Sale Aligned with AltaGas' Asset Monetization and Funding Strategy for the Acquisition of WGL Holdings, Inc.
("WGL")
CALGARY, June 13, 2018 /CNW/ - AltaGas Ltd. (AltaGas)
(TSX: ALA) announced today that it has entered into a definitive agreement to indirectly sell 35 percent of its interest in the
Northwest British Columbia Hydro Electric Facilities (the "Facilities") for $922 million. The
purchase price implies a 2017 EBITDA multiple of approximately 27 times and a total value of over $2.6
billion on a 100 percent basis for the Facilities. The sale of the interest in the Facilities is part of the larger
funding strategy related to AltaGas' acquisition of WGL, and represents almost half of the approximate $2
billion in asset sales to be raised.
"The sale of the minority interest in the Northwest Hydro Facilities is aligned with our asset monetization and funding
strategy," said David Harris, President and Chief Executive Officer of AltaGas. "Our
criteria include appropriate value for the assets, shareholder value creation, and credit metric accretion, with the resulting
business being consistent with our long-term vision for AltaGas.
"We continue to be very confident in completing our long-term financing plan in the next several months, and with the sale of
the Facilities and certain anticipated non-core assets, we expect over half of the $2 billion in
targeted asset sales to be completed by mid-summer," stated Mr. Harris. "We also continue to advance discussions for the
monetization of certain additional assets, which we expect to conclude in the third quarter.
"We look forward to closing the acquisition of WGL. The business combination is a compelling one, with accretive
earnings per share and cash flow per share growth, a business with a strong balance sheet, and a balanced portfolio of high
quality energy infrastructure assets," concluded Mr. Harris.
Funding Strategy for WGL
The acquisition of WGL is fully backstopped by a US$3 billion bridge facility and
$2.6 billion in equity proceeds raised through the February 2017
subscription receipt offering and private placement. The proceeds of the sale of 35 percent of AltaGas' interest in the
Facilities, further asset monetizations, as well as offerings of senior debt and hybrid securities, will allow for the rapid
repayment of the bridge facility.
On June 4th, a US$2 billion preliminary short form base shelf
prospectus for the issuance of both debt securities and preferred shares was filed in Alberta. AltaGas anticipates filing a
final short form base shelf prospectus shortly both in Alberta and the U.S. This will
enable AltaGas to access the U.S. capital markets on a timely basis over the following 25 months, subject to market
conditions.
Definitive Agreement
The definitive agreement to sell the 35 percent stake of AltaGas' interest in the Facilities has been entered into
with a joint venture company that is indirectly owned by Axium Infrastructure Inc., as manager of Axium Infrastructure Canada II
Limited Partnership, and Manulife Financial Corporation.
Axium Infrastructure is an independent investment firm dedicated to investing in core assets generating stable and predictable
cash flows in the energy, transportation and social infrastructure sectors. Since 2010, the firm has invested in a diversified
portfolio of over 100 North American infrastructure assets, having assets and co-investments under management as of March 31, 2018 of approximately $4 billion.
Manulife is a leading international financial services group with assets under management and administration of over
$1.1 trillion (US$850 billion) as of March
31, 2018. Manulife is an active investor in renewable energy and infrastructure with equity investments in these
sectors totaling over $7 billion.
AltaGas will remain the majority holder of the Facilities and continue to provide all operational, maintenance and management
functions. The transaction is subject to closing adjustments and customary closing conditions, and is expected to close
prior to the end of June 2018. AltaGas anticipates that there will be a negligible amount of current cash taxes resulting
from this transaction.
Northwest British Columbia Hydro Electric Facilities
Located in Tahltan First Nation territory, the Facilities are comprised of the 195-megawatt Forrest Kerr Hydroelectric
Facility which achieved commercial operation ("COD") in October 2014, the 16-megawatt Volcano Creek
Hydroelectric Facility which achieved COD in December 2014, and the 66-megawatt McLymont Creek
Hydroelectric Facility which achieved COD on October 1, 2015. The Facilities had a total capital
cost of approximately $1 billion, and are underpinned by three separate 60-year, fully indexed
electricity purchase agreements with BC Hydro.
The Tahltan First Nation continues to play a key role in the success of the Facilities and to work closely with AltaGas to
provide clean energy to British Columbia for decades to come.
TD Securities Inc., J.P. Morgan and RBC Capital Markets are acting as joint financial advisors to AltaGas in connection with
this transaction.
WGL Acquisition Next Steps
On June 13, 2018, the DC Public Service Commission will hold an additional day of
hearing for the purpose of reviewing the unanimous settlement agreement (the "Settlement"). A community hearing will also
be held that evening to receive any public comments on the Settlement. It is anticipated that the record will close on
June 18, 2018, with a final order expected to be issued the week of June 25,
2018.
About AltaGas
AltaGas is an energy infrastructure company with a focus on natural gas, power and regulated utilities. AltaGas
creates value by acquiring, growing and optimizing its energy infrastructure, including a focus on clean energy sources. For more
information visit: www.altagas.ca.
FORWARD LOOKING INFORMATION
This news release contains forward-looking information (forward-looking statements). Words such as "may", "can", "would",
"could", "should", "will", "expect", "opportunity" and similar expressions suggesting future events or future performance, as
they relate to the Corporation or any affiliate of the Corporation, are intended to identify forward-looking statements.
Specifically, such forward-looking statements included in this document include, but are not limited to, statements with respect
to the following: expected financing strategy for the WGL acquisition, including additional asset sales, value of such asset
sales, timing, and additional financing steps, including potential hybrid securities and senior term debt; expected ability to
execute on our long-term financing plan; expected balance sheet strength, accretion, portfolio balance and quality, and risk
profile following the closing of the WGL acquisition; expected closing and timing of the closing of the sale of AltaGas' interest
in the Facilities; and expected tax implications of the sale of AltaGas' interest in the Facilities, and expected timing of the
DC Public Service Commission process. These statements involve known and unknown risks, uncertainties and other factors that may
cause actual results, events and achievements to differ materially from those expressed or implied by such statements. Such
statements reflect AltaGas' current expectations, estimates and projections based on certain material factors and assumptions at
the time the statement was made. Material assumptions include: expected commodity supply, demand and pricing; volumes and
rates; exchange rates; inflation; interest rates; credit rating; regulatory approvals and policies; future operating and capital
costs; project completion dates; capacity expectations; implications of recent U.S. tax legislation changes; the outcomes of
significant commercial contract negotiation; financing of the WGL Acquisition; timing and completion of the WGL acquisition; and
timing and completion of the sale of AltaGas' interest in the Facilities. AltaGas' forward-looking statements are subject
to certain risks and uncertainties which could cause results or events to differ from current expectations, including, without
limitation: access to and use of capital markets; market value of AltaGas' securities; AltaGas' ability to pay dividends;
AltaGas' ability to service or refinance its debt and manage its credit rating and risk; prevailing economic conditions;
potential litigation; AltaGas' relationships with external stakeholders, including Aboriginal stakeholders; volume throughput and
the impacts of commodity pricing, supply, composition and other market risks; available electricity prices; interest rate,
exchange rate and counterparty risks; legislative and regulatory environment; the potential for service interruptions; AltaGas'
ability to economically and safely develop, contract and operate assets; AltaGas' ability to update infrastructure on a timely
basis; AltaGas' dependence on certain partners; impacts of climate change and carbon taxing; cybersecurity risks; risks
associated with the acquisition of WGL, the financing of the WGL acquisition and the underlying business of WGL; and the other
factors discussed under the heading "Risk Factors" in the most recent AIF. Many factors could cause AltaGas' or any
particular business segment's actual results, performance or achievements to vary from those described in this news release,
including, without limitation, those listed above and the assumptions upon which they are based proving incorrect. These factors
should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions
underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this news
release, and such forward-looking statements included in this news release, should not be unduly relied upon. The impact of any
one assumption, risk, uncertainty or other factor on a particular forward-looking statement cannot be determined with certainty
because they are interdependent and AltaGas' future decisions and actions will depend on management's assessment of all
information at the relevant time. Such statements speak only as of the date of this news release. AltaGas does not intend, and
does not assume any obligation, to update these forward-looking statements except as required by law. The forward-looking
statements contained in this news release are expressly qualified by these cautionary statements.
Financial outlook information contained in this news release about prospective financial performance, financial position or
cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on
management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook
information contained in this news release should not be used for purposes other than for which it is disclosed herein.
This news release contains references to certain financial measures that do not have a standardized meaning prescribed by
GAAP and may not be comparable to similar measures presented by other entities. These non-GAAP measures provide additional
information that management believes is meaningful regarding AltaGas' and Coast Mountain Hydro Limited Partnership's operational
performance, liquidity and capacity to fund dividends, capital expenditures, and other investing activities. Readers are
cautioned that non-GAAP measures should not be construed as alternatives to other measures of financial performance calculated in
accordance with GAAP. EBITDA is a measure of AltaGas' operating profitability prior to how business activities are financed,
assets are amortized, or earnings are taxed. EBITDA is calculated from the Consolidated Statement of Income using net income
adjusted for pre-tax depreciation and amortization, interest expense, and income tax expense. EBITDA includes additional
adjustments for unrealized gains (losses) on risk management contracts, gains (losses) on investments, transaction costs related
to acquisitions, gains (losses) on the sale of assets, and accretion expenses related to asset retirement obligations.
AltaGas presents EBITDA as a supplemental measure. EBITDA is frequently used by analysts and investors in the evaluation of
entities within the industry as it excludes items that can vary substantially between entities depending on the accounting
policies chosen, the book value of assets and the capital structure.
SOURCE AltaGas Ltd.
View original content: http://www.newswire.ca/en/releases/archive/June2018/13/c7719.html