The transaction was supported by Export Development Canada (EDC)'s issuance of Performance Security Guarantee of up to $75 million to backstop letters of credit issued against project development obligations by Recurrent Energy. In addition, in conjunction with the acquisition, Credit Suisse will provide Recurrent Energy with a US$150 million, one year senior secured bridge loan.
The acquisition of Recurrent has increased Canadian Solar's total solar project pipeline by approximately 4.0 GW to a total of 8.5 GW, including an increase in its late-stage project pipeline by approximately 1.0 GW to 2.4 GW. Recurrent's seven late-stage projects totalling approximately 1.0 GW are located in California and Texas and are expected to be built and connected to the grid prior to the ITC expiration at the end of 2016.
This transaction significantly increases Canadian Solar's late-stage project pipeline in low risk geographies. Recurrent's seven late-stage projects have long-term power purchase agreements with investment grade counterparties, and are expected to generate significant US dollar denominated cash flow after completion, serving as the cornerstone for the launch of Canadian Solar's own Yield-Co in the quarters ahead.
With the closing of the transaction on March 30, 2015, David Brochu has been appointed Recurrent's new Chief Executive Officer to replace Arno Harris. Michael Metzner, Recurrent's Chief Financial Officer is also stepping down from his role. This management transition had been planned in advance.
Mr. Brochu previously served as Recurrent Energy's Chief Operating Officer, a position he assumed in June 2014. Before that, Mr. Brochu served as Recurrent Energy's Senior Vice President of Development, where he oversaw all development activities, including the build out of more than 315 MW of solar PV projects in two years. Mr. Brochu was previously President and CEO of UPC Solar, a Chicago-based solar PV developer with a pipeline of projects in Ontario, Canada and the United States, which Recurrent Energy acquired in 2009.
David Brochu, CEO of Recurrent Energy, said:
"I am honored to lead this exceptional team, with our new parent Canadian Solar, as we further strengthen our position in North America's solar energy market. We look forward to transitioning our business model to own and operate assets, as we embark on construction of more than 1 GW of solar PV projects over the next two years."
Dr. Shawn Qu, Canadian Solar Chairman and Chief Executive Officer, said:
"With the acquisition of Recurrent Energy our significantly expanded, globally diverse project pipeline places Canadian Solar firmly among the leading global solar energy companies. We believe that with David's leadership and experience at Recurrent, we can continue to build on our proven solar energy development track record to create lasting value for our shareholders."