BROOKFIELD, NEWS, Jan 13, 2020 (GLOBE NEWSWIRE via COMTEX) -- All amounts in U.S. dollars unless otherwise stated
-- Proposal is being made at a BEP-to-TERP exchange ratio equivalent to 0.36, which represents an 11% premium to TerraForm Power's current trading price
-- Combined company would be one of the largest, integrated pure-play renewable power companies in the world with a 20-year track record of delivering strong total returns and stable distribution growth
-- Expected to be immediately accretive to Brookfield Renewable while further expanding its global renewable portfolio in North America and Western Europe
-- TerraForm Power shareholders will benefit from a broader growth mandate including a global development pipeline, investment grade balance sheet, increased liquidity, and enhanced diversification
-- Brookfield Renewable's Board of Directors has also approved a 5% increase to its quarterly distribution, bringing its annual payout to $2.17 per unit
Brookfield Renewable Partners L.P. /zigman2/quotes/203824572/composite BEP +0.76% ("Brookfield Renewable") today announced that it has made a non-binding, all-share proposal to acquire the outstanding Class A common shares of TerraForm Power, Inc. /zigman2/quotes/205933696/composite TERP +0.43% ("TerraForm Power"), other than the 62% owned by Brookfield Renewable and its affiliates (this "transaction" or the "proposed transaction"). Pursuant to the proposed transaction, each Class A common share of TerraForm Power would be acquired, on a tax-deferred basis, for consideration equivalent to 0.36 of a Brookfield Renewable unit. Consideration for the transaction will be in the form of Class A shares of Brookfield Renewable Corporation ("BEPC shares"). The proposal values TerraForm Power at $17.31, representing an 11% premium to the closing share price of TerraForm Power on January 10, 2020.
The proposed transaction would strengthen Brookfield Renewable's position as one of the largest publicly-traded, globally-diversified, multi-technology, pure-play renewable power platforms with $50 billion in total power assets, an equity capitalization of approximately $16 billion and a 20-year track record delivering 18% annualized returns to unitholders since inception with consistent, stable distribution growth.
"We believe this transaction will create significant value for investors in both companies through a simplified corporate structure and continued sponsorship from Brookfield Asset Management," said Sachin Shah, CEO of Brookfield Renewable. "For Brookfield Renewable unitholders, this transaction is expected to be immediately accretive and further expands our portfolio in North America and Western Europe, all while delivering returns in-line with our targets. Further, the proposed transaction will enhance the liquidity of the BEPC shares."
He continued, "TerraForm Power shareholders, in turn, will benefit from access to a broader growth mandate that includes global, multi-technology and development opportunities, and increased access to capital and liquidity, underpinned by an investment grade balance sheet."
As previously announced, Brookfield Renewable intends to make a special distribution of BEPC shares to its unitholders. The BEPC shares will be structured with the intention of providing an economic return equivalent to Brookfield Renewable units, including identical distributions, and will be exchangeable, at the shareholder's option, for Brookfield Renewable units on a one-for-one basis. As such, the proposed transaction would allow TerraForm Power shareholders to acquire economic exposure to Brookfield Renewable through shares of a corporation. The exchange ratio will be adjusted on a proportional basis to reflect the contemplated special distribution of BEPC shares to Brookfield Renewable unitholders, which we expect to close concurrently with the closing of the proposed transaction.
Brookfield Renewable presented its proposal to the Board of Directors of TerraForm Power on January 11, 2020. The proposed transaction is subject to the negotiation and execution of definitive transaction documents and customary approvals, including approval of a committee of the Board of Directors of TerraForm Power consisting solely of independent directors, and the approval of a majority of TerraForm Power's stockholders not affiliated with Brookfield Renewable. Brookfield Renewable will not pursue the proposed transaction without obtaining these approvals.
There is no assurance that the Board of TerraForm Power will approve the proposed transaction or that a transaction will be consummated.
"In light of our recent growth, strong balance sheet and access to capital, we are pleased to announce that our Board of Directors has declared a 5% increase to the quarterly distribution, bringing our annual payout to $2.17 per unit," added Mr. Shah.
The next quarterly distribution in the amount of $0.5425 per unit, is payable on March 30, 2020 to unitholders of record as at the close of business on February 28, 2020. This represents an increase of 5% over the prior quarterly distribution of $0.515 per unit. Brookfield Renewable targets a sustainable distribution, increasing on average at 5% to 9% annually.
The quarterly dividends on Brookfield Renewable's preferred shares and preferred units have also been declared.