Atlantic Power strengthens balance sheet

On July27,2015 Atlantic Power  had a press release describing two events that strengthened their balance sheet and lowered their risk profile.These facts are not yet recorded in the other databases so this blog will rely on facts given in the press release..ATP used most of the proceeds (of $350 million) to complete the early redemption of $311 million of 9% senior unsecured notes.They redeemed them early and so had to pay $104.50 to par;they were due to expire in November 2018.The total cost of redemption then was $330 million.The extra expenses of $20 million will be recorded in the next quarterly report.
       Sold the wind farm
Atlantic Power had 5 wind power plants in Idaho and Oklahoma.ATP sold them to Sun Edison and made a large capital gain.In fact, they made about $350 million from the sale and transferred $250 million of debt to the purchaser.So most of the proceeds paid off the $330 million early redemption of the senior unsecured notes.Atlantic Power states that it now has consolidated debt of $1.1 billion and this is a reduction of $800 million since the end of 2013.However Qtrade (a broker)  shows more debt on their books than this.Probably ATP's data is more accurate here.Atlantic also shows that there was $250 million of debt on the wind assets that has been eliminated with the sale of the wind assets.
  Atlantic adds that this is the early redemption of  it's most expensive debt and over 9 months  it has reduced total debt by almost $800 million.It, of course,will continue normal debt reduction by amortizing it's term loans and project debt.And now it has remaining corporate debt of about $305 million (in convertible debentures) which mature in 2017 and 2019.Atlantic is trying to lengthen their maturities.
      Ontario Superior Court denies motion
On July 24, 2015 the Ontario Superior court of Justice issued a decision denying the plaintiff's motion for leave and certification of a class action suit against ATP.The Superior court concluded that there were no misrepresentations about disclosing material changes by the defendants and no possibility that the plaintiffs would succeed in a class action suit against ATP.Furtermore the court added if the defendants did succed they would have to reimburse the plaintiffs for their cost of responding to the motion.Also ATP made a successful motion in  March,2015 in U.S District court to dismiss the class action suit.Nevertheless the plaintiffs are scheduled to make an appeal to the U.S court of Appeals in August and September.In order to succeed the plaintiffs must introduce new and relevant facts to change the former decision.
      A New Leaf
Atlantic Power has in the recent past traded higher than it's present price and had a higher dividend.But investors punished the stock price because of excess debt and reduced cash flows.Atlantic Power had to cut the dividend to keep it's capital program intact.Since 2013 it has made a number of astute investments such as acquiring the wind power assets.Now it has pared down some expensive debt and made it's debt profile look better.It probably still needs to sell one more asset that can produce another nice gain.A gain here might help to redeem one issue of  their convertible debentures.A successful asset sale and an early redemption of debentures might help to raise their credit rating.All of these actions will help to gradually raise their cash flow again.