BREAKING NEWS

Innergex Renewable Energy will acquire Alterra for an aggregate consideration of $1.1 billion

  • $1.1 billion transaction to meaningfully diversify Innergex’s asset portfolio in terms of geography and energy sources
  • Transaction to solidify Innergex’s position as a leading renewable energy independent power producer by adding eight operating projects (net 364 MW), three projects under construction (net 118 MW), three prospective projects at an advanced stage (net 686 MW), other U.S. PTC-qualified prospective projects (net 490 MW), and an extensive pipeline of prospective projects in preliminary stages or in progress (net 4,350 MW)
  • Transaction expected to be accretive to Innergex’s distributable cash flow per share upon completion of Alterra’s projects currently under construction and some of the advanced-stage prospective projects
  • Transaction to be fully funded and supported by a new subordinated unsecured loan from Caisse de dépôt et placement du Québec (“la Caisse”); commitments obtained from two leading Canadian banks to backstop and upsize Innergex’s existing credit facility in order to maintain a strong and flexible balance sheet and provide ample liquidity to fully fund Innergex’s development portfolio pro forma for the transaction
  • Alterra shareholders to receive $8.25 per Alterra common share, payable in $2.06 cash and 0.4172 of a common share of Innergex, after the effect of full pro-ration, for a total transaction value of $1.1 billion, including the assumption of Alterra’s debt
  • Alterra shareholders to realize an immediate premium and an opportunity to continue to participate in the go-forward growth of Innergex
Innergex Renewable Energy Inc. (TSX:INE) (“Innergex”) and Alterra Power Corp. (TSX:AXY) (“Alterra”) are pleased to announce today that they have entered into an arrangement agreement (the “Arrangement Agreement”) pursuant to which Innergex will acquire all of the issued and outstanding common shares of Alterra (the “Alterra Common Shares”) for an aggregate consideration of $1.1 billion, including the assumption of Alterra’s debt (the “Transaction”). The Transaction is subject to approval by Alterra’s shareholders and other customary closing conditions. Pursuant to the Transaction, Alterra shareholders will receive an aggregate consideration which will consist of approximately 25% in cash and 75% in common shares of Innergex (the “Innergex Common Shares”). The price of $8.25 per Alterra Common Shares implies a premium of 58% to Alterra’s 20-day volume weighted average price of $5.21 on the TSX as of October 27, 2017.

“This transaction is highly strategic and accretive for Innergex as we believe it significantly accelerates Innergex’s growth profile with a path to reach a net installed capacity of over 2,000 MW by 2020,” said Michel Letellier, President and Chief Executive Officer of Innergex. “The geographic and energy sources profile of Alterra’s portfolio further diversifies Innergex’s asset base by adding operating hydro and wind projects in Canada, a large number of operating, under construction and prospective wind projects in the U.S. and operating geothermal assets in Iceland. Further, we believe that the addition of Alterra’s seasoned and experienced team to Innergex’s team enhances our ability to concurrently develop multiple projects across many geographies.”

“This is an excellent transaction for Alterra shareholders,” said Ross Beaty, Executive Chairman of Alterra. “It offers a significant premium and the opportunity for Alterra shareholders to remain exposed to Alterra’s assets, including our growth pipeline. Innergex is an outstanding Canadian clean energy company with highly complementary renewable energy assets to those of Alterra and a similar corporate culture. The combined company will have a lower cost of capital, stronger balance sheet, more diversified asset base and greater capacity to grow rapidly and efficiently. I look forward to tendering my Alterra shares into Innergex and remaining a significant shareholder for many years to come.”

OPERATIONAL AND FINANCIAL HIGHLIGHTS
Alterra will complement Innergex’s current operating, under construction and prospective projects, resulting in increased geographic and technological diversification through meaningful presence in the United States and Icelandic power markets as well as the addition of geothermal power generation to Innergex’s production mix. We believe that the transaction significantly accelerates Innergex’s growth profile.
  • Innergex’s overall net power generation capacity will be of 1,606 MW, up over 40 %, pro forma the Transaction, including assets under construction
  • Addition of three advanced-stage prospective projects with capacity of net 686 MW
  •  A number of other prospective U.S. renewable electricity production tax credit (“PTC”) qualified projects totalling approximately 490 MW
  • Extensive pipeline of prospective projects in preliminary stages or in progress estimated at a net capacity of 4,350 MW to be added to Innergex’s pipeline of net capacity of approximately net 3,560 MW
Alterra’s and Innergex’s experienced management teams, with a track record of successfully developing and operating renewable energy projects in various jurisdictions, will play an important role in developing the large growth pipeline of the combined company.

The Transaction is expected to be accretive to Innergex’s distributable cash flow per share upon completion of Alterra’s projects currently under construction and some of the advanced-stage prospective projects.

TRANSACTION DETAILS
Under the terms of the Arrangement Agreement, Innergex is offering to acquire all of the issued and outstanding Alterra Common Shares by way of a plan of arrangement. Alterra shareholders will receive, at the election of each such shareholder, either (i) $8.25 in cash or (ii) 0.5563 Innergex Common Shares for each Alterra Common Share, subject in each case to the pro-ration, such that the aggregate consideration paid to all of Alterra shareholders will consist of approximately 25% in cash and 75% in Innergex Common Shares. Giving full effect to the proration, the consideration of each Alterra Common Share represents $2.06 in cash and 0.4172 Innergex Common Shares. The share consideration is based on Innergex’s common share closing price of $14.83 on the TSX on October 27, 2017.

The price of $8.25 per Alterra Common Share represents a premium of 58% to Alterra’s 20-day volume weighted average price of $5.21 on the TSX as of October 27, 2017. The Transaction is valued at approximately $1.1 billion, including the assumption of Alterra’s debt.

The Innergex Common Shares issuable to Alterra shareholders in connection with the Transaction represent a pro forma ownership of approximately 19% of the combined company. One member of the current Board of Directors of Alterra will join the Board of Directors of Innergex upon closing of the Transaction.

The Transaction is subject to approval of at least 66 ⅔% Alterra Common Shares represented in person or by proxy at a special meeting of Alterra shareholders to be called to consider the Transaction – expected to be held in December 2017 (the “Special Meeting”). The Board of Directors of Alterra, having received a unanimous recommendation from a special committee comprised solely of independent directors (the “Special Committee”), has unanimously approved the Transaction and recommends that Alterra shareholders vote in favour of the Transaction. The Special Committee of Alterra has received an opinion from its financial advisor, Raymond James Ltd., that the consideration to be received pursuant to the Arrangement Agreement is fair, from a financial point of view, to the Alterra shareholders.

In addition to Alterra shareholder approval, the Transaction is subject to court and certain regulatory approvals in Canada and U.S., key third party consents and other customary closing conditions. The Transaction is not subject to approval by Innergex shareholders.

The Arrangement Agreement provides for customary non-solicitation covenants on the part of Alterra and a right in favour of Innergex to match any unsolicited superior proposal. If Innergex does not exercise its right to match, Innergex would receive a termination fee of approximately $18 million from Alterra in the event the Arrangement Agreement is terminated as a result of a superior proposal. Subject to the receipt of all required regulatory approvals and key third-party consents, closing of the Transaction is expected to occur in the first quarter of 2018 

SUPPORT OF KEY SHAREHOLDERS I
nnergex has entered into a support and voting agreement with Mr. Ross Beaty, Executive Chairman of Alterra, and certain related entities who have control over approximately 31% of Alterra’s issued and outstanding common shares. Pursuant to the support and voting agreement, Mr. Beaty, together with these related entities, have agreed to: (i) vote all of their Alterra Common Shares in favour of the Transaction at the Special Meeting (ii) a 12-month holding period with respect to the Innergex Common Shares to be received by them as a result of the Transaction; and (iii) elect to receive Innergex Common Shares for the entirety of the Alterra Common Shares held by them. In addition, directors and senior officers of Alterra who beneficially own Alterra Common Shares have also entered into support and voting agreements pursuant to which they have agreed to vote all of their Alterra Common Shares in favour of the Transaction at the Special Meeting. Alterra’s directors and senior officers, including Mr. Beaty and related entities, hold approximately 32% of Alterra Common Shares in the aggregate.


ABOUT INNERGEX RENEWABLE ENERGY INC.
The Corporation develops, owns and operates run-of-river hydroelectric facilities, wind farms and solar photovoltaic farms and carries out its operations in Quebec, Ontario and British Columbia, Canada, France and Idaho, U.S. Its portfolio of assets currently consists of: (i) interests in 52 operating facilities with an aggregate net installed capacity of 1,078 MW (gross 1,781 MW), including 31 hydroelectric facilities, 20 wind farms and one solar farm; (ii) interests in two projects under construction with a net installed capacity of 46 MW (gross 66 MW), for which power purchase agreements have been secured; and (iii) prospective projects with an aggregate net capacity totalling 3,560 MW (gross 3,940 MW). Innergex is rated BBB- by S&P.


ABOUT ALTERRA POWER CORP.
Alterra Power Corp. is a global renewable energy company that manages operations of eight power plants totalling 825 MW of hydro, wind, geothermal and solar generation capacity in Canada, the USA and Iceland. Alterra owns a 364 MW share of this capacity, generating over 1,500 GWh of clean power annually.
Alterra is also constructing the 200 MW Flat Top wind project in central Texas, which is expected to be in operation by mid-2018 (51% owned by Alterra). Upon the completion of Flat Top, Alterra will operate nine power plants totalling 1,025 MW of capacity and will own a 465 MW share of this capacity, generating almost

2,000 GWh of clean power annually. Alterra also has an extensive portfolio of development projects and a skilled team of developers, builders and operators to support its growth plans

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