Workathon is the blog I use for irregular company reports and those with sketchy data.This is one of those reports.Connacher Oil and Gas has talked about recapitalizing for some time and it appeared as though it would never happen.But they brought in a completely new board of guys with experience in turnarounds and startups.And they have pulled it off.
Recapitalizatuion
The conversion starts by exchanging approximately $1 billion of debt (including unpaid interest) for new common shares.They will also issue $35 million of "new convertible notes" and the interest will be compounded and accrued.The recapitalization will save $80 million of annual interest expense.The First Lien Term Loan Credit will replace the old revolving credit facility which was less secure.This will result in a consolidation of the common shares on the basis of 800 new shares for each old common share.Connacher Oil and Gas will then have 28,300,000 outstanding shares.
Conclusion
This blog has followed Connacher Oil and Gas for some time.The advice given in this blog was to keep increasing production and not to recapitalize.When we first started looking at Connacher, production was only 11,000 barrels per day;now it is at 15,100 barrels per day.Of course,neither Connacher nor this blog counted on the drop in the price of oil.Now Connacher has replaced it's debt with new common shares and reduced interest expenses by almost $100 million(in total).The new board seems very sharp and experienced and if anybody can pull this off it looks like they can.Connacher has already worked hard to get their production up to 15,100 barrels per day and their chances of succeeding are better now than when production was at 11,000 barrels per day.However now they are limiting capital expenditures to maintenance and production increases are even more important.A lot of money has been spent on their second facility called Algar and they need to spend a little more to get production from this facility they have been working on since 2010.This blog predicts gradual declines for revenues,and the stock price unless they get more production from their second facility at Algar.Or else they will have to sell off some non-core assets to get capital needed to bring the stock price back to the original conversion price.
Friday, 10 July 2015
Sunday, 28 June 2015
Capital Power brings onstream new wind project
This is another of those press releases that I have mentioned in Workathon before(in this case an Alberta utility) .The details are a bit sketchy but it does show that Capital Power has begun commercial operation of a wind project called K2 in southwestern Ontario.Capital tells us that it was under construction for 18 months.The power generated will be 270MW which makes it one of the largest in Canada.Capital owns it in combination with Samsung Energy and Pattern Enegy.Capital Power and Samsung sold 33% to Pattern and now all are equal partners in the K2 wind project.So in effect,Capital owns 90MW of new power generation in K2.
Capital has most of it's facilities in Alberta which has had low power prices for the last year and a half. K2 will fetch higher power prices in Ontario and help Capital diversify further.Capital Power(CPX) gets energy from a variety of energy sources.CPX owns more than 3200 MW of power generation from 17 facilities and another 371 from a power purchase agreement.Also an additional 545MW of owned generation capacity is now under construction in Alberta and North Carolina.
Summary
This sounds like a good deal for Capital Power.It will bring on more revenues and hence increase adjusted EBITDA,But selling about 17% to Pattern Energy when it was completed should have been at a good price.There are no details to calculate whether the profit on the sale almost paid for their share of the project costs but it should be easier to carry after the sale to Pattern Energy.Also Ontario power prices should bring a bigger margin than Alberta prices.Capital did not offer guidance on whether this changes their forecast for adjusted EBITDA for 2015 or not.But this may help to bring them in at the top end of guidance.
Capital has most of it's facilities in Alberta which has had low power prices for the last year and a half. K2 will fetch higher power prices in Ontario and help Capital diversify further.Capital Power(CPX) gets energy from a variety of energy sources.CPX owns more than 3200 MW of power generation from 17 facilities and another 371 from a power purchase agreement.Also an additional 545MW of owned generation capacity is now under construction in Alberta and North Carolina.
Summary
This sounds like a good deal for Capital Power.It will bring on more revenues and hence increase adjusted EBITDA,But selling about 17% to Pattern Energy when it was completed should have been at a good price.There are no details to calculate whether the profit on the sale almost paid for their share of the project costs but it should be easier to carry after the sale to Pattern Energy.Also Ontario power prices should bring a bigger margin than Alberta prices.Capital did not offer guidance on whether this changes their forecast for adjusted EBITDA for 2015 or not.But this may help to bring them in at the top end of guidance.
Tuesday, 23 June 2015
Regulating Canadian telephone rates
I did another blog on rate setting for Canadian utilities in general on another site.It looked at setting rates for essential services such as telephone,cable,electicity and water provision.This blog will focus on regulating telephone rates.And it will focus on the operation of the CRTC(Canadian Radio,Television and Telecommunications Commission).This blog will look at the effect on the service provider,namely,Bell Canada and Telus.
Most essential services are provided for by a monopoly whether it be gas or water or telephone..The equilibrium output for a monopoly is less than market equilibrium that is, less than the market demands.And the price is higher than the market equilibrium also because a monopoly sets it's own prices..That is to say, if there were several providers the rate would be lower and the output higher than with a single provider.This is where the regulator fits in;it lowers the prices and increases service to consumers over what it would be with a monopoly.The market is not at equilibrium for the monopoly nor the consumer.
The Rate Hearing
The process starts with an informal meeting of both parties that are fairly familiar with each other.The Commission will be informed of the utility's intentions and a rough idea of what rate increases are sought.No adverse reaction will be followed by a formal rate application which is likely to be a lengthy document.This will be followed by a notice to the public asking for interested parties to inform the CRTC that they wish to intervene in the rate making process.This will be followed by a notice to the public setting the date for the hearing and the likely length of the hearing.An agenda will be made that covers all interested topics and the time expected to hear them.
The Allowed Rate of Return for the telcos
This section will diverge from my other blog done on another website.It dealt with the allowed rate of return in a general sense.But a discussion of regulation has to be different when dealing with two important companies that have not only an important impact on consumers but also on the entire technology sector.Their services are not only essential in rural communities but to many Canadian businesses. Also the resulting rates have a significant impact on a large number of Canadian investors.The CRTC,in effect has an extra variable to consider the price of Bell Canada stock and Telus stock.A decision that all consumers love and sends the price of either stock down by 10 to 20% will be frowned upon by it's boss the Minister of Communications. A healthy Bell Canada and Telus stock is very important to the entire investment community.CRTC must set rates that generate earnings that will be a positive force for these stocks.
The Decision
The decision will be careful to consider any poignant points made by intervenors throughout the hearing.As always it must address the size of the investment program and certain areas that it wants to see more investment in.Here the commission must encourage and cajole rather than try to force investment in these areas.The quality of service must be addressed at length.This will bring it to the allowed rate of return that the rates generated in their test year.The CRTC will not explicitly mention the expected price of the utility stocks but they will have a firm grip on their expected price.Then lastly and importantly they will mention the reasonableness of rates generated by their decision.
Most essential services are provided for by a monopoly whether it be gas or water or telephone..The equilibrium output for a monopoly is less than market equilibrium that is, less than the market demands.And the price is higher than the market equilibrium also because a monopoly sets it's own prices..That is to say, if there were several providers the rate would be lower and the output higher than with a single provider.This is where the regulator fits in;it lowers the prices and increases service to consumers over what it would be with a monopoly.The market is not at equilibrium for the monopoly nor the consumer.
The Rate Hearing
The process starts with an informal meeting of both parties that are fairly familiar with each other.The Commission will be informed of the utility's intentions and a rough idea of what rate increases are sought.No adverse reaction will be followed by a formal rate application which is likely to be a lengthy document.This will be followed by a notice to the public asking for interested parties to inform the CRTC that they wish to intervene in the rate making process.This will be followed by a notice to the public setting the date for the hearing and the likely length of the hearing.An agenda will be made that covers all interested topics and the time expected to hear them.
The Allowed Rate of Return for the telcos
This section will diverge from my other blog done on another website.It dealt with the allowed rate of return in a general sense.But a discussion of regulation has to be different when dealing with two important companies that have not only an important impact on consumers but also on the entire technology sector.Their services are not only essential in rural communities but to many Canadian businesses. Also the resulting rates have a significant impact on a large number of Canadian investors.The CRTC,in effect has an extra variable to consider the price of Bell Canada stock and Telus stock.A decision that all consumers love and sends the price of either stock down by 10 to 20% will be frowned upon by it's boss the Minister of Communications. A healthy Bell Canada and Telus stock is very important to the entire investment community.CRTC must set rates that generate earnings that will be a positive force for these stocks.
The Decision
The decision will be careful to consider any poignant points made by intervenors throughout the hearing.As always it must address the size of the investment program and certain areas that it wants to see more investment in.Here the commission must encourage and cajole rather than try to force investment in these areas.The quality of service must be addressed at length.This will bring it to the allowed rate of return that the rates generated in their test year.The CRTC will not explicitly mention the expected price of the utility stocks but they will have a firm grip on their expected price.Then lastly and importantly they will mention the reasonableness of rates generated by their decision.
Sunday, 14 June 2015
Algonquin Power raises new debt
On April 30,2015 Algonquin Power gave a press release telling investors that it has closed a private placement of $160 million senior unsecured 30 year notes with a coupon of 4.13%.The 30 year financing is quite attractive and made possible by a 20 year signed agreement for the delivery of water to Liberty Utilities.They tell us that the proceeds of the private placement will be used to partially fund the $327 million needed to pay for their Park Water System located in California and Montana. ParkWater Systems operates 3 regulated water utilities. in southern California and Western Montana. The deal is expected to close in the second quarter of 2015 and will bring some new revenues and earnings in the third quarter.The acquisition is expected to have property,plant and other assets of $259 million for rate making purposes.
Review of 2014
The closing of this transaction is taken as an opportunity to review Algonquin Power's performance in 2014.This information is taken from past quarterly reports and from information in databases.Revenues for 9 months were $684 million compared to $470 million for 9 months of 2013.While net earnings of $45 million were obtained for 2014 compared to $43 million in 2013.Also they earned adjusted EBITDA of $206 million versus $160 million for 2013.So we can see that Algonquin has had good growth in revenues and adjusted EBITDA but slight growth in net earnings in 2014.However Algonquin made two significant acquisitions in 2014 and both will be closing in 2015.This will make a ssinificant change to it's balance sheet.These transactions are the acquisition of the Park Water Systems(which is discussed above) and the Odell wind project.The Odell wind project is located in Minnesota.These two projects are valued at about $640 million and both are located in U.S.A. Algonquin has also constructed two small wind projects in Canada in 2014.
Too many eggs in the Regulated Basket
This blog has been critical of Algonquin having too many projects generating revenues and earnings from American regulated utilities.Algonquin would be quick to add that it has gotten quite a few good rate awards here.This blog counters with the fact that the probability of continued large awards is decreasing over time.The probability of any rate awards in 2015 being as substantial as in 2013 is slim.This risk has continued with the acquisition of Park Water Systems;this is another regulated utility albeit in a new jurisdiction.Their other large American acquisition,the Odell wind project is not regulated.And it has a 20 year contract with Xcel Energy.This helps to reduce overall risk. Algonquin has taken two countermeasures to soften the risk of getting two or three bad American regulatory decisions..First Algonquin has sold 8 million subscription receipts to another Canadian utility (Emera) so that now Emera owns approximately 25% of Algonquin shares.Secondly it has made several new offerings of common shares to the Canadian public.This does stabilize the ownership but it does not eliminate the probability of a trend to lower rate awards starting to come from American regulators.At least Algonquin has spread it's assets over several state regulators.But it is the position of this blog that Algonquin needs more assets (like the Odell wind project) with long term contracts in place.However Algonquin's tremenduous growth in revenues will continue in 2015 with significant new revenue coming onstream from both the Park and Odell systems.
Growth versus stability
Algonquin Power has specialized in acquiring American water and energy assets at distressed prices.It has done very well here and has picked up very good growth in revenues and adjusted EBITDA.Net earnings have not grown as fast but that is partly as a result of large asset write offs.That aside,Algonquin is on track to hit between $280 and $300 million in adjusted EBITDA in 2015 which is tremenduous growth since 2011.The price of the stock has not yet kept up to the growth in adjusted EBITDA and net earnings since 2011.
Review of 2014
The closing of this transaction is taken as an opportunity to review Algonquin Power's performance in 2014.This information is taken from past quarterly reports and from information in databases.Revenues for 9 months were $684 million compared to $470 million for 9 months of 2013.While net earnings of $45 million were obtained for 2014 compared to $43 million in 2013.Also they earned adjusted EBITDA of $206 million versus $160 million for 2013.So we can see that Algonquin has had good growth in revenues and adjusted EBITDA but slight growth in net earnings in 2014.However Algonquin made two significant acquisitions in 2014 and both will be closing in 2015.This will make a ssinificant change to it's balance sheet.These transactions are the acquisition of the Park Water Systems(which is discussed above) and the Odell wind project.The Odell wind project is located in Minnesota.These two projects are valued at about $640 million and both are located in U.S.A. Algonquin has also constructed two small wind projects in Canada in 2014.
Too many eggs in the Regulated Basket
This blog has been critical of Algonquin having too many projects generating revenues and earnings from American regulated utilities.Algonquin would be quick to add that it has gotten quite a few good rate awards here.This blog counters with the fact that the probability of continued large awards is decreasing over time.The probability of any rate awards in 2015 being as substantial as in 2013 is slim.This risk has continued with the acquisition of Park Water Systems;this is another regulated utility albeit in a new jurisdiction.Their other large American acquisition,the Odell wind project is not regulated.And it has a 20 year contract with Xcel Energy.This helps to reduce overall risk. Algonquin has taken two countermeasures to soften the risk of getting two or three bad American regulatory decisions..First Algonquin has sold 8 million subscription receipts to another Canadian utility (Emera) so that now Emera owns approximately 25% of Algonquin shares.Secondly it has made several new offerings of common shares to the Canadian public.This does stabilize the ownership but it does not eliminate the probability of a trend to lower rate awards starting to come from American regulators.At least Algonquin has spread it's assets over several state regulators.But it is the position of this blog that Algonquin needs more assets (like the Odell wind project) with long term contracts in place.However Algonquin's tremenduous growth in revenues will continue in 2015 with significant new revenue coming onstream from both the Park and Odell systems.
Growth versus stability
Algonquin Power has specialized in acquiring American water and energy assets at distressed prices.It has done very well here and has picked up very good growth in revenues and adjusted EBITDA.Net earnings have not grown as fast but that is partly as a result of large asset write offs.That aside,Algonquin is on track to hit between $280 and $300 million in adjusted EBITDA in 2015 which is tremenduous growth since 2011.The price of the stock has not yet kept up to the growth in adjusted EBITDA and net earnings since 2011.
Monday, 1 June 2015
Interrent REIT reports
On May 12 Interent reported its' first quarter results.It is a REIT that owns and manages apartment buildings.This market is solid but not as strong as it was in 2010 or 2011.Interrent is typical of the apartment REIT sector.It's assets and revenues have grown considerably from 2010 but have slown down recently.Revenues have been basically flat in 2014 and the first quarter of 2015.Consequently the price has stalled recently.Nevertheless it has gradually improved most of it's financial statistics.In addition, it bought one new apartment building in Montreal- a new market for Interrent.We will look at the data in their quarterly report below.
The First Quarter Report
The Interrent report has a lot of operating statistics all of which show a small improvement.Monthly rents increased 3% and the net operating income was up by 16% while funds flow and adjusted funds flow was up about 15%.The interest coverage ratio improved from 2.62 to 2.38 times and the debt service ratio improved from 1.55 to 1.37 times. This means that earnings are adequate to cover interest payments and service the debt.Consequently the debt to gross book value ratio moved from 49% to 47%.Interrent is managing it's debt adequately. All of these statistics improved slightly.The quarterly report is optimistic but there has been no significant improvement in this quarter.Interrent's revenue and adjusted EBITDA have been almost flat since the first quarter of 2014.However it has improved slightly every quarter.This has caused the stock price to remain in a very tight range since the end of 2013.And it will likely remain flat unless their operational statistics improve more in 2015.
The First Quarter Report
The Interrent report has a lot of operating statistics all of which show a small improvement.Monthly rents increased 3% and the net operating income was up by 16% while funds flow and adjusted funds flow was up about 15%.The interest coverage ratio improved from 2.62 to 2.38 times and the debt service ratio improved from 1.55 to 1.37 times. This means that earnings are adequate to cover interest payments and service the debt.Consequently the debt to gross book value ratio moved from 49% to 47%.Interrent is managing it's debt adequately. All of these statistics improved slightly.The quarterly report is optimistic but there has been no significant improvement in this quarter.Interrent's revenue and adjusted EBITDA have been almost flat since the first quarter of 2014.However it has improved slightly every quarter.This has caused the stock price to remain in a very tight range since the end of 2013.And it will likely remain flat unless their operational statistics improve more in 2015.
Wednesday, 27 May 2015
Press releases and quarterly reports
Many of the blogs in Workathon and all in my other blog called Blogdaleupsome have gotten their data from company press releases and their quarterly reports.At first the data did jive with other data such as the price of the stock and other corporate information.But gradually the information was not coroborating as much with other external data.Other press releases started to show less and less logic;in fact,they became confusing in some cases.Their forecasts of revenues and earnings were hard to believe.
It is hard to shake the tendency for companies to tell their shareholders that things are going well and earnings will be 10 to 25% better next quarter.Especially when writers like me believe them and tell the same story.It is ,of course,incumbent on writers to check their data and make sure it is as correct as possible.Sometimes all companies have to estimate certain values;this will always be the case.
Experience is worth a 1000 words
The Chinese proverb is that a picture is worth 1000 words.But every writer knows that experience is also worth 1000 words.I used to work in the federal government and I am used to the situation where the data in one department does not jive with that of another department.It was always better to use Statistics Canada data when you could get it;it was always more reliable.When you could not get Statistics Canada data you had to blend data from two uncertain sources.This is what I must do here is blend data from broker's database and from company press releases.Where possible check data in a quarterly report against company data.However now Workathon will likely have less reporting of company press releases and quarterly reports.That will be the domaine of my other blog called Blogdaleupsome.
The Crocodile Gold Syndrome
Sometimes it is possible to get data or information in a press release that is nowhere else found.This situation I saw several times.The first time I came across it was for Crocodile Gold.This stock trades on the TSX.They had purchased two mines that they had estimated to get two years production from.They did some exploratory work and found(supposedly) a huge ore body.No final estimate was given but it could have been as big as 4 to 5 million ounces.The stock was trading at about$.20 per share and once I reported this I expected the share price to move towards $1.00 per share.But it now trades at only $.35 per share.Still this situation has not been clarified.Is the ore body as described or is it not.No other news source has reported the actual size of the discovery.
This situation also occurred to other companies such as Twin Butte and Chorus Aviation.News reported only in press releases and nowhere else reported.Often the news is beneficial to the stock but rarely does the share price react.Twin Butte ,for example, bought a company with light oil resources.They found multi-layering of oil pools and oil pools not discovered by the previous company.The stock should have moved up considerably but it moved down to it's present level of about $.85 per share.Was the quarterly report wrong or did something else explain this behaviour?So,in conclusion, always check the data in a company's press releases,if you can.
It is hard to shake the tendency for companies to tell their shareholders that things are going well and earnings will be 10 to 25% better next quarter.Especially when writers like me believe them and tell the same story.It is ,of course,incumbent on writers to check their data and make sure it is as correct as possible.Sometimes all companies have to estimate certain values;this will always be the case.
Experience is worth a 1000 words
The Chinese proverb is that a picture is worth 1000 words.But every writer knows that experience is also worth 1000 words.I used to work in the federal government and I am used to the situation where the data in one department does not jive with that of another department.It was always better to use Statistics Canada data when you could get it;it was always more reliable.When you could not get Statistics Canada data you had to blend data from two uncertain sources.This is what I must do here is blend data from broker's database and from company press releases.Where possible check data in a quarterly report against company data.However now Workathon will likely have less reporting of company press releases and quarterly reports.That will be the domaine of my other blog called Blogdaleupsome.
The Crocodile Gold Syndrome
Sometimes it is possible to get data or information in a press release that is nowhere else found.This situation I saw several times.The first time I came across it was for Crocodile Gold.This stock trades on the TSX.They had purchased two mines that they had estimated to get two years production from.They did some exploratory work and found(supposedly) a huge ore body.No final estimate was given but it could have been as big as 4 to 5 million ounces.The stock was trading at about$.20 per share and once I reported this I expected the share price to move towards $1.00 per share.But it now trades at only $.35 per share.Still this situation has not been clarified.Is the ore body as described or is it not.No other news source has reported the actual size of the discovery.
This situation also occurred to other companies such as Twin Butte and Chorus Aviation.News reported only in press releases and nowhere else reported.Often the news is beneficial to the stock but rarely does the share price react.Twin Butte ,for example, bought a company with light oil resources.They found multi-layering of oil pools and oil pools not discovered by the previous company.The stock should have moved up considerably but it moved down to it's present level of about $.85 per share.Was the quarterly report wrong or did something else explain this behaviour?So,in conclusion, always check the data in a company's press releases,if you can.
Tuesday, 12 May 2015
Atlantic Power reports first quarter results
On May7,2015 Atlantic Power reported it's first quarter 2015 results.It was a lukewarm report.Atlantic Power is an electric utility with 28 operating power generating projects;some are in Canada and some are in United States.It produces 2945 MW of power and has it's headquarters in Boston.
Highlights of the quarter
The big item for this quarter is the sale of 5 wind asset facilities for $350 million which is 13 times it's expected cash distribution.This is considered a good price as developing business will often sell for 5 to 6 times operating income.Some of these facilities (like the Rockland plant) are quite recent acquisitions.The proceeds of the sale will be used to redeem a $311 million 9% unsecured note.It also repaid $24 million of a term loan and $16 million from discretionary debt.None of the proceeds will be included in EBITDA.Other utilities might have included a portion in the EBITDA calculations as there will be a loss of EBITDA for the rest of the year from disposing of these facilities.
Quarterly project adjusted EBITDA
Project adjusted EBITDA was reported as $59 million - an increase of $2.2 million over Q1 last year.This was partly due to project generation availabiltity rising from 92.7% to 97.6% Atlantic is an efficient generator of power.But adjusted EBITDA from the 5 wind assets was excluded(although income was earned for 3 months) as was income from one other facility.Also $9.6 million of general and administrative expenses(G&A) were taken from adjusted EBITDA.So the reported EBITDA figure should have been $68 million.It also is not clear whether the payment of the discretionary debt was taken from EBITDA or from the sale of the wind assets.Most utilitites use the term comparable adjusted EBITDA but ATP's figure is not comparable to other periods or other utilities.However this blog takes the position that ATP may be getting closer to discarding their project adjusted EBITDA methodology.
EBITDA Calculations
Atlantic Power does not own 8 or 9 facilities;it owns large parts of 28 facilities.Also it(like most utilities) reports it's earnings on an adjusted EBITDA basis.However it does not use what is called comparable adjusted EBITDA.Instead it uses project adjusted EBITDA methodology.It includes the percentage of earnings that it has of total equity in it's EBITDA calculations.In one case it owns only 50% of the total equity;this however is the exception.It also excludes G&A expenses from EBITDA, so it's EBITDA is smaller than other utilities.It is not clear if they do include payments on discretionary debt and amortization of some loans also.These are items that Atlantic must clear up in the future.But it is clear that ATP's project adjusted EBITDA is less than what it is called total adjusted EBITDA.And it is not comparable adjusted EBITDA.
Guidance for 2015
Atlantic Power gave guidance in it's annual report of project adjusted EBITDA of $265 to $285 million.In this quarterly report it changed it's guidance to $200 to $220 million.This is after 5 wind assets have been sold.But this might be as high as $285 to $300 million if ATP used a comparable adjusted EBITDA.
Highlights of the quarter
The big item for this quarter is the sale of 5 wind asset facilities for $350 million which is 13 times it's expected cash distribution.This is considered a good price as developing business will often sell for 5 to 6 times operating income.Some of these facilities (like the Rockland plant) are quite recent acquisitions.The proceeds of the sale will be used to redeem a $311 million 9% unsecured note.It also repaid $24 million of a term loan and $16 million from discretionary debt.None of the proceeds will be included in EBITDA.Other utilities might have included a portion in the EBITDA calculations as there will be a loss of EBITDA for the rest of the year from disposing of these facilities.
Quarterly project adjusted EBITDA
Project adjusted EBITDA was reported as $59 million - an increase of $2.2 million over Q1 last year.This was partly due to project generation availabiltity rising from 92.7% to 97.6% Atlantic is an efficient generator of power.But adjusted EBITDA from the 5 wind assets was excluded(although income was earned for 3 months) as was income from one other facility.Also $9.6 million of general and administrative expenses(G&A) were taken from adjusted EBITDA.So the reported EBITDA figure should have been $68 million.It also is not clear whether the payment of the discretionary debt was taken from EBITDA or from the sale of the wind assets.Most utilitites use the term comparable adjusted EBITDA but ATP's figure is not comparable to other periods or other utilities.However this blog takes the position that ATP may be getting closer to discarding their project adjusted EBITDA methodology.
EBITDA Calculations
Atlantic Power does not own 8 or 9 facilities;it owns large parts of 28 facilities.Also it(like most utilities) reports it's earnings on an adjusted EBITDA basis.However it does not use what is called comparable adjusted EBITDA.Instead it uses project adjusted EBITDA methodology.It includes the percentage of earnings that it has of total equity in it's EBITDA calculations.In one case it owns only 50% of the total equity;this however is the exception.It also excludes G&A expenses from EBITDA, so it's EBITDA is smaller than other utilities.It is not clear if they do include payments on discretionary debt and amortization of some loans also.These are items that Atlantic must clear up in the future.But it is clear that ATP's project adjusted EBITDA is less than what it is called total adjusted EBITDA.And it is not comparable adjusted EBITDA.
Guidance for 2015
Atlantic Power gave guidance in it's annual report of project adjusted EBITDA of $265 to $285 million.In this quarterly report it changed it's guidance to $200 to $220 million.This is after 5 wind assets have been sold.But this might be as high as $285 to $300 million if ATP used a comparable adjusted EBITDA.
Subscribe to:
Posts (Atom)