Canada, Environmental, Finance, North America

Brookfield to invest in TransAlta, Mangrove Partners plans to nominate five board candidates

TransAlta Corporation recently announced an investment by Brookfield Renewable Partners and its institutional partners that “crystalizes the value of its Hydro Assets, enhances its financial position to execute its strategy, and accelerates the opportunity to return capital to shareholders.”

Just a few hours after that announcement, TransAlta said it had received notice under its Advance Notice By-Law that Mangrove Partners intends to nominate five candidates for election to the company’s board of directors at the upcoming Annual and Special Meeting of Shareholders. Successful appointment of these directors could result in termination of the Brookfield investment by the board.

TransAlta says this investment will ensure the company will transition to 100% clean energy by 2025.

Brookfield will invest $750 million through the purchase of exchangeable securities, which will be convertible into an equity ownership interest in TransAlta’s Alberta hydro assets at a value based on a multiple of the future hydro assets’ EBITDA. In addition, Brookfield has committed to purchase TransAlta common shares on the open market to increase its share ownership in TransAlta to 9%.

“Brookfield’s investment is a strong endorsement of TransAlta’s strategy and future value,” said Dawn Farrell, president and chief executive officer. “By crystallizing the value of our Hydro Assets, we can accelerate the return of capital to shareholders and invest in coal to gas conversions and strategic gas and renewable developments, while still meeting our goal to reduce senior indebtedness to $1.2 billion by the end of 2020.”

TransAlta will include two experienced Brookfield nominees, Harry Goldgut and Richard Legault, on its slate of directors for election at the upcoming 2019 meeting. TransAlta also announced that Robert Flexon, former chief executive officer of Dynegy, has agreed to stand for election at the meeting.

According to a press release, RBC Global Asset Management Inc., TransAlta’s largest shareholder at 12.4%, is supportive of the strategic investment and has committed to supporting TransAlta’s slate of director nominees at the upcoming 2019 Meeting.

“We are pleased to partner with TransAlta to accelerate its transition to clean energy and support value creation for all shareholders,” said Sachin Shah, CEO, Brookfield Renewable Partners. “We look forward to contributing our capabilities, particularly our long-term expertise in the hydro sector, to enable the company’s growth over the long-term.”

TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the U.S. and Australia. The company is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydroelectric power.