NextEra Energy Partners said it agreed with NextEra Energy Resources to pay almost $850 million for a 50% interest in a 2,520 MW portfolio of renewable energy, including solar, solar-plus-storage, and wind.
In conjunction with the acquisition, NextEra Energy Partners entered into a roughly $824 million convertible equity portfolio financing with Apollo Global Management.
The financing is the lowest cost in the partnership’s history, according to a statement. Terms were set with a more than 250 basis point lower implied return than the first iterations of the structure in 2018 and early 2019.
The portfolio includes:
- Cool Springs Solar, an approximately 213 MW solar generation and 40 MW solar storage facility in Georgia.
- Dodge Flat Solar, an approximately 200 MW solar generation and 50 MW solar storage facility in Nevada.
- Elora Solar, an approximately 150 MW solar generation facility in Tennessee.
- Quitman II Solar, an approximately 150 MW solar generation facility in Georgia.
- Fish Springs Ranch Solar, an approximately 100 MW solar generation and 25 MW solar storage facility in Nevada.
- Quinebaug Solar, an approximately 49 MW solar generation facility in Connecticut.
NextEra Energy Partners expects to acquire the interests in the assets for around $849 million, subject to working capital and other adjustments, plus NextEra Energy Partners’ share of the portfolio’s total tax equity financings, which is estimated to be approximately $866 million at the time of closing.
The acquisition is expected to contribute adjusted EBITDA of around $184 million to $194 million.
NextEra Energy Partners said it expects to close the acquisition later this year or in early 2022, subject to customary closing conditions and receipt of certain regulatory approvals.
The financing will provide NextEra Energy Partners with the right to periodically buy out the investor’s equity interest in the portfolio between the five- and 10-year anniversaries of the agreement at a fixed pre-tax annual return of around 5.6% (inclusive of all prior distributions).
NextEra Energy Partners will have the right to pay 100% of the buyout price in NextEra Energy Partners’ common units, issued at no discount to the then-current market price.
When fully drawn, the financing agreement will allocate at least 35% of the portfolio’s cash flows to NextEra Energy Partners over the initial 10-year period. This cash flow allocation implies a roughly 4.8% effective annual coupon on the investor’s outstanding investment over the initial period prior to NextEra Energy Partners’ anticipated initiation of periodic buyouts of the investor’s equity interest.
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