Mr. James Moore Jr. reports

ATLANTIC POWER AGREES TO BE ACQUIRED BY I SQUARED CAPITAL

Atlantic Power Corp. has entered into a definitive agreement with I Squared Capital, a leading global infrastructure investor, under which the company's outstanding common shares and convertible debentures, and the outstanding preferred shares and medium term notes of certain of its subsidiaries, will be acquired. The total enterprise value of the deal is approximately $961-million (U.S.) (based on current foreign exchange rates) and the transaction was unanimously approved by Atlantic Power's board of directors.

• Common shareholders to receive $3.03 (U.S.) per share in cash, representing a 48-per-cent premium to the 30-day volume weighted average price per common share on the New York Stock Exchange;
• Convertible debentures to be converted to common shares, including a make whole premium; following conversion, debenture holders will receive $3.03 (U.S.) per share in cash;
• Preferred shareholders and medium term noteholders to receive cash representing meaningful premiums to recent trading prices.

"We are pleased to announce this transaction with I Squared Capital. The independent directors of the board, with the assistance of our financial and legal advisers, carefully analyzed I Squared Capital's offer, and after extensive negotiation and thorough consideration, concluded that the agreement is in the best interests of Atlantic Power," said Kevin T. Howell, chairman of Atlantic Power's board of directors.

"The all-cash price of $3.03 (U.S.) per common share represents a significant premium to our recent trading levels," said James J. Moore Jr., president and chief executive officer of Atlantic Power. "As our fellow shareholders know, the future value of our shares is highly dependent on power prices and recontracting outcomes for several major power purchase agreements that are expiring in the next three to five years. The acquisition of our shares for cash would remove this uncertainty for investors and provide immediate and significant cash value. We have carefully considered the offer and we encourage our fellow shareholders to join management and the board in voting to approve this transaction.

"The agreement also provides for the acquisition of our other public securities for cash, delivering a positive outcome for all of our security holders. Completion of this transaction is conditioned upon the approval of these holders, as well as other required approvals, which are discussed in this press release," continued Mr. Moore. "I Squared Capital is a strong financial organization whose leaders have significant experience in the power sector. Thomas Lefebvre and his team have been resilient and resourceful in putting together this transaction, which we believe is an excellent opportunity for the security holders and employees of Atlantic Power.

"We are excited to partner with Jim Moore and the management team, who have made great progress over the past several years in improving the company's balance sheet and leverage ratio while addressing operational challenges," stated Thomas Lefebvre, partner at I Squared Capital. "Atlantic Power has an attractive portfolio of assets that I Squared Capital is well positioned to manage and we look forward to working together."

Transaction highlights

• Common shareholders of Atlantic Power will receive $3.03 (U.S.) per common share in cash, representing a 48-per-cent premium to the 30-day volume weighted average price per common share on the New York Stock Exchange for the period ending Jan. 14, 2021.
• Atlantic Power's 6.00-per-cent Series E convertible unsecured subordinated debentures due Jan. 31, 2025, will be converted into common shares of Atlantic Power immediately prior to the closing of the transaction based on the conversion ratio in effect at such time (including the "make whole premium shares" issuable under the terms of the trust indenture for the convertible debentures following a cash change of control). Holders of the convertible debentures will receive $3.03 (U.S.) per common share held following the conversion of the convertible debentures, plus accrued and unpaid interest on the convertible debentures up to, but excluding, the closing date of the transaction.
• Atlantic Power Preferred Equity Ltd.'s (APPEL) cumulative redeemable preferred shares, Series 1, cumulative rate reset preferred shares, Series 2, and cumulative floating rate preferred shares, Series 3, will be redeemed for $22.00 (Canadian) per preferred share in cash, representing meaningful premiums to the recent trading prices of such shares on the Toronto Stock Exchange.
• Atlantic Power Limited Partnership's (APLP) 5.95-per-cent medium term notes due June 23, 2036, will be redeemed for consideration equal to 106.071 per cent of the principal amount of medium term notes held as of the closing of the transaction, plus accrued and unpaid interest on the medium term notes up to, but excluding, the closing date of the transaction. Holders of medium term notes that deliver a written consent to the proposed amendments to the trust indenture governing the medium term notes (as described below) will also be entitled to a consent fee equal to 0.25 per cent of the principal amount of medium term notes held by such holders, conditional on closing of the transaction.

The acquisition of Atlantic Power's outstanding common shares and the redemption of the outstanding preferred shares of APPEL will be completed by way of a plan of arrangement under the Business Corporations Act (British Columbia). In connection with the arrangement, Atlantic Power's shareholder rights plan will be terminated and all rights to purchase Atlantic Power's common shares issued pursuant to the shareholder rights plan will be cancelled.

Recommendation of the board and the special committee

The board of directors of Atlantic Power, after consultation with financial and legal advisers, and based on the unanimous recommendation of a special committee of the board consisting entirely of independent directors, has unanimously approved the arrangement and determined that the arrangement is in the best interests of Atlantic Power, and recommends that Atlantic Power's common shareholders vote in favour of the arrangement. The board of directors of APPEL has similarly unanimously approved the arrangement and determined that the arrangement (together with a proposed continuance of APPEL under the laws of British Columbia) is in the best interests of APPEL and recommends that the preferred shareholders of APPEL vote in favour of the arrangement and the proposed continuance.

The board, after consultation with financial and legal advisers, and based on the unanimous recommendation of the special committee, has also unanimously determined that the mandatory conversion of Atlantic Power's convertible debentures in accordance with the terms set out in the arrangement agreement is in the best interests of Atlantic Power and recommends that holders of the convertible debentures vote in favour of an amendment to the trust indenture governing the convertible debentures to provide for their mandatory conversion on closing of the arrangement into common shares of Atlantic Power based on the conversion ratio in effect at such time under the terms of the trust indenture (including the "make whole premium shares" issuable under the terms of the trust indenture following a cash change of control).

In addition, the board of directors of the general partner of APLP, after consulting with financial and legal advisers, has unanimously determined that the mandatory redemption of its 5.95-per-cent medium term notes due June 23, 2036, in accordance with the terms set out in the arrangement agreement is in the best interests of APLP and recommends that holders of the medium term notes vote in favour of an amendment to the trust indenture governing the medium term notes to provide for such mandatory redemption on closing of the arrangement for consideration equal to 106.071 per cent of the principal amount of the medium term notes held plus accrued and unpaid interest thereon up to, but excluding, the closing date of the transaction. Holders of medium term notes that deliver a written consent to the proposed amendments to the trust indenture governing the medium term notes will also be entitled to a consent fee equal to 0.25 per cent of the principal amount of medium term notes held by such holders, conditional on closing of the transaction.

Blair Franklin Capital Partners Inc. has provided the special committee and the board, and the board of directors of APPEL, with its opinions that, as of the date of the opinions, and subject to the factors, assumptions, limitations and qualifications on which such opinions are based, the consideration to be paid to holders of Atlantic Power's common shares and convertible debentures, and the preferred shares of APPEL (in each case other than I Squared Capital and its affiliates), is fair, from a financial point of view, to such holders. Each of the directors and executive officers of Atlantic Power has entered into a support agreement to vote their common shares and preferred shares, if any, in support of the arrangement, and to vote their convertible debentures and medium term notes, if any, in support of the amendments to the trust indentures governing the convertible debentures and the medium term notes, as applicable.

The arrangement agreement

The arrangement agreement, entered into with affiliates of infrastructure funds managed by I Squared Capital provides that the transaction is subject to a number of closing conditions, including court approval of the arrangement, regulatory approvals (including under the Competition Act (Canada) and the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the Communications Act of 1934, as amended, and the Federal Power Act, as amended), as well as the receipt of certain third party consents.

The transaction is also conditional on the approval of two-thirds of the votes cast by holders of Atlantic Power's common shares voting in person or by proxy at a special meeting of Atlantic Power's common shareholders and the approval of two-thirds of the votes cast by holders of APPEL's preferred shares (voting as a single class) in person or by proxy at a meeting of APPEL's preferred shareholders in respect of both the arrangement and the proposed continuance of APPEL under the laws of British Columbia.

In addition, the transaction is conditional upon the approval of the holders of the convertible debentures and the medium term notes, respectively (in each case either by way of votes of the holders of the convertible debentures and the medium term notes holding at least two-thirds of the principal amount of the convertible debentures and the medium term notes, respectively, voted in person or by proxy at separate meetings of the holders of the convertible debentures and the medium term notes or by way of separate written consents of the holders of the convertible debentures and the medium term notes holding not less than two-thirds of the principal amount of convertible debentures and medium term notes outstanding, as applicable), of certain amendments to the trust indentures governing such securities, as described above. Atlantic Power and APLP will seek the approval of the holders of the convertible debentures and medium term notes by way of separate meetings and/or consent solicitations.

A bondholder representing approximately 66 per cent of the principal amount of medium term notes and approximately 19 per cent of the principal amount of convertible debentures outstanding has agreed to vote in favour of or otherwise consent to amendments to the trust indentures governing those securities.

The arrangement agreement is subject to customary non-solicitation provisions, including Atlantic Power's right to consider and accept unsolicited superior proposals in certain circumstances, subject to a right to match in favour of the purchasers. A termination fee of $12.5-million (U.S.) will be payable by Atlantic Power to the purchasers should the transaction not close under certain circumstances, including if the arrangement is not completed as a result of Atlantic Power accepting an unsolicited superior proposal. A reverse termination fee of $15-million (U.S.) will be payable by the purchasers to Atlantic Power should the transaction not close as a result of an uncured breach by the purchasers of the arrangement agreement (provided Atlantic Power is not then in breach of the arrangement agreement).

Further information regarding the transaction, including without limitation information regarding the arrangement, the amendments to the trust indentures of the convertible debentures and the medium term notes, the terms and conditions of the 0.25-per-cent consent fee in respect of the medium term notes, copies of the fairness opinions and the various factors considered by the board, the board of directors of APPEL and the board of directors of the general partner of APLP will be included in Atlantic Power's management information circular and proxy statement, which will be mailed to Atlantic Power's shareholders and APPEL's preferred shareholders, and the management information circulars and/or consent solicitation documents to be mailed to Atlantic Power's convertible debenture holders and APLP's medium term noteholders. Copies of the arrangement agreement and the management information circulars will be available on SEDAR and on EDGAR, or through Atlantic Power's website.

Following closing of the transaction, the common shares of Atlantic Power will be delisted from the TSX and the NYSE, and the preferred shares and convertible debentures will be delisted from the TSX. The parties currently expect to close the transaction in the second quarter of 2021.

Financial and legal advisers

Goldman Sachs & Co. LLC is acting as lead financial adviser to the special committee. Blair Franklin Capital Partners Inc. is acting as financial adviser to the special committee, the board and the board of directors of APPEL, and has provided its fairness opinions on a fixed-fee basis. Cleary Gottlieb Steen & Hamilton LLP is acting as United States legal counsel to the special committee and Atlantic Power, and Goodmans LLP is acting as Canadian legal counsel to the special committee and Atlantic Power. Kingsdale Advisors is acting as strategic shareholder adviser and proxy solicitation agent to Atlantic Power.

RBC Capital Markets is acting as financial adviser and arranging financing in support of the deal for I Squared Capital. Sidley Austin LLP is acting as U.S. legal counsel to I Squared Capital, and Stikeman Elliott LLP is acting as Canadian legal counsel to I Squared Capital.

Investor conference call and webcast

Atlantic Power's management team will host a telephone conference call and webcast to discuss this announcement on Friday, Jan. 15, 2021, at 8 a.m. ET. An accompanying presentation will be available on the conference calls page of Atlantic Power's website prior to the call.

Phone numbers:

U.S. (toll-free):  1-855-239-3193

Canada (toll-free):  1-855-669-9657

International (toll):  1-412-542-4129

Conference access:  Please request access to the Atlantic Power conference call.

Webcast:  The call will be broadcast over Atlantic Power's website.

Replay: access conference call number 10151644 at the following telephone numbers:

U.S. (toll-free):  1-877-344-7529

Canada (toll-free):  1-855-669-9658

International (toll):  1-412-317-0088

The replay will be available one hour after the end of the conference call through Feb. 15, 2021, at 11:59 p.m. ET.

About Atlantic Power Corp.

Atlantic Power is an independent power producer that owns power generation assets in 11 states in the United States and two provinces in Canada. The generation projects sell electricity and steam to investment-grade utilities and other creditworthy large customers predominantly under long-term PPAs that have expiration dates ranging from 2021 to 2043. The company seeks to minimize its exposure to commodity prices through provisions in the contracts, fuel supply agreements and hedging arrangements. The projects are diversified by geography, fuel type, technology, dispatch profile and offtaker (customer). Approximately 75 per cent of the projects in operation are 100 per cent owned and directly operated and maintained by the company. The company has expertise in operating most fuel types, including gas, hydro and biomass, and it owns a 40-per-cent interest in one coal project. Atlantic Power Preferred Equity is an indirect wholly owned subsidiary of Atlantic Power.

About I Squared Capital

I Squared Capital is an independent global infrastructure investment manager focusing on energy, utilities, digital infrastructure, transport and social infrastructure in the Americas, Europe and Asia. Headquartered in Miami, the firm has over $24-billion in assets under management and offices in Hong Kong, London, New Delhi, New York and Singapore.

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