Mr. Steve Dalton reports
REVOLVE ANNOUNCES PROPOSED ACQUISITION OF CANADIAN RENEWABLE ENERGY OPERATOR AND DEVELOPER, WINDRIVER POWER CORPORATION
Revolve Renewable Power Corp. proposes to acquire WindRiver Power Corp., a Canadian-based owner, operator and developer of wind and hydro projects in the provinces of British Columbia and Alberta.
Revolve, Revolve Acquisition Corp. (the purchaser), a wholly owned Alberta subsidiary of Revolve, and WindRiver have entered into an arrangement agreement dated Oct. 3, 2023, pursuant to which the purchaser and WindRiver shall complete a plan of arrangement under the Business Corporations Act (Alberta) to effect the proposed acquisition. Following the completion of the arrangement, WindRiver shall become a wholly owned subsidiary of Revolve and the purchaser.
The proposed acquisition, once completed, will add 96.63 megawatts (MW) of net operational and development capacity to the company's portfolio, which is split between 6.63 MW of net operational capacity and 90 MW of development assets, all located within Canada. The proposed acquisition is consistent with the company's strategy of building a diversified renewable energy platform across North America while adding long-term recurring revenue and cash flow. It will also provide a strong base to expand the company's activities in the Canadian market where the company has already commenced greenfield development work earlier this year.
Completion of the proposed acquisition is subject a number of conditions, including the final acceptance of the TSX Venture Exchange, receipt of WindRiver shareholder approval, receipt of a final order approving the arrangement from the Court of King's Bench of Alberta, Judicial Centre of Calgary, and other customary closing conditions. Closing of the proposed acquisition is expected to occur in early December of this year.
Steve Dalton, chief executive officer of Revolve, commented: "We are delighted to reach agreement for our first acquisition in the Canadian market. As we outlined in our updated corporate presentation a number of weeks ago, the acquisition of operating assets is a key part of our strategy to accelerate the transition of the company to an owner/operator business model.
"The acquisition of WindRiver will add long-term recurring revenue and cash flow to the business, accelerate our expansion into the Canadian market, and bring with it a highly experienced operations and development team.
"We look forward to working with the WindRiver team towards completion of the transaction in the coming months."
WindRiver background
WindRiver was established in 2008 as a developer of wind and hydro projects in Canada. It has since built a successful record in the industry completing the development of a number of projects across both British Columbia and Alberta totalling over 200 MW.
WindRiver currently holds equity interests in the following portfolio of projects:
Operating projects:
- Six MW Box Springs wind farm project, located in Medicine Hat, Alta., was commissioned in 2014 and consists of three Gamesa G90 turbines. The project sells electricity under a 20-year fixed-price power purchase agreement with the City of Medicine Hat. WindRiver is a 51-per-cent shareholder in this project;
- 11 MW Hunter Creek hydro project, a run-of-river hydro facility located in Hope, B.C., was developed by WindRiver and was commissioned in June, 2018. It sells electricity to BC Hydro under a long-term power purchase agreement. WindRiver is an indirect 21-per-cent shareholder in this project;
- Six MW Sakwi hydro project, located in Harrison Hot Springs, B.C. WindRiver was also the developer of this project and it was commissioned in December, 2014. The project also sells electricity to BC Hydro under a long-term power purchase agreement. WindRiver is an indirect 21-per-cent shareholder in the project.
Development projects
In addition to the operating projects, WindRiver currently has two hydro development projects that it has been progressing through the development cycle for several years. These are:
- 15 MW Tamihi Creek hydro project, located in the Chilliwack River Valley near Chilliwack, B.C. WindRiver is the developer of the project and a 70-per-cent shareholder;
- 75 MW Kinskuch Lake hydro project, located north of Terrace, B.C. The project has the potential to develop significant storage capacity, beyond run of river, at Kinskuch Lake. WindRiver is the developer of the project and an 87.5-per-cent shareholder.
These projects are at varying stages of development with target ready-to-build dates in 2025 to 2026 subject to future power contracting opportunities with BC Hydro.
Both the operating and development projects are currently managed by the WindRiver team, which is expected to remain in place posttransaction and is expected to play an integral role in expanding the company's presence in the Canadian market.
Following completion of the proposed acquisition, the company will have 12.33 MW (net) of operating assets under long-term power purchase agreements, three MW under construction, and a development portfolio of approximately 3,084.2 MW across the United States, Canada and Mexico.
The transaction
Revolve, the purchaser and WindRiver have entered into the arrangement agreement, pursuant to which the purchaser and WindRiver shall complete the arrangement to effect the proposed acquisition. Following the completion of the arrangement, WindRiver shall become a wholly owned subsidiary of Revolve and the purchaser.
Under the terms of the arrangement agreement, the purchaser will acquire all of the outstanding common shares of WindRiver in exchange for 21.787175502 cents, in cash, per WindRiver share, for total gross upfront consideration of $4.85-million.
The purchaser may also pay up to $14-million depending on whether WindRiver's Tamihi Creek and Kinskuch Lake hydro projects achieve certain milestones, are sold to a third party by the purchaser or other postclosing events occur. In addition, the company has agreed to reimburse certain historic development costs related to these projects, to be reimbursed once construction has commenced on the respective project.
The company has also agreed to pass through contingent payments of up to $5.7-million expected to be received by WindRiver from development assets previously sold to third parties by WindRiver.
The arrangement agreement contains customary representations and warranties, covenants and conditions for a transaction of this nature. A copy of the arrangement agreement will be filed on Revolve's SEDAR+ profile and will be available for viewing.
The transaction is an arm's-length transaction for purposes of the policies of the TSX Venture Exchange and the company expects that the transaction will meet the criteria of an expedited acquisition pursuant to Policy 5.3 -- Acquisitions and Disposition of Non-Cash Assets of the TSX-V's corporate finance manual.
Acquisition financing
Concurrently with signing of the arrangement agreement the company has also signed financing agreements with RE Royalties Ltd. for the provision of a secured loan of up to $5-million or 80 per cent of the total upfront consideration to partly finance the proposed acquisition. The financing agreements consist of a secured loan agreement and a royalty agreement between Revolve and RE Royalties.
The secured loan will be drawn down as part of completion of the proposed acquisition and will have a term of 36 months. It will be repayable at maturity and bear interest at 12 per cent on drawn funds, with interest payable on a quarterly basis during the term. The company will pay RE Royalties a financing fee of 1 per cent of the secured loan amount on signing of the loan. The secured loan will be secured on certain assets of the company.
The company has also entered into a royalty agreement with RE Royalties under which it will receive a variable royalty of between 0.5 per cent and 1 per cent on gross revenues generated by certain operational projects for the life of the power purchase agreements for each relevant operational project.
About Revolve Renewable Power Corp.
Revolve was formed in 2012 to capitalize on the growing global demand for renewable power. Revolve develops utility-scale wind, solar and battery storage projects in the U.S. and Mexico with a portfolio of 2,838 MW under development. The company has a second division, Revolve Renewable Business Solutions, which installs and operates sub-20 MW behind-the-meter distributed generation (or DG) assets. Revolve Renewable Business Solutions currently has an operating portfolio of six MW with an additional three MW under construction.
Revolve has an accomplished management team with a demonstrated record of taking projects from greenfield through to ready-to-build (or RTB) status and successfully concluding project sales to large operators of utility-scale renewable energy projects. To date, Revolve has developed and sold over 1,550 MW of projects.
Going forward, Revolve is targeting 5,000 MW of utility-scale projects under development in the U.S. and Mexico, and in parallel is rapidly growing its portfolio of revenue-generating DG assets.
We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.