Boralex Inc. Boralex is on a shopping spree to expand its green power generation, spending more than $400-million on solar and wind facilities in the United States and Canada in two separate deals.
On Monday, the Montreal-based renewable-energy company announced it will pay $283-million for controlling interests in seven solar energy installations in Alabama, Indiana and California from Centaurus Renewable Energy LLC Centaurus Energy.
That followed the acquisition on Friday of minority interests in three Quebec wind farms held by Caisse de dépôt et placement du Québec. Boralex, which owned the majority stakes, is paying $121.5-million for the remainder of facilities, located in the regional county municipalities of Avignon in Gaspésie and Les Appalaches in eastern Quebec.
The deals add to the company’s financial and operations base with its new chief executive, Patrick Decostre, set to take the helm next week. He replaces Patrick Lemaire, who is retiring after 14 years as the head of the company, which has operations in North America and Europe.
The solar acquisitions fit into a four-year, multiprong corporate strategy to diversify energy sources and geography that the incoming CEO played a big role in developing. The wind-farm deal brings growth and simplification, which are also part of the planning amid a global transition to more renewables, Mr. Decostre said.
“What I would like to do, and as you can see we’ve already started, is to accelerate the pace, not because of Boralex but because the market is like this,” he said in an interview. “The renewable energy market around the world is accelerating and so it is important to lead the market.”
Together, the new U.S. solar interests add capacity of 118 megawatts to Boralex’s total, and are backed by long-term purchase agreements with 21.5 years remaining on average. The assets are expected to add earnings before interest, taxes, depreciation and amortization (EBITDA) of about $20-million, Boralex said.
Boralex said it expects to close the deals by the end of the year, subject to customary conditions, including U.S. federal regulatory approval of the acquisitions in Lafayette, Ala., and Five Points, Calif. Seventy-five per cent of the price will be financed with debt.
Meanwhile, the additional Quebec wind-farm interests will add 145 MW of net power to the company’s capacity, and $31-million to its EBITDA. For the Caisse, it is not a full retreat from the assets, as the major provincial investment fund has a 17.3-per-cent stake in Boralex.
The two deals allow the company to make use of the $201-million in proceeds from a share sale that it completed in August, Desjardins Securities analyst Bill Cabel pointed out. The U.S. assets look pricey at 14 times their annual pretax operating earnings, but they offer long-term security, said Mr. Cabel, who has a “Buy” rating on the stock.
“The U.S. solar assets also provide stable and diversified cash flows that will complement BLX’s wind-dominated portfolio, which is primarily located in eastern Canada and France,” he wrote in a research note.
Boralex is a year and a half into its expansion plan, which sees it increasing installed capacity by 44 per cent and boosting discretionary cash flow by 2.5 times. Adding solar and battery storage operations and growing in markets with promising renewable energy programs are key to the strategy.
The shares have climbed 64 per cent this year amid broad interest in renewable energy among major global institutions seeking companies focused on improving environmental, social and governance performance.
Mr. Decostre said he expects pro-clean-energy policies being developed by U.S. president-elect Joe Biden and his incoming administration will be positive for his company and the industry, as it will bring the federal government’s messaging in line with states such as New York and California that have pushed renewables.
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