Algonquin Power reaches another milestone

     Algonquin Power  recently completed the acquisition of Empire District Electric,a supplier of water, natural gas and electricity originating from Joplin, Missouri.This took a lot of time and a lot of work and the final cost was U.S. $3.2 Billion (including $.9 billion debt).In an earlier press release AQN said they intend to spend another U.S$ 2.0Billion on renovations.Algonquin adds that this addition will allow it to bring economies of scale to it's American operations.It will also bring a 7to 9% accretion to AQN 2017 earnings.                       

     Financing Details
  Many investors thought Algonquin would never be able to complete this transaction.It would be "close but no Empire". However Algonquin says that this yearlong transaction will close in the first quarter of 2017.There are several steps involved in doing this.The transaction will be funded by $1.6 Billion in bridge debt financing from 4 banks including 2 Canadian banks.But permanent financing will be obtained by placements of common 
 equity,preferred equity,convertible debentures and long term debt.
  Algonquin issued a large number of installment receipts that traded on the TSX.Notice to holders of the installment receipts was given that the final installment will be paid in no more than 90 days and no less than 15 days.Final payment is due on   February2,2017.The final payment is significant at $667 per $1000.Algonquin says that holders can convert at a maximum  2.5% of their outstanding shares.
  The Art of the Deal
       This is a significant milestone for Algonquin as now their power generating capacity is at 2.5 GW.Investors will be upset temporarily that so many common shares will be offered at a price of $10.60.But shareholders may convert only 1 to 2 % of their float as some conversion may not happen.Conversion will dilute existing shares and earnings.But shareholders can be soothed by the fact that this will increase earnings by 7 to 9% in 2017 and by more in the future as AQN starts to reap economies of scale.Most satisfying of all is that Algonquin believes that this transaction will allow them to increase the dividend by 10% for perhaps 2 years.                    use Workathon for business news ; use Workathon for business news