closing.
The purchase will include all of Heartland’s business activities in Alberta and British Columbia. This includes the addition of 1,844 MW (net interest) of complementary flexible capacity, including contracted cogeneration, peaking generation, transmission capacity, and development opportunities in hydrogen. Approximately 55% of revenues are contracted with a weighted-average remaining life of 16 years. The expected EBITDA multiple is approximately 5.5x. It is anticipated that corporate synergies, before tax, will surpass $20 million each year.
The assets acquired will be crucial in supporting the energy transition and reliability in the Alberta electricity market. The acquisition not only augments and further diversifies TransAlta’s portfolio in Alberta’s energy-only market but also enhances TransAlta’s competitive positioning in the highly dynamic and shifting electricity landscape in Alberta. TransAlta will account for any economic benefits that occur after October 31, 2023. The transaction will be financed using cash on hand and draws on TransAlta’s credit facilities.
John Kousinioris, President and Chief Executive Officer of TransAlta, expressed his enthusiasm for the acquisition, stating, With this acquisition, we are pleased to announce the addition of highly flexible and complementary assets to our Alberta portfolio. With the ongoing shift towards renewable energy spurring fresh investments in the Province, we believe the market will necessitate affordable, adaptable, and swift power generation to uphold grid reliability in the future. This acquisition will bolster our competitive stance and fortify our diverse portfolio. Combined with our marketing prowess, we can contribute to and bolster a greener grid.