Atlantic Power Corporation ("Atlantic Power" or the "Company") announced that on March 18, 2020, it executed an amendment to its senior secured revolving credit facility ("Revolver"). The amendment provides for an extension of the Revolver maturity date to April 2025, to coincide with the maturity date of the senior secured term loan ("Term Loan"). Both the Revolver and the Term Loan are at the Company's APLP Holdings Limited Partnership ("APLP Holdings") subsidiary. At February 29, 2020, the Company had no borrowings under the Revolver but was utilizing $78.2 million for letters of credit.
In conjunction with the extension, the Revolver capacity was reduced to $180 million from $200 million previously. The amendment allows an upsizing of the Revolver capacity by up to $30 million, to a maximum aggregate amount of $210 million, subject to approval of the two letter of credit issuer banks and increased commitments by existing or new lenders. Such an upsizing would not require a further amendment. There were no other significant changes to the terms of the Revolver.
As previously disclosed in the Company's February 3, 2020 press release, the pricing of the Term Loan and Revolver was reduced to 250 basis points over LIBOR effective January 31, 2020.
"We are pleased to have extended our Revolver maturity by three years to coincide with the recent extension of our Term Loan maturity date. The Revolver extension, together with our cash position, provides us with strong liquidity through April 2025," said Terrence Ronan, Executive Vice President and Chief Financial Officer of Atlantic Power. "To date the primary use of the Revolver has been to support letters of credit, the need for which will be reduced following the sale of our Manchief plant in 2022. The balance of the Revolver is available for other purposes such as asset acquisitions."
"Today job one is to ensure the safety and health of our employees while continuing to generate electric power for our customers. Our people and our plants are performing terrifically in these tough times," said James J. Moore, Jr., President and Chief Executive Officer of Atlantic Power. "On the financial front, the actions that we have taken over the past several years to reduce costs and repay debt enable Atlantic Power to withstand difficult environments, in the power markets or more broadly. The extension of our Revolver to match the recent extension of our Term Loan maturity is a good outcome for us."
Mr. Moore continued, "We have highly contracted EBITDA and operating cash flow. More than 95% of our cumulative EBITDA and operating cash flow through 2024 is generated under Power Purchase Agreements (PPAs) with an average remaining term of approximately six years. These PPAs are predominantly with investment grade counterparties. We plan to continue allocating the majority of this strong cash flow to debt repayment, and expect to amortize the balance of our Term Loan by the April 2025 maturity. During this five-year period we expect to generate significant discretionary cash flow after debt repayment, as we noted on our fourth quarter 2019 conference call."
"After years of rebuilding our financial strength, we are now well positioned for periods of market turmoil. We invested $45 million in the acquisition of biomass and hydro projects (and project interests) in 2018 and 2019. These acquisitions are producing strong returns in line with our expectations. We stand ready to do more acquisitions if and when values are compelling. We also have repurchased $6.7 million of common shares and Cdn$8.4 million (approximately US$6.0 million equivalent) of preferred shares under our normal course issuer bid this year to date."
The Company expects to record fees associated with the extension of the Revolver as an expense in the first quarter of 2020.
Source: Atlantic Power
Date: Mar 18, 2020