TransAlta Corporation Provides Notice of Series G Preferred Shares Conversion Right and Announces Reset Dividend Rates
TransAlta Corporation (TransAlta or the Company) (TSX: TA; NYSE: TAC) announced today that it does not intend to exercise its right to redeem all or any portion of the currently outstanding Cumulative Redeemable Rate Reset First Preferred Shares, Series G (Series G Shares) (TSX: TA.PR.J) on September 30, 2019 (the Conversion Date).
As a result, and subject to certain conditions, the holders of the Series G Shares will have the right to elect to convert all or any of their Series G Shares into Cumulative Redeemable Floating Rate First Preferred Shares, Series H of the Company (Series H Shares) on the basis of one Series H Share for each Series G Share on the Conversion Date.
As provided in the share terms of the Series G Shares, the foregoing conversion right is subject to the conditions that: (i) if TransAlta determines that there would remain outstanding immediately following the conversion, less than 1,000,000 Series G Shares, all remaining Series G Shares shall be converted automatically into Series H Shares on a one-for one basis effective September 30, 2019; or (ii) if TransAlta determines that there would remain outstanding immediately after the conversion, less than 1,000,000 Series H Shares, holders of Series G Shares shall not be entitled to convert their shares into Series H Shares on the Conversion Date. There are currently 6,000,000 Series G Shares outstanding.
With respect to any Series G Shares that remain outstanding after September 30, 2019, holders thereof will be entitled to receive quarterly fixed cumulative preferential cash dividends, if, as and when declared by the Board of Directors of TransAlta. The annual dividend rate for the Series G Shares for the five-year period from and including September 30, 2019 to but excluding September 30, 2024, will be 4.988%, being equal to the five-year Government of Canada bond yield of 1.188% determined as of today plus 3.80%, in accordance with the terms of the Series G Shares.
With respect to any Series H Shares that may be issued on September 30, 2019, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, if, as and when declared by the Board of Directors of TransAlta. The annual dividend rate for the 3-month floating rate period from and including September 30, 2019 to but excluding December 31, 2019 will be 5.438%, being equal to the annual rate for the most recent auction of 90-day Government of Canada Treasury Bills of 1.638% plus 3.80%, in accordance with the terms of the Series H Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.
The Series G Shares are issued in book entry only form and must be purchased or transferred through a participant in the CDS depository service (CDS Participant). All rights of holders of Series G Shares must be exercised through CDS or the CDS Participant through which the Series G Shares are held. The deadline for the registered shareholder to provide notice of exercise of the right to convert Series G Shares into Series H Shares is 3:00 p.m. (MST) / 5:00 p.m. (EST) on September 15, 2019. Any notices received after this deadline will not be valid. As such, holders of Series G Shares who wish to exercise their right to convert their shares should contact their broker or other intermediary for more information and it is recommended that this be done well in advance of the deadline in order to provide the broker or other intermediary with time to complete the necessary steps.
If TransAlta does not receive an election notice from a holder of Series G Shares during the time fixed therefor, then the Series G Shares shall be deemed not to have been converted (except in the case of an automatic conversion). Holders of the Series G Shares and the Series H Shares will have the opportunity to convert their shares again on September 30, 2024, and every five years thereafter as long as the shares remain outstanding. For more information on the terms of the Series G Shares and the Series H Shares, please see TransAlta’s articles of amalgamation, including the share terms and shares in series schedule attached thereto as Schedule A, which are available on the Company’s website under the Investor Centre (Governance).
About TransAlta Corporation:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. We provide municipalities, medium and large industries, businesses and utility customers clean, affordable, energy efficient, and reliable power. Today, we are one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. We are also proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit our web site at transalta.com.
Forward Looking Information
This news release contains certain information that is forward-looking and is subject to important risks and uncertainties (such statements are usually accompanied by words such as may, will, should, estimate, intend or other similar words). Specifically, this news release contains forward-looking information with respect to the Company, the Series G Shares and the Series H Shares, including but not limited to future conversions, redemptions and dividends. All forward-looking information reflect the Company’s beliefs and assumptions based on information available at the time the statements were made and as such are not guarantees of future performance. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this press release. TransAlta undertakes no obligation to update or revise any forward-looking information except as required by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from those in the forward-looking information, refer to the Company’s Annual Report and Management’s Discussion and Analysis, and the risks set out in the prospectus supplement dated August 8, 2014 relating to the issuance of the Series G Shares, filed under the Company’s profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission at www.sec.gov.
TransAlta Corporation Provides Notice of Series G Preferred Shares Conversion Right and Announces Reset Dividend Rates
Year-to-Date Highlights
The Pioneer Pipeline transported first gas four months ahead of schedule to TransAlta’s generating units at Sundance and Keephills
On July 4, 2019, TransAlta issued final notice to proceed (FNTP) for the coal-to-gas conversion on Sundance Unit 6 with a target to complete the conversion by the second half of 2020
Signed an agreement to purchase a 49% interest in the Skookumchuck Wind Energy Facility upon commercial operation, which is expected in December of 2019; the 136.8 MW wind facility, located in Washington State near the Company’s Centralia Plant, has a 20-year power purchase agreement with an investment grade counterparty
Entered into an agreement to acquire 100% of Keephills 3 from Capital Power in exchange for Genesee 3 enabling full flexibility on coal-to-gas execution strategy
Issued the initial tranche of $350 million of unsecured, subordinated debentures to an affiliate of Brookfield Renewable Partners and its institutional partners (collectively Brookfield) as part of the strategic partnership that recognizes the anticipated future value of TransAlta’s hydro assets, enhances its financial position to execute its strategy, and accelerates the opportunity to return capital to shareholders
Filed a normal course issuer bid (NCIB) and purchased and cancelled 2,398,200 common shares at an average price of $8.57 per common share, for a total cost of $21 million
Funds from operations were $155 million, a decrease of $33 million compared with 2018 and in line with lower expectations from Canadian Gas segment
Free cash flow (1)(2) was $49 million in line with expectations
2019 free cash flow guidance of $270 to $330 million confirmed to the top end of the range
Todd Stack appointed Chief Financial Officer and John Kousinioris appointed Chief Operating Officer
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) today reported its second quarter and year-to-date 2019 financial results, which reflect solid operational and financial results for the quarter and were in line with expectations.
Results for the quarter demonstrate the competitiveness of our business structure and asset diversification,- said Dawn Farrell, President and Chief Executive Officer. We are pleased with the improving margins and performance of our Canadian Coal fleet as we transition away from the Power Purchase Arrangements and execute on our coal-to-gas plan. As we look forward, we are seeing improving fundamentals in the Alberta market and continue work to competitively position our Alberta coal assets to deliver our coal-to-gas strategy, commented Mrs. Farrell.
Comparable EBITDA(1)(2)(3) for the three and six months ended June 30, 2019, was $215 million and $436 million, a decline of $33 million and $48 million compared to 2018 and in line with guidance expectations. This decline largely reflects the expected roll-off of contract cash flows for the Mississauga and Poplar Creek assets within the Canadian Gas segment. In the three and six months ended June 30, 2018, comparable EBITDA included $32 million and $70 million from these contracts.
The Company delivered free cash flow of $49 million and $144 million, respectively, for the three and six months ended June 30, 2019. Free cash flow decreased by $47 million and $33 million compared to the same periods in 2018, mainly driven by lower comparable EBITDA from Canadian Gas and planned outage capital in Canadian Coal in 2019.
The Company’s results were in line with expectations as the roll-off in expected contract cash flows were met with improved EBITDA margins in the Canadian Coal fleet resulting from lower fuel and carbon compliance costs and lower operating costs. In addition, performance from the Energy Marketing segment was stronger than the same period in 2018. Overall, the Company’s cash flows continued to benefit from higher power prices during the year and asset diversification within its portfolio.
Based on the current market outlook for the balance of the year, TransAlta is tracking to achieve the upper end of its free cash flow guidance.
An Investor Day will be held in Toronto on September 16, 2019 to showcase current and future growth opportunities, including the coal-to-gas conversions.
Financial and Operating Highlights
Free cash flow was $144 million, a decrease of $33 million
On August 2, 2019, the Corporation announced that it entered into an agreement to acquire Capital Power Corporation’s 50 per cent ownership interest in the Keephills 3 facility in exchange for TransAlta’s 50 per cent ownership interest in the Genesee 3 facility. This consolidates TransAlta’s control and operation of the Keephills 3 facility, allowing the Company greater flexibility to pursue our coal-to-gas conversions and optimize our fleet decisions. The Company anticipates that the transaction will be neutral to both comparable EBITDA and funds from operations. We expect to recognize a net pre-tax loss in the range of $155 million to $205 million, mainly resulting from the write-down to fair value of TransAlta’s existing 50 per cent of Keephills 3.
Comparable EBITDA
(in CAD$ millions)
3 Months Ended
6 Months Ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Canadian Coal (1)
66
47
129
111(1)
U.S. Coal
19
25
9
50
Canadian Gas
31
61
61
122
Australian Gas
31
31
61
62
Wind and Solar
47
49
116
117
Hydro
37
49
64
66
Energy Marketing
13
6
32
(4)
Corporate
(29)
(20)
(36)
(40)
Total Comparable EBITDA(1)
215
248
436
484(1)
Canadian Coal: Comparable EBITDA for the three and six months ended June 30, 2019 was $19 million and $18 million higher, compared to 2018, excluding the one-time receipt of $157 million for the termination of the Sundance B and C PPAs in the first quarter of 2018. This largely reflects the combined impact of higher realized prices, lower variable costs and lower OM&A costs. Comparable gross margin per MWh for the three and six months ended June 30, 2019, improved by $5/MWh and $2/MWh, respectively, compared to the same periods in 2018.
S. Coal: Comparable EBITDA for the three and six months ended June 30, 2019, was down $6 million and $41 million, respectively, compared to 2018. During the first quarter of 2019, the Company incurred cash losses of $25 million on its day ahead hedging position, due to an isolated and extreme pricing event and unplanned outage at US Coal. The remaining year-to-date comparable EBITDA variance of $16 million was related to the fact that in 2018 TransAlta fulfilled more of its contracted volumes with lower priced power purchases. In 2019, lower priced power to service its contracted volumes was not available until later in the year, requiring additional higher cost production from the plant to support TransAlta contracts.
Canadian Gas: Comparable EBITDA for the three and six months ended June 30, 2019 decreased by $30 million and $61 million, respectively, compared to the same periods in 2018, mainly due to the expiry of the Mississauga contract on December 31, 2018 and lower scheduled payments from the Poplar Creek finance lease. In the three and six months ended June 30, 2018, comparable EBITDA included $32 million and $70 million of EBITDA, respectively, from the Mississauga contract and Poplar Creek contract.
Australian Gas: Comparable EBITDA for the three and six months ended June 30, 2019 was consistent compared to 2018, which was expected due to the nature of these contracts.
Wind and Solar: Comparable EBITDA for the three and six months ended June 30, 2019 was consistent with the same periods in 2018, as lower overall production was mostly offset by insurance proceeds from a tower fire at Summerview. OM&A costs were up slightly due to increased contractor costs.
Hydro: Comparable EBITDA for the three and six months ended June 30, 2019 decreased by $12 million and $2 million, respectively, compared to the same periods in 2018, mainly due to strong results in 2018 and decreased opportunities for ancillary services in 2019.
Energy Marketing: For the three and six months ended June 30, 2019, comparable EBITDA was higher by $7 million and $36 million, respectively, compared to the same periods in 2018 due to strong results across all markets with particularly strong performance from the US Western markets. In addition, for the three and six months ended June 30, 2019, Energy Marketing generated $4 million and $22 million, respectively, in unrealized mark-to-market gains, which were not included in comparable EBITDA. The cash flow from the 2019 unrealized value is expected to be realized in future periods.
Corporate: During the quarter, corporate costs were negatively impacted by the total return swap related to the Company’s share-based payment plan as well as higher legal fees. For the year-to-date period, corporate costs were positively impacted by the realized net gain of $9 million from the total return swap on our share-based payment plans, partially offset by increased legal fees.
Consolidated Earnings Review
Net earnings attributable to common shareholders during the second quarter of 2019 was nil compared to a net loss of $105 million last year, mainly due to the impact of the Alberta tax rate reduction, improved margins at Canadian Coal and strong performance in the Energy Marketing segment. Net loss attributable to common shareholders for the six months ended June 30, 2019 was $65 million compared to a net loss of $40 million for the same period in 2018. The net loss for the six months ended June 30, 2018 included the one-time receipt of $157 million ($115 million after tax) for the termination of the Sundance B and C PPAs. Excluding the termination payment, the year-to-date earnings improved by $90 million, due to the impact of the Alberta tax rate reduction, strong Alberta pricing, improved margins at Canadian Coal, lower year-to-date OM&A costs and lower interest expense, which was partially offset by a loss on sale of assets.
Total sustaining capital expenditures of $86 million were $32 million higher compared to 2018 primarily due to higher planned major maintenance in the Canadian Coal segment. There were no planned maintenance outages on operated power plants in the same periods in 2018. Total capital expenditures of $89 million, which includes productivity capital expenditures, were $29 million higher than 2018 and in-line with the Company’s guidance for the year.
Second Quarter and Year-to-Date 2019 Financial and Operational Highlights
In $CAD millions, unless otherwise stated
3 Months Ended
6 Months Ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Adjusted availability (%)(2)(4)
83.8
85.8
86.7
90.1
Production (GWh) (4)
5,235
5,199
13,360
12,370
Revenue
497
446
1,145
1,034
Comparable EBITDA (2)
215
248
436
641
Net earnings (loss) attributable to common shareholders
(105)
(65)
(40)
FFO (2)
155
188
324
506
Cash Flow from Operating Activities
258
104
340
529
FCF (2)
49
96
144
334
Net earnings (loss) per common share
$(0.36)
$(0.23)
$(0.14)
FFO per share (2)
$0.55
$0.65
$1.14
$1.76
FCF per share (2)
$0.17
$0.33
$0.51
$1.16
Dividends declared per common share
$0.04
$0.04
$0.04
$0.08
TransAlta is in the process of filing its Consolidated Financial Statements and accompanying notes, as well as the associated Management’s Discussion & Analysis (MD&A). These documents will be available August 9, 2019 on the Investors section of TransAlta’s website at transalta.com or through SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml.
Conference call
TransAlta will hold a conference call and webcast at 9:00 a.m. MT (11:00 a.m. ET) today, August 9, 2019, to discuss our second quarter 2019 results. The call will begin with a short address by Dawn Farrell, President and CEO, and Todd Stack, Chief Financial Officer, followed by a question and answer period for investment analysts and investors. A question and answer period for the media will immediately follow. Please contact the conference operator five minutes prior to the call, noting TransAlta Corporation as the company and Chiara Valentini as moderator.
Dial-in numbers Second Quarter 2019 Results:
Toll-free North American participants call: 1-888-231-8191
Outside of Canada & USA call: 1-647-427-7450
A link to the live webcast will be available on the Investor Centre section of TransAlta’s website at https://transalta.com/investors/events-and-presentations. If you are unable to participate in the call, the instant replay is accessible at 1-855-859-2056 (Canada and USA toll free) with TransAlta pass code 5281588 followed by the # sign. A transcript of the broadcast will be posted on TransAlta’s website once it becomes available.
Notes
(1) Excluding the one-time receipt of $157 million in compensation received from the Balancing Pool for the early termination of the Sundance B and C Power Purchase Arrangements receivedin the first quarter of 2018
(2) These items are not defined under IFRS. Presenting these items from period to period provides management and investors with the ability to evaluate earnings trends more readily in comparison with prior periods results. Refer to the Discussion of Consolidated Results section of the Company’s MD&A for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS.
(3) During the first quarter of 2019, we revised our approach to reporting adjustments to arrive at comparable EBITDA, mainly to be more comparable with other companies in the industry. Comparable EBITDA is now adjusted to exclude the impact of unrealized mark-to-market gains or losses. Both the current and prior period amounts have been adjusted to reflect this change.
(4) Availability and production include all generating assets (generation operations and finance leases that we operate).
About TransAlta Corporation:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. We provide municipalities, medium and large industries, businesses and utility customers clean, affordable, energy efficient, and reliable power. Today, we are one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. We are also proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit our web site at transalta.com.
Forward Looking Statements
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws (collectively referred to as forwarding-looking statements). All forward-looking statements are based on our beliefs as well as assumptions based on information available at the time the assumption was made and on management’s experience and perception of historical trends, current conditions, results and expected future developments, as well as other factors deemed appropriate in the circumstances. Forward-looking statements are not facts, but only predictions and generally can be identified by the use of statements that include phrases such as may, will, can, could, would, should, shall, believe, expect, estimate, anticipate, intend, plan, propose, project, forecast, foresee, potential, enable, continue and similar expressions. These statements are not guarantees of our future performance, events or results and are subject to a number of significant risks, uncertainties and other important factors that could cause our actual performance, events or results to be materially different from those set out in the forward-looking statements. More particularly, and without limitation, this news release contains forward-looking statements relating to: the coal-to-gas conversion for Sundance Unit 6; the Pioneer Pipeline driving lower fuel and carbon costs for the Canadian Coal fleet and improve EBITDA margins; ability to achieve the upper end of our FCF guidance; throughput of approximately 130 MMcf/day of natural gas flowing through the Pioneer Pipeline on November 1, 2019; improving fundamentals in the Alberta market; ability to competitively position the Alberta coal assets to deliver on the coal-to-gas strategy; the acquisition of the remaining 50% interest in Keephills 3 from Capital Power; purchasing a 49% interest in the Skookumchuck Wind Energy Facility upon commercial operation and the timing thereof; the closing of the second tranche of $400 million from Brookfield and the anticipated benefits thereof; andthe anticipated future value of TransAlta’s hydro assets. These statements are based on TransAlta’s beliefs and assumptions based on information available at the time the assumptions were made, including assumptions pertaining to: the Company’s ability to successfully defend against any existing or potential legal actions or regulatory proceedings; the closing of the second tranche of the Brookfield investment occurring and other risks to the Brookfield investment not materializing; no significant changes to regulatory, securities, credit or market environments; key assumptions pertaining to power prices remaining unchanged; our ownership of or relationship with TransAlta Renewables Inc. not materially changing; the Alberta hydro assets achieving their anticipated future value, cash flows and adjusted EBITDA; the anticipated benefits and financial results generated on the coal-to-gas conversions and the Company’s other strategies; and assumptions relating to the completion of the strategic partnership with and investment by Brookfield and proposed share buy-backs. The forward-looking statements are subject to a number of risks and uncertainties that may cause actual performance, events or results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include: the failure of the second tranche of the Brookfield investment to close; the outcomes of existing or potential legal actions or regulatory proceedings not being as anticipated, including those pertaining to the Brookfield investment; fluctuations in demand, market prices and the availability of fuel supplies required to generate electricity; changes in the current or anticipated legislative, regulatory and political environments in the jurisdictions in which we operate; environmental requirements and changes in, or liabilities under, these requirements; the failure of the conditions precedent to the second tranche of the investment to be satisfied; and other risks and uncertainties contained in the Company’s Management Proxy Circular dated March 26, 2019 and its Annual Information Form and Management’s Discussion and Analysis for the year ended December 31, 2018, filed under the Company’s profile with the Canadian securities regulators on www.sedar.com and the U.S. Securities and Exchange Commission on www.sec.gov. Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements, which reflect TransAlta’s expectations only as of the date of this news release. In light of these risks, uncertainties and assumptions, the forward-looking statements might occur to a different extent or at a different time than we have described, or might not occur at all. TransAlta disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Note: All financial figures are in Canadian dollars unless otherwise indicated.
TransAlta and Capital Power Reach Agreement to Swap Non-Operating Interests in Keephills 3 and Genesee 3
Transaction will result in TransAlta owning 100% of the Keephills 3 Facility and Capital Power owning 100% of the Genesee 3 Facility
TransAlta Corporation (TransAlta or the Company) (TSX: TA; NYSE: TAC) announced today that it has entered into definitive agreements with Capital Power Corporation (Capital Power) providing for the swap of their respective non-operating interests in the Keephills 3 facility and the Genesee 3 facility (“the Transaction”). As a result of the Transaction, TransAlta will own 100% of the Keephills 3 facility and Capital Power will own 100% of the Genesee 3 facility. The purchase prices for each non-operating interest will be largely set-off against each other, resulting in a net payment of approximately $10 million being made from Capital Power to TransAlta, subject to working capital adjustments.
“Today marks another important step in our transition to becoming Canada’s leading clean power company,” stated Dawn Farrell, President and Chief Executive Officer of TransAlta. “This transaction consolidates our control and operation of the Keephills 3 facility and allows us greater flexibility in pursuing our strategy of accelerating the coal-to-gas conversions.”
The Keephills 3 facility is a 463 MW coal-fired generating facility located approximately 70 kilometers west of Edmonton, Alberta, adjacent to TransAlta’s existing Keephills Unit 1 and Unit 2 power plants. TransAlta and Capital Power are currently equal partners in the ownership of the Keephills 3 facility, with TransAlta being responsible for its operations. The Keephills 3 facility achieved commercial operation in 2011 and has been identified as a candidate for TransAlta’s intended coal-to-gas conversions.
The Genesee 3 facility is a 466 MW coal-fired generating facility located approximately 50 kilometers southwest of Edmonton, adjacent to Capital Power’s Genesee generating station. TransAlta and Capital Power are also equal partners in the ownership of the Genesee 3 facility, with Capital Power being responsible for its operations.
The closing of the Transaction is subject to certain customary closing conditions, including the receipt of all necessary governmental and regulatory approvals and, as it applies to a subsidiary of TransAlta, receipt of bondholder consent. The Transaction is expected to close in the fourth quarter of 2019.
About TransAlta Corporation:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. We provide municipalities, medium and large industries, and businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, we are one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. We are also proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit our web site at transalta.com.
Forward-Looking Statements
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “may”, “will”, “project”, “should”, “propose”, “plans”, “intends” and similar expressions are intended to identify forward-looking information or statements. More particularly, and without limitation, this news release contains forward-looking statements and information relating to: the Transaction, including the closing and satisfaction of conditions precedents; the anticipated benefits arising from the Transaction, including as it relates to the Corporation’s coal-to-gas strategy; and the potential conversion of Keephills 3 to a gas-fired facility. These statements are based on TransAlta’s belief and assumptions based on information available at the time the assumptions were made. These statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include: failure to receive all necessary regulatory approvals or satisfy other conditions to closing the Transaction; legislative or regulatory developments; any significant changes to Common Share price or trading volume; market or business conditions; business opportunities that become available to, or are pursued by TransAlta; and other risk factors contained in the Company’s annual information form and management’s discussion and analysis. Readers are cautioned not to place undue reliance on these forward-looking statements or forward-looking information, which reflect TransAlta’s expectations only as of the date of this news release. TransAlta disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Note: All financial figures are in Canadian dollars.
TransAlta Corporation Provides Notice of Series G Preferred Shares Conversion Right and Announces Reset Dividend Rates
TransAlta Corporation (TransAlta or the Company) (TSX: TA; NYSE: TAC) today commented on the Government of Alberta’s announcement that the energy-only market framework in Alberta will be maintained.
The promise by the Government of Alberta to deliver a decision on market structure within 90 days was fulfilled, thereby reducing significant uncertainty for TransAlta in assessing investment decisions in the Alberta power generation market. The Company has undertaken a review of its future investment decisions on coal-to-gas conversions and repowering through hybrid investments, as well as the impacts on our hydro and wind assets, under an energy-only market. This review has confirmed that our strategy to convert the coal fleet to natural gas remains unchanged. The Company will provide more details of its strategy at its investor day to be held on September 16, 2019.
The energy-only market has been in place in Alberta since 2000. The structure provides stability and ensures a competitive framework to be able to assess investment opportunities in Alberta. TransAlta is now in a position to make key investment decisions as it transitions to gas and continues to provide affordable and clean power for Alberta consumers for decades to come. The $750 million in capital raised earlier in 2019 can now be put to work in Alberta for the benefit of investors and customers.
TransAlta is well positioned to continue on the path to become Canada’s leading gas and renewables generator by 2025.
About TransAlta Corporation
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. We provide municipalities, medium and large industries, businesses and utility customers clean, affordable, energy efficient, and reliable power. Today, we are one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. We are also proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit our web site at transalta.com.
Forward Looking Statement
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws (collectively referred to as forwarding-looking statements). All forward-looking statements are based on our beliefs as well as assumptions based on information available at the time the assumption was made. These statements are not guarantees of our future performance, events or results and are subject to a number of significant risks, uncertainties and other important factors that could cause our actual performance, events or results to be materially different from those set out in the forward-looking statements. More particularly, and without limitation, this news release contains forward-looking statements relating to: the Company’s investor day; being able to conclude and announce key investment decisions at the investor day, and that such decisions will ensure affordable and clean power for Alberta consumers; the market will support TransAlta’s ability to generate power competitively; the closing of the $750 million capital investment, including the $400 million preferred share subscription scheduled to close in October 2020; and becoming Canada’s leading gas and renewables generator by 2025 . The forward-looking statements are subject to a number of risks and uncertainties that may cause actual performance, events or results to differ materially from those contemplated by the forward-looking statements, which include: fluctuations in demand, market prices and the availability of fuel supplies required to generate electricity; the closing of the $750 million investment and the satisfaction of all closing conditions associated with the $400 million preferred share subscription in October 2020; changes in the current or anticipated legislative, regulatory and political environments; environmental requirements and changes in, or liabilities under, these requirements; and other risks and uncertainties contained in the Company’s Management Proxy Circular dated March 26, 2019 and its Annual Information Form and Management’s Discussion and Analysis for the year ended December 31, 2018, filed under the Company’s profile with the Canadian securities regulators on www.sedar.com and the U.S. Securities and Exchange Commission on www.sec.gov. Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements, which reflect TransAlta’s expectations only as of the date of this news release. TransAlta disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
TransAlta Corporation Provides Notice of Series G Preferred Shares Conversion Right and Announces Reset Dividend Rates
The Board of Directors of TransAlta Corporation (TSX: TA) (NYSE: TAC) today declared a quarterly dividend of $0.04 per common share payable on October 1, 2019 to shareholders of record at the close of business on September 3, 2019.
The Board of Directors also declared the following quarterly dividend on its Cumulative Redeemable Rate Reset First Preferred Shares for the period starting from and including June 30, 2019 up to but excluding September 30, 2019:
Preferred Shares
TSX Stock Symbol
Dividend Rate
Dividend Per Share
Record Date
Payment Date
Series A
TA.PR.D
2.709%
$0.16931
September 3, 2019
September 30, 2019
Series B*
TA.PR.E
3.717%
$0.23422
September 3, 2019
September 30, 2019
Series C
TA.PR.F
4.027%
$0.25169
September 3, 2019
September 30, 2019
Series E
TA.PR.H
5.194%
$0.32463
September 3, 2019
September 30, 2019
Series G
TA.PR.J
5.300%
$0.33125
September 3, 2019
September 30, 2019
*Please note the quarterly floating rate on the Series B Preferred Shares will be reset every quarter.
All currency is expressed in Canadian dollars except where noted. When the dividend payment date falls on a weekend or holiday, the payment is made the following business day.
About TransAlta Corporation:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. We provide municipalities, medium and large industries, businesses and utility customers clean, affordable, energy efficient, and reliable power. Today, we are one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. We are also proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit our web site at transalta.com.
TransAlta Corporation Provides Notice of Series G Preferred Shares Conversion Right and Announces Reset Dividend Rates
TransAlta Corporation (TransAlta) (TSX: TA) (NYSE: TAC) will release its second quarter 2019 results before markets open on Friday, August 9, 2019. A conference call and webcast to discuss the results will be held for investors, analysts, members of the media and other interested parties the same day beginning at 9:00 a.m. Mountain Time (11:00 a.m. ET). The media will be invited to ask questions following analysts.
Please contact the conference operator five minutes prior to the call, noting TransAlta Corporation as the company.
Dial-in numbers Second Quarter 2019 Results:
Toll-free North American participants call: 1-888-231-8191
Outside of Canada & USA call: 1-647-427-7450
A link to the live webcast will be available on the Investor Centre section of TransAlta’s website at https://transalta.com/investors/events-and-presentations. If you are unable to participate in the call, the instant replay is accessible at 1-855-859-2056 (Canada and USA toll free) with TransAlta pass code 5281588 followed by the # sign. A transcript of the broadcast will be posted on TransAlta’s website once it becomes available.
About TransAlta Corporation:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. We provide municipalities, medium and large industries, businesses and utility customers clean, affordable, energy efficient, and reliable power. Today, we are one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. We are also proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit our web site at transalta.com.
TransAlta Corporation Provides Notice of Series G Preferred Shares Conversion Right and Announces Reset Dividend Rates
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) today announced that the Toronto Stock Exchange (TSX) has accepted the notice filed by the Company to implement a normal course issuer bid (NCIB) for a portion of its common shares (Common Shares).
Pursuant to the NCIB, TransAlta may repurchase up to a maximum of 14,000,000 Common Shares, representing approximately 4.92% of issued and outstanding Common Shares as at May 27, 2019. Purchases under the NCIB may be made through open market transactions on the TSX and any alternative Canadian trading platforms on which the Common Shares are traded, based on the prevailing market price. Any Common Shares purchased under the NCIB will be cancelled.
Transactions under the NCIB will depend on future market conditions. TransAlta will initially retain discretion whether to make purchases under the NCIB, and to determine the timing, amount and acceptable price of any such purchases, subject at all times to applicable TSX and other regulatory requirements. The period during which TransAlta is authorized to make purchases under the NCIB commences on May 29, 2019 and ends on May 28, 2020 or such earlier date on which the maximum number of Common Shares are purchased under the NCIB or the NCIB is terminated at the Company’s election.
Under TSX rules, not more than 176,447 Common Shares (being 25% of the average daily trading volume on the TSX of 705,788 Common Shares for the six months ended April 30, 2019) can be purchased on the TSX on any single trading day under the NCIB, with the exception that one block purchase in excess of the daily maximum is permitted per calendar week. There are currently 284,697,495 Common Shares of the Company issued and outstanding.
TransAlta repurchased and cancelled 3,264,500 million common shares on the open market through the facilities of the TSX and/or alternative Canadian trading platforms at a cost of $22.9 million, or an average of $7.02 per share under its prior NCIB approved by the TSX on March 9, 2018 for the period from March 14, 2018 and ends on March 13, 2019.
The NCIB provides the Company with a capital allocation alternative with a view to long-term shareholder value. TransAlta’s Board of Directors and Management believe that, from time to time, the market price of TransAlta’s Common Shares does not reflect the underlying value and purchases of Common Shares for cancellation under the NCIB may provide an opportunity to enhance shareholder value.
About TransAlta Corporation:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. We provide municipalities, medium and large industries, businesses and utility customers clean, affordable, energy efficient, and reliable power. Today, we are one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. We are also proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit our web site at transalta.com.
Forward-Looking Statements
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words expect, anticipate, continue, estimate, may, will, project, should, propose, plans, intends and similar expressions are intended to identify forward-looking information or statements. More particularly, and without limitation, this news release contains forward-looking statements and information relating to TransAlta’s intentions with respect to the NCIB, the effects of repurchases of Common Shares and purchases thereunder, including any enhancement to shareholder value. These statements are based on TransAlta’s belief and assumptions based on information available at the time the assumptions were made. These statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include: the entering into of an automatic securities purchase plan; legislative or regulatory developments; any significant changes to Common Share price or trading volume; continued availability of capital and financing; changes to general economic, market or business conditions; business opportunities that become available to, or are pursued by TransAlta; and other risk factors contained in the Company’s annual information form and management’s discussion and analysis. Readers are cautioned not to place undue reliance on these forward-looking statements or forward-looking information, which reflect TransAlta’s expectations only as of the date of this news release. TransAlta disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Note: All financial figures are in Canadian dollars.
TransAlta Announces Appointment of Chief Financial Officer
TransAlta Corporation (TransAlta or the Company) (TSX:TA) (NYSE:TAC) today announces the promotion of Todd Stack to Chief Financial Officer (CFO), effective immediately.
Mr. Stack, who has served as Managing Director and Corporate Controller of the Company since February 2017, has been responsible for providing leadership and direction over TransAlta’s financial activities, corporate accounting and reporting, tax, and corporate planning.
“I am excited to announce Todd’s well-deserved promotion to CFO,”- said Dawn Farrell, President and Chief Executive Officer. “Todd has been with the Company for more than 25 years and has been an instrumental member of our finance and corporate reporting team. As CFO, he will provide significant value to the Company based on his extensive experience in finance, valuation, economics and the power industry.”
Since joining the Company in 1990, Mr. Stack has acted as the Company’s Treasurer, Corporate Controller, as well as a member of the corporate development team reviewing greenfield and acquisition opportunities. Prior to joining the finance team at TransAlta, Mr. Stack held a number of roles in the engineering team, including design, operations and project management. Mr. Stack is a registered professional engineer in Alberta and has received a Masters of Business Administration from the University of Calgary and is a holder of the Chartered Financial Analyst designation.
Mr. Stack replaces Christophe Dehout, who will be leaving the Company to pursue new opportunities.
About TransAlta Corporation
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. We provide municipalities, medium and large industries, businesses and utility customers clean, affordable, energy efficient, and reliable power. Today, we are one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. We are also proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit our web site at transalta.com.
TransAlta Corporation Provides Notice of Series G Preferred Shares Conversion Right and Announces Reset Dividend Rates
Financial Highlights
Funds from operations were $169 million, an increase of $8 million over 2018;
Free cash flow from ongoing operations increased 17% to $95 million; and
Entered into a $750 million strategic investment with an affiliate of Brookfield Renewable Partners
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) today reported first quarter 2019 financial results which reflect strong operational and financial results for the quarter, based on the execution of our strategic goals to competitively position our assets in the market. Our portfolio of assets in Alberta benefitted from high power prices during the quarter, and our Energy Marketing segment successfully offset a portion of the losses due to an extreme pricing event in the Pacific Northwest.
During the quarter we agreed to acquire a 49% interest in the Skookumchuck wind project adjacent to our coal mine at Centralia, further diversifying our fleet. The project has a 20-year PPA with an investment grade counterparty, making it a good candidate for TransAlta Renewables to acquire. The acquisition is expected to close in December 2019. Including Skookumchuck, we now have over $700 million of renewables project under development in addition to the investments in the Pioneer Pipeline and our coal to gas conversions. An Investor Day will be held in Toronto in September to showcase current and future growth opportunities, including the coal to gas conversions. Additionally, an analyst and institutional investor tour of our Alberta wind and hydro facilities will be held in mid-July.
Free cash flow(1,2) during the first quarter of $95 million and funds from operations(1,2) of $169 million, increased $14 million and $8 million, respectively, after adjusting for the receipt of $157 million from the Balancing Pool for the early termination of the Sundance B and C Power Purchase Arrangements (PPAs) received in 2018. The increase was driven by strong performance from Energy Marketing and Hydro, partially offset by lower results from US Coal and Canadian Gas.
Comparable EBITDA(1,2,3) for the quarter decreased $15 million compared to last year after adjusting for the one-time payment received in 2018. Alberta operations benefitted from higher prices in the quarter with average power prices in the first quarter of $69 per MWh compared to $35 per MWh in 2018, mainly reflecting the impact of the extreme cold weather during February and March of 2019. This was offset by lower EBITDA from US Coal as a result of one unit being unavailable during extreme market conditions, the expiry of the contract at Mississauga on December 31, 2018, and lower scheduled payments from the Poplar Creek finance lease in Canadian Gas.
Results for the quarter demonstrate the competitiveness of our business structure and asset diversification.- said Dawn Farrell, President and Chief Executive Officer. With increased financial capability through our innovative arrangement with Brookfield, we are now excited to get back to growing the business and continuing to execute our strategy. commented Mrs. Farrell.
First Quarter Highlights
Announced retirement plans for Tim Faithfull and Ambassador Gordon Giffin from the Board of Directors. Subsequent to the quarter, Tim Faithfull retired from the Board immediately following TransAlta’s 2019 Annual and Special Meeting of Shareholders. Ambassador Gordon Giffin intends to retire as director and Board Chair in 2020.
Received approval from the Alberta Electric System Operator to extend the mothballing of Sundance Units 3 and 5 until November 1, 2021.
Approved the innovative 10MW Windcharger battery storage project that will store energy produced from our Summerview II Wind Farm in Tesla batteries. The project received co-funding support from Emissions Reduction Alberta and will be the first utility-scale battery storage facility in Alberta.
Agreed to issue $750 million of exchangeable securities to Brookfield Renewable Partners and its institutional partners (collectively Brookfield) as part of a strategic partnership that realizes the value of our hydro assets, enhances our financial position to execute our strategy, and accelerates the opportunity to return capital to shareholders. The initial tranche of $350 million in exchange for unsecured, subordinated debentures was funded on May 1, 2019. TransAlta has also committed to returning up to $250 million of capital to shareholders through share repurchases within the next three years.
Important Subsequent Events
Signed an agreement to purchase a 49% interest in the Skookumchuck Wind Energy Facility upon commercial operation, which is expected in December of 2019. The 136.8 MW wind facility, located in Washington state near our Centralia Plant, has a 20-year power purchase agreement with an investment grade counterparty.
Announced that all resolutions at the Company’s Annual and Special Shareholders Meeting were approved, and that three new directors: Robert Flexon, Harry Goldgut and Richard Legault, were elected to the Board of Directors.
First Quarter 2019 Review by Segment
Comparable EBITDA(in CAD$ millions)
3 Months Ended
March 31, 2019
March 31, 2018
Canadian Coal
63
64(a)
U.S. Coal
(10)
25
Canadian Gas
30
61
Australian Gas
30
31
Wind and Solar
69
68
Hydro
27
17
Energy Marketing
19
(10)
Corporate
(7)
(20)
Total Comparable EBITDA
221
236(a)
a) Excludes $157 million in compensation from the Balancing Pool for the early termination of the Sundance B and C PPAs.
Canadian Coal: Comparable EBITDA for the three months ended March 31, 2019 was lower by $1 million, after adjusting for the one-time receipt of $157 million for the termination of the Sundance B and C PPAs in the first quarter of 2018. Performance in the first quarter of 2019 was in line with the same quarter of 2018, despite the termination of the Sundance PPAs and the mothballing of two units. This largely reflects the combined impact of higher prices, co-firing with gas, and lower OM&A costs offsetting the loss of ability to recover Sundance carbon compliance costs through the PPAs.
U.S. Coal: Comparable EBITDA was down by $35 million during the first quarter of 2019 compared to 2018. During an isolated and extreme pricing event in March, Centralia was unable to commit one of its units to physical production for day ahead supply due to an unplanned forced outage repair. As a result, the Company incurred cash losses of $25 million on its day ahead hedging position. This isolated and extreme pricing event was the result of cold weather and strong demand in the Pacific Northwest as well as from extremely high natural gas prices. The affected unit was able to return to service earlier than expected for delivery in the real time market, however, it was only able to recover a portion of the day ahead hedge losses due to real time prices settling significantly below the day ahead settlement price. The day ahead and subsequent real time prices are historically very similar. The event occurred within a 48-hour period. The remaining variance of $10 million is mainly related to the strong results in 2018 as we fulfilled our contracted volumes with low priced power purchases.
Canadian Gas: Comparable EBITDA for the three months ended March 31, 2019 decreased by $31 million compared to the same period in 2018, mainly due to the expiry of the Mississauga contract on December 31, 2018 and lower scheduled payments from the Poplar Creek finance lease. In 2018, comparable EBITDA included $29 million of revenues from the Mississauga contract.
Australian Gas: Comparable EBITDA for the three months ended March 31, 2019 was consistent with the same period in 2018, which was expected due to the nature of our contracts.
Wind and Solar: Comparable EBITDA for the three months ended March 31, 2019 was consistent with the same period in 2018 as lower overall production was offset by favorable pricing in Alberta and reductions in operating and production-based costs.
Hydro: Comparable EBITDA for the three months ended March 31, 2019 increased by $10 million compared to the same period in 2018, primarily due to a favourable market in Alberta.
Energy Marketing: Comparable EBITDA was $29 million higher compared to the same period in 2018 due to strong results from U.S. Western markets. In addition, Energy Marketing generated $18 million in unrealized mark-to-market gains in the quarter, which were not included in comparable EBITDA. The cash flow from these mark-to-market gains is expected to be realized in future periods.
Corporate: During the period, corporate cash flow was positively impacted by a total return swap which resulted in a $13 million decrease in administrative costs related to our share-based payment plan.
Consolidated Earnings Review
Net loss attributable to common shareholders during the first quarter of 2019 was $65 million compared to net earnings of $65 million for the same period in 2018. Last year’s net earnings included the one-time receipt of $157 million ($115 million after tax) for the termination of the Sundance B and C PPAs. Excluding the termination payment, this quarter’s net loss was $15 million higher due to lower comparable EBITDA, higher depreciation, and higher earnings attributable to non-controlling interests partially offset by lower interest expense and lower income tax expense.
First Quarter 2018 Financial and Operational Highlights
In $CAD millions, unless otherwise stated
3 Months Ended
March 31, 2019
March 31, 2018
Availability (%) (4)
89.4
93.9
Production (GWh)
8,125
7,171
Revenue
648
588
Comparable EBITDA
221
393
Net earnings attributable to common shareholder
(65)
65
Funds from operations
169
318
Cash Flow from Operating Activities
82
425
Free cash flow
95
238
Net earnings per common share attributable to common shareholders
$(0.23)
$0.23
Funds from operations per share
$0.59
$1.10
Free cash flow per share
$0.33
$0.83
Dividends declared per common share
$0.04
TransAlta is in the process of filing its Consolidated Financial Statements and accompanying notes, as well as the associated Management’s Discussion & Analysis (MD&A). These documents will be available today on the Investors section of TransAlta’s website at transalta.com or through SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml.
Conference call
We will hold a conference call and webcast at 9:00 a.m. MT (11:00 a.m. ET) today, May 14, 2019, to discuss our first quarter 2019 results. The call will begin with a short address by Dawn Farrell, President and CEO, and Christophe Dehout, Chief Financial Officer, followed by a question and answer period for investment analysts and investors. A question and answer period for the media will immediately follow. Please contact the conference operator five minutes prior to the call, noting TransAlta Corporation as the company and Sally Taylor as moderator.
Dial-in numbers First Quarter 2019 Results:
Toll-free North American participants call: 1-888-231-8191
Outside of Canada & USA call: 1-647-427-7450
A link to the live webcast will be available on the Investor Centre section of TransAlta’s website at https://transalta.com/investors/events-and-presentations. If you are unable to participate in the call, the instant replay is accessible at 1-855-859-2056 (Canada and USA toll free) with TransAlta pass code 3795994 followed by the # sign. A transcript of the broadcast will be posted on TransAlta’s website once it becomes available.
Notes
(1) Excluding one-time positive cash flows due to the Alberta Power Purchase Arrangement terminations in 2018.
(2) These items are not defined under IFRS. Presenting these items from period to period provides management and investors with the ability to evaluate earnings trends more readily in comparison with prior periods results. Refer to the Funds from Operations and Free Cash Flow and Earnings and Other Measures on a Comparable Basis sections of the Company’s MD&A for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS.
(3) During the first quarter of 2019, we revised our approach to reporting adjustments to arrive at comparable EBITDA, mainly to be more comparable with other companies in the industry. Comparable EBITDA is now adjusted to exclude the impact of unrealized mark-to-market gains or losses. Both the current and prior period amounts have been adjusted to reflect this change.
(4) Availability and production includes all generating assets (generation operations and finance leases that we operate).
About TransAlta Corporation:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. We provide municipalities, medium and large industries, businesses and utility customers clean, affordable, energy efficient, and reliable power. Today, we are one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. We are also proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit our web site at transalta.com.
Forward Looking Statements
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws (collectively referred to as forwarding-looking statements). All forward-looking statements are based on our beliefs as well as assumptions based on information available at the time the assumption was made and on management’s experience and perception of historical trends, current conditions, results and expected future developments, as well as other factors deemed appropriate in the circumstances. Forward-looking statements are not facts, but only predictions and generally can be identified by the use of statements that include phrases such as may, will, can, could, would, should, shall, believe, expect, estimate, anticipate, intend, plan, propose, project, forecast, foresee, potential, enable, continue and similar expressions. These statements are not guarantees of our future performance, events or results and are subject to a number of significant risks, uncertainties and other important factors that could cause our actual performance, events or results to be materially different from those set out in the forward-looking statements. More particularly, and without limitation, this news release contains forward-looking statements relating to: the competitiveness of our business structure and asset diversification; increased financial capability following the arrangement with Brookfield; strategies and plans, including growing the business and continuing to execute our strategy; Ambassador Giffin intention to retire as director and Board Chair in 2020; the mothballing of Sundance Units 3 and 5 until November 1, 2021; the Windcharger battery storage project that is expected to store energy produced from the Summerview II Wind Farm; closing of the acquisition of a 49% interest in the Skookuumchuk Wind Energy Facility, including the commercial operation date; the investment by Brookfield for a further $400 million in exchangeable securities; the expected benefits from the strategic partnership with Brookfield; and the expected return of capital to shareholders. These statements are based on TransAlta’s beliefs and assumptions based on information available at the time the assumptions were made, including assumptions pertaining to: the Company’s ability to successfully defend against any existing or potential legal actions or regulatory proceedings, including by Mangrove Partners; the closing of the second tranche of the Brookfield investment occurring and other risks to the Brookfield investment not materializing; no significant changes to regulatory, securities, credit or market environments; key assumptions including power prices, Sundance coal capacity factor and hydro/wind resource remaining unchanged from those previously stated on December 17, 2018; the anticipated Alberta capacity market framework in the future; our ownership of or relationship with TransAlta Renewables Inc. not materially changing; the Alberta hydro assets achieving their anticipated future value, cash flows and adjusted EBITDA; the anticipated benefits and financial results generated on the coal-to-gas conversions and the Company’s other strategies; and assumptions relating to the completion of the strategic partnership with and investment by Brookfield and proposed share buy-backs. The forward-looking statements are subject to a number of risks and uncertainties that may cause actual performance, events or results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include: the failure of the second tranche of the Brookfield investment to close; the outcomes of existing or potential legal actions or regulatory proceedings not being as anticipated, including those pertaining to the Brookfield investment; changes in our relationships with Brookfield and its affiliated entities or our other shareholders; our Alberta hydro assets not achieving their anticipated value, cash flows or adjusted EBITDA; the Brookfield investment not resulting in the expected benefits for the Company and its shareholders; the inability to complete share buy-backs within the timeline or on the terms anticipated or at all; fluctuations in demand, market prices and the availability of fuel supplies required to generate electricity; changes in the current or anticipated legislative, regulatory and political environments in the jurisdictions in which we operate; environmental requirements and changes in, or liabilities under, these requirements; the failure of the conditions precedent to the second tranche of the investment to be satisfied; and other risks and uncertainties contained in the Company’s Management Proxy Circular dated March 26, 2019 and its Annual Information Form and Management’s Discussion and Analysis for the year ended December 31, 2018, filed under the Company’s profile with the Canadian securities regulators on www.sedar.com and the U.S. Securities and Exchange Commission on www.sec.gov. Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements, which reflect TransAlta’s expectations only as of the date of this news release. In light of these risks, uncertainties and assumptions, the forward-looking statements might occur to a different extent or at a different time than we have described, or might not occur at all. TransAlta disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Note: All financial figures are in Canadian dollars unless otherwise indicated.
TransAlta Announces Initial Closing of the Brookfield Strategic Financing
TransAlta Corporation (TransAlta or the Company) (TSX:TA) (NYSE:TAC) today announced the closing of the initial tranche of its previously announced $750 million strategic investment by an affiliate of Brookfield Renewable Partners (Brookfield).
“Having achieved this important milestone, we can now start to realize the benefits of our partnership and financing with Brookfield”,- said Dawn Farrell, CEO of TransAlta. “We are moving swiftly to put capital to work including advancing our coal-to-gas conversions.”
As previously disclosed, Brookfield will invest $750 million in TransAlta through the purchase of exchangeable securities, which are convertible into an equity ownership interest in TransAlta’s Alberta hydro assets in the future at a value based on a multiple of the hydro assets future adjusted EBITDA. In connection with today’s initial closing, Brookfield invested $350 million in TransAlta in exchange for unsecured, subordinated debentures; the remaining $400 million will be invested in October 2020 in exchange for a new series of redeemable, retractable first preferred shares, subject to the satisfaction of certain customary conditions precedent. In connection with the transaction, TransAlta shareholders recently elected to its Board of Directors two experienced Brookfield executives, Harry Goldgut and Richard Legault, at its 2019 Annual and Special Shareholders Meeting.
The investment provides the financial flexibility to drive TransAlta’s transition to 100% clean energy by 2025, recognizes the anticipated future value of TransAlta’s Alberta hydro assets, and also accelerates the Company’s plan to return capital to its shareholders. It also creates a partnership with one of the world’s leaders in the renewables industry and is expected to generate value in the near-term, while driving sustainable growth over the long-term for all TransAlta shareholders.
Further Information
Further information is contained in the Company’s material change report dated March 26, 2019 and investment agreement dated as of March 22, 2019 previously filed on www.sedar.com and www.sec.gov. Additional details about the strategic investment by Brookfield will be available in the Company’s further material change report, to be filed on www.sedar.com and www.sec.gov in due course. Copies of the definitive agreements entered into by TransAlta and Brookfield on the initial closing date will also be filed with the material change report.
About TransAlta Corporation
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. We provide municipalities, medium and large industries, businesses and utility customers clean, affordable, energy efficient, and reliable power. Today, we are one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. We are also proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit our web site at transalta.com.
Forward-Looking Statements
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws (collectively referred to as “forwarding-looking statements”). All forward-looking statements are based on our beliefs as well as assumptions based on information available at the time the assumption was made and on management’s experience and perception of historical trends, current conditions, results and expected future developments, as well as other factors deemed appropriate in the circumstances. Forward-looking statements are not facts, but only predictions and generally can be identified by the use of statements that include phrases such as “may”, “will”, “can”, “could”, “would”, “should”, “shall”, “believe”, “expect”, “estimate”, “anticipate, “intend”, “plan”, “propose”, “project”, “forecast”, “foresee”, “potential”, “enable”, “continue” and similar expressions. These statements are not guarantees of our future performance, events or results and are subject to a number of significant risks, uncertainties and other important factors that could cause our actual performance, events or results to be materially different from those set out in the forward-looking statements. More particularly, and without limitation, this news release contains forward-looking statements relating to: statements relating to the strategic investment by and partnership with Brookfield and its affiliated entities; the timing and probability for completing the proposed second tranche of the Brookfield investment; the ability of the investment to enhance the Company’s financial position and to execute its strategy; the Company’s use of proceeds and strategy, plans and priorities, including as it pertains to reducing debt, growing the renewables business, maintaining, realizing and maximizing the value of the hydro assets, converting coal-fired units to natural gas fired units and returning capital to shareholders; the Company’s relationship with Brookfield and other shareholders; the expected timing, costs and benefits of the strategic investment by and partnership with Brookfield; the expected benefits to be realized from the election of Brookfield’s nominees to the Board of Directors of the Company; the expected higher cash flow and anticipated adjusted EBITDA to be generated by the Alberta hydro assets following expiry of the power purchase arrangement in 2020 or upon the conversion of the exchangeable securities; the expected benefits of Brookfield being a cornerstone shareholder; and the timing, terms and probability of returning capital to shareholders through share buy-backs. These statements are based on TransAlta’s beliefs and assumptions based on information available at the time the assumptions were made, including assumptions pertaining to: the Company’s ability to successfully defend against any existing or potential legal actions or regulatory proceedings, including by Mangrove Partners; the closing of the second tranche of the Brookfield investment occurring and other risks to the Brookfield investment not materializing; no significant changes to regulatory, securities, credit or market environments; the anticipated Alberta capacity market framework in the future; our ownership of or relationship with TransAlta Renewables Inc. not materially changing; the Alberta hydro assets achieving their anticipated future value, cash flows and adjusted EBITDA; the anticipated benefits and financial results generated on the coal-to-gas conversions and the Company’s other strategies; the Company’s and Mangrove’s strategies and plans; no significant changes in applicable laws, including any tax or regulatory changes in the markets in which we operate; the anticipated structure and framework of an Alberta capacity market in the future; risks associated with the impact of the Brookfield investment on the Company’s shareholders, debtholders and credit ratings; assumptions referenced in our 2019 guidance; no material decline in the dividends expected to be received from TransAlta Renewables Inc.; the expected life extension of the coal fleet and anticipated financial results generated on conversion; and assumptions relating to the completion of the strategic partnership with and investment by Brookfield and proposed share buy-backs. The forward-looking statements are subject to a number of risks and uncertainties that may cause actual performance, events or results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include: the failure of the Brookfield’s director nominees to be elected at future shareholders meetings; the failure of the second tranche of the Brookfield investment to close; the outcomes of existing or potential legal actions or regulatory proceedings not being as anticipated, including those pertaining to the Brookfield investment; changes in our relationships with Brookfield and its affiliated entities or our other shareholders; our Alberta hydro assets not achieving their anticipated value, cash flows or adjusted EBITDA; the Brookfield investment not resulting in the expected benefits for the Company and its shareholders; the inability to complete share buy-backs within the timeline or on the terms anticipated or at all; fluctuations in demand, market prices and the availability of fuel supplies required to generate electricity; changes in the current or anticipated legislative, regulatory and political environments in the jurisdictions in which we operate; environmental requirements and changes in, or liabilities under, these requirements; the failure of the conditions precedent to the second tranche of the investment to be satisfied; risks associated with the calculation of the hydro assets EBITDA, including non-financial measures included in that calculation; the anticipated benefits of the joint Brookfield/TransAlta hydro operating committee not materializing; the timing and value of Brookfield’s exchange of exchangeable securities and the amount of equity interest in the hydro assets resulting therefrom; changes in general economic conditions including interests rates; operational risks involving our facilities; unexpected increases in cost structure; failure to meet financial expectations; structural subordination of securities; and other risks and uncertainties contained in the Company’s Management Proxy Circular dated March 26, 2019 and its Annual Information Form and Management’s Discussion and Analysis for the year ended December 31, 2018, filed under the Company’s profile with the Canadian securities regulators on www.sedar.com and the U.S. Securities and Exchange Commission (SEC) on www.sec.gov. Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements, which reflect TransAlta’s expectations only as of the date of this news release. In light of these risks, uncertainties and assumptions, the forward-looking statements might occur to a different extent or at a different time than we have described, or might not occur at all. TransAlta disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Certain financial information contained in this news release, including the calculation of EBITDA pursuant to the Brookfield investment, may not be standard measures defined under International Financial Reporting Standards (IFRS) and may not be comparable to similar measures presented by other entities. For further information on the calculation of EBITDA in respect of the Brookfield investment and with regard to the exchangeable securities, reference should be made to the material change report and the investment agreement previously filed by the Company, and the further material change report and copies of the definitive agreements to be filed, with the Canadian securities regulators on www.sedar.com and the SEC on www.sec.gov.
