Sprott Power buys N.S. wind firm in $33-million deal8/9/2012
Nova Scotia’s largest wind farm has a new Toronto owner as part of a $33-million deal announced Wednesday.
Sprott Power Corp., which owns a wind farm near Amherst, announced it is buying Shear Wind Inc. of Bedford.
Shear Wind owns and operates Glen Dhu in Pictou County. The 62-megawatt project is Nova Scotia’s largest wind farm.
Jeff Jenner, president and chief executive of Sprott Power, said the acquisition increases the company’s portfolio of assets from 80 megawatts to 144 megawatts.
“Shear Wind’s development pipeline is also attractive, given its size and location throughout Canada,” Jenner said in a news release.
The acquisition will also improve operating efficiencies in Nova Scotia and result in cost savings, Sprott Power said.
Neither Jenner nor Mike Magnus, Shear Wind’s president and chief executive officer, could be reached for further comment.
The acquisition agreement was announced late Wednesday afternoon after the close of financial markets.
Sprott Power holdings include the 15-turbine wind farm near Amherst. The 31.5-megawatt project became operational in March.
The company also has turbines in Cape Breton and Digby counties and elsewhere in Cumberland County.
The sale plan also increases a Spanish conglomerate’s interest in Glen Dhu, indirectly making it the majority owner.
Wind Canada Investments Ltd. and Genera Avante Holdings Canada Inc. will pay Sprott $1.8 million to increase the latter company’s stake in Glen Dhu from 49 per cent to 51 per cent.
Both are subsidiaries of Genera Avante SL, the energy arm of Spanish utility conglomerate Inveravante Inversiones Universales SL.
The conglomerate owns 66 per cent of Shear Wind through Genera Avante Holdings Canada.
Sprott Power also said its forming a strategic partnership with the two Canadian subsidiaries.
The Toronto company will form a joint venture with Genera Avante Holdings Canada to operate Shear Wind holdings. A separate joint venture with Wind Canada will develop further projects.
Shear Wind also operates a 1.6-megawatt turbine project at Fitzpatrick Mountain, Pictou County.
In addition, the Bedford company has more than 860 megawatts in projects proposed or being developed in this province, New Brunswick, Saskatchewan and Alberta.
The deal, unanimously approved by the board of directors of both companies, is expected to close in mid-October.
The acquisition must also be approved by Shear Wind shareholders, although the majority have already indicated they support the sale.
Indications that Shear Wind was on the block surfaced in May when the company asked the Nova Scotia Supreme Court for a four-month extension to hold its annual meeting.
Justice John D. Murphy granted the order.
The sale announcement comes less than a week after both companies failed to get their proposed wind projects in Nova Scotia approved by the province.
The renewable electricity administrator instead awarded contacts to three other ventures in Lunenburg and Guysborough counties.
There were 16 projects in the running to add power to the grid starting in January 2015. Sprott and Shear Wind wanted to expand their existing wind farms or build new ones, but those projects are now in limbo.
The Energy Department has said it doesn’t plan to approve more large-scale wind farms any time soon and that there isn’t room on the system for them.
To expand its Nova Scotia holdings, Sprott Power assumes $51 million in debt related to Glen Dhu, although the amount will be offset by $5 million following certain adjustments.
Shear Wind’s business is valued at $79 million, Sprott Power said.
The Toronto buyer is raising $30 million to help finance the deal through an offering of convertible debentures being purchased by a syndicate of underwriters led by Canaccord Genuity Corp. The agreement includes an option that could raise an additional $4.5 million.
Sprott Power stock was trading for 98 cents a share on the Toronto Stock Exchange, unchanged from its previous close.
Shear Wind stock was trading for 17 cents a share on the TSX Venture Exchange, down two cents from its previous close.
(The Chronicle Herald)