Algonquin Power continues to Grow

   Algonquin Power is a Canadian utility that has been covered in several of my blogs on Workathon(December26, 2015 and June14,2015) and on Blogdaleupsome(October28, 2015).Algonquin although listed on the TSX has a large amount of resources in United States and in particular  regulated resources.This blog ,in past posts has recommended that more of their rsources be diversified into other jurisdictions or at least into non-regulated assets.However it is realized that this is difficult to do when the rate of return is so enticing and rate awards come so quickly.Algonquin has added a couple of  non-regulated investments recently in particular into wind farms with long term contracts.But Algonquin has come up with a strategy which may have solved their problems.
      Operational Statistics
   Before we analyze their recent strategy this blog will look at the results of their recent annual report.On March31,2015 Algonquin showed their 2015 annual and fourth quarter results;they were quite good.Net earnings for the year were $119 million(CDN.) or $.43 per share compared to $78 million (CDN.) or $.32 per share in 2014.Revenue was $1.03 billion compared to $942 million for 2014.While adjusted EBITDA grew by 29% over 2014.
  Their year over year results were quite good but their fourth quarter results were basically flat in comparison to that of 2014.However this will be remembered as the quarter in which it bought the huge Empire utility.This is a huge investment for Algonquin which is not that small.And they have come up with a new form of financing called Installment receipts in order to help raise the money.These receipts trade on the TSX but it is not clear to this author whether they will trade on the NYSE as a form of depository receipt.Perhaps when the second installment has been paid up and full value received that Algonquin may trade them on an American exchange as the money is mostly used for American assets.                

                Regulators                                                                                         It is suggested that much of the requirements necessary for this instrument to become an American depository receipt have already been met.If Algonquin gets approval to do this it would be quite a feather in it's cap and might be smiled upon by the regulators that grant their rates.However it must be able to sign up an American bank to hold them and handle the depository recepits and this has not yet been done.Should this starategy continue to unfold then this blog suggests that this would possibly be for $1 billion in depository receipts and be a sizeable amount of the almost $3 billion of Algonquin Power equity. And if it is done then Algonquin Power might have a much easier time with American power regulators.This would likely propel the stock towards $12 a share by the first day of June.                use Workathon for info. on Cdn. utilities ;      subscribe to Workathon for utility analysis