Atlantic Power Corporation (ATP) completed its Initial Public Offering in November 2004. ATP formed Atlantic Power Holdings, LLC (“Atlantic Holdings”) to acquire indirect interests in 15 power projects from subsidiaries of ArcLight Energy Partners Funds I and II ("ArcLight Funds I & II"), and Caithness Energy (the “Existing Investors”). At the time of its Initial Public Offering ("IPO"), ATP owned 58.1% of Atlantic Holdings and the Existing Investors owned the remaining 41.9%. In October 2005, Caisse de dépôt et placement du Québec (the “Caisse”) purchased 7.5 million IPSs, increasing ATP ownership of Holdings to 70.1%. In October, 2006, ATP further increased its ownership in Holdings to approximately 86% in connection with a public offering of its IPSs and 6.25% convertible debentures. In December 2006, a private placement of IPSs was completed and the proceeds were used by ATP to purchase the Existing Investors' remaining interest in Holdings, so ATP now owns 100% of the equity in Holdings.
ArcLight Capital Partners is a leading private equity investment firm focused exclusively in the electric power and energy sectors with more than $6.8 billion in managed assets, including ArcLight Funds I & II. ArcLight will share in the upside of the original projects and further growth of Atlantic Power, since ArcLight Funds I & II are the indirect owners of Atlantic Power Management, LLC ("Atlantic Power Management") which manages Atlantic Power. Atlantic Power Management earns an incentive fee equal to 25% of the product of the increase in cash distributions paid to investors above the initial level of $1 per IPS per year, times the number of common shares outstanding.
Atlantic Power owns interests in a growing, diversified portfolio of power generating projects and one transmission line, located in major U.S. power markets. See Assets pull down.
The majority of Atlantic Power's projects sell electricity under long-term Power Purchase Agreements ("PPAs") to electricity off-takers, all of which have investment-grade credit ratings. The PPAs typically provide for substantial capacity payments based on the plant's availability to generate electricity - generally designed to cover fixed costs, capital and return on capital, and an energy payment based on actual generation and is structured to cover fuel and other variable costs. In addition, most of the projects have long-term supply agreements for fuel and fuel transportation whose terms may correspond to the PPA length. The majority of our Power Purchase Agreements provide for the pass-through of changing fuel costs.
ATP’s projects have a diverse base of electricity and steam customers, technologies and fuel types, and operate in multiple regulatory jurisdictions and regional power pools. This diversity reinforces ATP's stability of cash flows by limiting investor exposure to an individual electricity or steam off-taker or to market, regulatory, or environmental conditions in any one region. In addition, all of ATP's electric capacity is being sold to customers with investment-grade credit ratings. Also, its power purchase agreements generally pass through changing fuel prices to the offtakers.
Since its IPO in November 2004, ATP has raised its distribution twice: by Cdn. $.03 to Cdn. $1.03 per IPS per year in September 2005, and by another Cdn. $.03 to Cdn $1.06 per IPS per year in September 2006.
ATP will continue to grow shareholder value by:
1. Optimizing cash flow from existing assets by focusing on improving physical project operation and contractual arrangements for fuel supply, operations, power sales, etc.
2. Consolidating its ownership position within existing project partnerships.
3. Making accretive acquisitions by considering the purchase of existing projects owned by the ArcLight funds or in the open market.
ATP plans to enhance project operations and increase cash distributions by optimizing commercial arrangements such as Power Purchase Agreements, Fuel Supply and Transport Contracts, Steam Sales Agreements and Management and Operations Agreements; achieving operating efficiencies; upgrading existing equipment and plant configurations; and expanding existing projects.
Atlantic Power Management is the manager of ATP with the objective of providing investors with stable and sustainable cash distributions while focusing on identifying additional acquisitions and investments in Canadian and U.S. power projects. Atlantic Power Management is indirectly owned by ArcLight Energy Partners Funds I and II, and its substantial energy investing experience, solid industry relationships, and power and energy market expertise will provide ATP’s investors with unique, profitable investment opportunities.
ATP intends to pay equal monthly distributions on the IPSs. Cash flow from the projects will vary from year to year based on known contractual factors, such as changes in pricing under the Power Purchase Agreements, Fuel Supply Agreements, and Steam Sale Agreements, compliance with the terms of the project-level financing, and transition to new agreements or market pricing following the expiry of Power Purchase Agreements. The stability of cash distributions is enhanced through the availability of cash generated in excess of cash paid out to investors. Excess cash is available to stabilize future cash distributions and to fund acquisitions or growth opportunities.
To see a list of our historical distributions, please visit our
Cash Distribution page.
Our IPS is listed on Toronto Stock Exchange (TSX) under the symbol
ATP.UN and our 6.25% convertible subordinated debentures are listed on the TSX under the symbol
ATP.DB.
For more detailed stock information, please visit our
Stock Information page.
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