AltaGas and its indirect wholly owned subsidiary AltaGas Power Holdings (U.S.) have entered into a purchase and sale agreement with Highstar Capital IV, L.P. and certain of its affiliates to acquire GWF Energy Holdings LLC, which holds a portfolio of three natural gas-fired electrical generation facilities in northern California.
The purchase price of the acquisition is US$642 million, subject to certain closing adjustments.The deal is expected to add approximately US$95 million in incremental contracted EBITDA per year, to be over 5 percent accretive to cash flow per share and to be modestly accretive to earnings per share in 2016, the first full year of ownership.
The deal includes three natural gas-fired power electrical generation plants located in California's San Joaquin Valley. The Tracy facility, a 330 MW combined cycle facility is recognized for reliability, flexible cycling ability and competitive start costs. The 97 MW Hanford and 96 MW Henrietta facilities are two flexible peaking facilities with quick-start capabilities.
The natural gas-fired electrical generation plants are fully contracted under power purchase agreements (PPAs) through to the fourth quarter of 2022 with Pacific Gas & Electric Company (PG&E). The PPAs are structured as tolling arrangements for 100 percent of the energy, capacity and ancillary services.
David Cornhill, Chairman and CEO of AltaGas, stated:
"Having a diversified energy infrastructure business across North America gives us more opportunities for growth and for creating shareholder value. The acquisition of these power facilities is an important addition to our business. Each asset has a power purchase agreement that will further enhance AltaGas' stable earnings and cash flow."