Alterra Power Announces Audited Results for the Year Ended December 31, 2013
and Project Updates
(under IFRS and all amounts in US dollars unless otherwise stated)
TSX : AXY
VANCOUVER, March 27, 2014 /CNW/ - Alterra Power Corp. (TSX: AXY) ("Alterra" or
the "Company") is pleased to report its financial and operating results for
the year ended December 31, 2013. For further information on these results
please see Alterra's Consolidated Financial Statements and Management's
Discussion and Analysis.
Alterra consolidates 100% of the results of operations at HS Orka and Soda
Lake, while Alterra's interests in the Toba Montrose run of river hydro
facility and the Dokie 1 wind facility are accounted for as equity
investments. In certain statements in this news release, Alterra's results are
disclosed as Alterra's "net interest", which means the effective portion of
results that Alterra would have reported if each of HS Orka (66.6%), Toba
Montrose (40%), Dokie 1 (51% from January to December 19, 2013 and 25.5% for
the remainder of 2013), ABW Solar (10% from August 23, 2013 to November 29,
2013) and Soda Lake (100%) had been reported in accordance with Alterra's
actual share of ownership at December 31, 2013 and for the twelve months then
ended. Management believes that net interest reporting provides the clearest
view of Alterra's performance.
Highlights for the year include:
-- Increased revenue and recurring net interest EBITDA: Revenue
was up 5% to $63.9 million due to a higher level of contracted
power sales at HS Orka. Net interest revenue (including
business interruption proceeds) was $88.9 million, up 2% from
the comparative year, primarily due to the increase in revenue
at HS Orka. Net interest EBITDA was 8% lower at $32.8 million,
but would have been 4% higher ($37.2 million) if the
non-recurring costs related to the Montrose rockslide that were
expensed were excluded.
-- Reliable power generation: Alterra's fleet of power projects
generated 1,268,294 MWh of clean power (net interest),
achieving 94% of budgeted generation despite the Montrose hydro
facility being offline for nearly nine months. Generation would
have been 101% of budget had the Montrose plant had been
operating for the whole period. Total generation from plants
operated by Alterra was 2,156,803 MWh.
-- Positive cash flow: The Company generated cash flow from
operations of $16.6 million versus $12.1 million in the
-- Strategic asset sales:
o Dokie 1 partial sale: Alterra sold half of its 51% interest in
Dokie 1 to Fiera Axium for $26.8 million plus up to C$2.3 million
over the next three years dependent on asset performance. The
Company retains a 25.5% ownership of Dokie 1 and continues to
operate and manage the project. The Company recognized a pre-tax
gain on the sale of $17.5 million in the year.
o ABW Solar: Alterra sold its 10% interest in the ABW Solar project
to Fiera Axium, for proceeds of $9.8 million. The Company
recognized a pre-tax gain on the sale of $2.8 million in the year.
-- Montrose facility back in service:Penstock replacement at the
Montrose hydro facility was completed and the facility was
brought back into service on September 22, 2013. Several site
improvements including protective berms have also been
completed and will significantly lessen the likelihood of any
future damage or interruption.
-- Reykjanes field maintenance program: The Company commenced a
fluid reinjection program at the Reykjanes field to enhance
future field stability. In support of the fluid reinjection
program, the Company completed drilling of a new large-diameter
well (RN-33) with positive initial indications of permeability.
Two new production wells were drilled at the Reykjanes
reservoir early in 2013. The first of these wells has been tied
in to the power plant and is supplying an additional 6 MW of
capacity. Testing of the second well is underway.
-- Distributions received:The Company recognized equity
distributions declared during the year from TMGP, DGP, and the
Blue Lagoon in the amounts of $0.8 million, $2.0 million, and
$1.8 million respectively. In 2013, HS Orka declared a dividend
of $1.2 million of which the Company's share was $0.8 million.
-- Jimmie Creek hydro project highlights:
o Pre-construction activities: Alterra executed a further limited
notice to proceed with SNC Lavalin to provide pre-construction
design work and other services in preparation to commence
construction on the 62 MW Jimmie Creek hydro project in British
Columbia in 2014.
o Power purchase agreement amended: The Company completed an
amendment to the power purchase agreement ("PPA") for Jimmie Creek.
Under the contract, the project will sell 100% of its power to BC
Hydro for 40 years commencing in August 2016.
o Purchase agreement executed: Alterra completed an agreement in
November to purchase the 49% stake of the Jimmie Creek project then
held by an affiliate of GE Energy Financial Services ("GE EFS").
On March 6, 2014 the transaction was completed, following which the
Company owned 100% of the project.
-- Shannon wind project highlights:
o Completed acquisition: Alterra acquired a 10% interest in the
Shannon wind project (a 202 MW development-stage wind project in
Clay County, Texas, USA), and subsequent to year end acquired the
remaining 90% for a small up-front payment and a developer's fee to
be paid at financial close.
o Commencement of construction:In December Alterra completed the
construction of the initial phase of turbine foundations and
project roads and began construction of the project's main power
transformer. These activities are expected to qualify the project
for the US Production Tax Credit.
o Interconnection Security: Subsequent to year end, Alterra placed a
$4.5 million cash deposit with the project's transmission provider
to begin the design and equipment procurement for the project's
o Current activities: The Company is in the process of finalizing
project contracts (turbine supply, O&M, etc.), documenting a power
hedge for project output, and finalizing terms with tax equity
investors. The Company has also entered into an exclusivity
agreement with a large energy infrastructure fund as a potential
equity partner for the project.
-- South American joint ventures:Alterra finalized its joint
venture with Energy Development Corporation ("EDC") for the
development of the Mariposa project in Chile and certain
geothermal concessions in Peru (the last of which were agreed
subsequent to year end). EDC will hold a 70% interest in the
projects and fund 100% of the next $58.3 million of project
expenditures at Mariposa and the next $14.0 million of project
expenditures across the two Peruvian concession groups.
-- Italy joint venture:The Company finalized a joint venture with
an affiliate of Graziella Green Power ("Graziella"), an Italian
developer of solar and geothermal assets to further advance
Alterra's geothermal concessions in Italy.
John Carson, Alterra's CEO, said, "2013 was a year of meeting challenges for
Alterra. While we were busy for most of the year completing repairs at our
Montrose facility, our team was still able to deliver another solid year of
revenue, cash flow, generation and team safety. In 2014, we are already at
full speed pursuing our goals of adding new projects and maintaining our track
record as a premier renewable energy operator."
The following table shows Alterra's net interest in selected operating and
financial results for the year, in addition to key financial information
extracted from the consolidated results.
(expressed in thousands of US dollars, except for production)
($000 except where
For the 12 ABW
months ended Toba Dokie 1 Soda Solar Exploration
December 31, HS Orka Montrose (25.5%) Lake (10%) (b) Netead Consolidated
2013 (66.6%) (40%) (a) (100%) Interestice Results
Generation 852,528 194,927 151,268 67,512 2,059 — 1,268,294 1,347,584
Total 39,512 20,153 16,658 4,545 832 — 81,700 63,872
Business — 7,166 — — — — 7,166 —
Gross Profit 10,156 10,028 7,602 (2,228) 555 — 26,113 13,021
EBITDA (d) 16,388 15,363 11,371 266 276 (10,885) 32,779 41,044
($000 except where
For the 12 Toba Soda ABW Net
months ended HS Orka Montrose Lake Solar Exploration Interest
December 31, (66.6%) (40%) Dokie 1 (100%) (10%) and Head Total Consolidated
2012 (c) (51%) Office Results
Generation 817,549 264,564 151,667 64,421 — — 1,298,201 1,292,008
Total 38,367 27,238 17,034 4,406 — — 87,045 61,112
Gross Profit 11,904 15,248 6,480 (2,982) — — 30,650 14,524
EBITDA 15,214 20,463 10,550 (614) — (9,884) 35,729 44,692
(a) Reflect 51% interest from January 1, 2013 to December 19, 2013 and
25.5% interest for the remainder of 2013.
(b) Represent the Company's 10% interest from August 23, 2013 to
November 29, 2013.
(c) Pro forma information which reflects what the results would have
been had the Company consolidated 66.6% of HS Orka for the full
twelve month period ended December 31, 2012 (versus the actual 75%
held through February 29, 2012).
(d) Here and elsewhere, Adjusted EBITDA ("EBITDA") is defined by
Alterra as earnings before interest, taxes, foreign exchange,
depreciation and amortization, as well as before deductions for
change in fair value of bonds payable and derivatives, foreign
exchange gain (loss), write off of development costs and goodwill
and other income (expense) except business interruption proceeds,
amortization of below market contracts, and value assigned to
options granted less share of income (loss) of equity accounted
investees plus the Company's interest in EBITDA of its equity
accounted investees. Alterra discloses EBITDA as it is a measure
used by analysts and by management to evaluate Alterra's
performance. As EBITDA is a non-IFRS measure, it may not be
comparable to EBITDA calculated by others. In addition, as EBITDA
is not a substitute for net earnings, readers should consider net
earnings in evaluating Alterra's performance. For a reconciliation
of consolidated EBITDA to Alterra's consolidated financial
statements refer to the Company's Management's Discussion and
Analysis for the year ended December 31, 2013.
Revenue was up 5% at $63.9 million due to increased generation and contractual
sales at HS Orka. Gross profit decreased to $13.0 million ($14.5 million at
December 31, 2012) as the increase in revenue was offset primarily by
increased power plant maintenance costs due to the planned cleaning and repair
of two geothermal wells at HS Orka.
Net loss increased to $116.3 million, largely as a result of one-time
write-offs of development projects as well as other non-cash items, offset in
part by gains from the sale of investments and interest from equity accounted
joint ventures. Non-cash items contributing to the loss include:
-- A $21.7 million non-cash loss resulting primarily from the
change in the fair value of embedded derivatives related to
aluminum-linked PPAs offset in part by a $2.7 million non-cash
gain in the fair value of bonds payable. Both of these
movements relate primarily to fluctuations in forecasted
aluminum prices which fell in the year by 8%.
-- A $120.5 million write-off of development projects ($1.6
million at December 31, 2012), which included $50.5 million for
the Bute Inlet project, $10.6 million for the Upper Toba River
project, $2.4 million for other hydro projects and $32.7
million for certain geothermal development properties. There
was also a write-off of $24.3 million for select plant and
equipment. The hydro write-offs were related to a decline in
the market outlook for renewable energy projects as a result of
the new Integrated Resource Plan ("IRP") from the BC
Government. An additional write down was recorded for certain
HS Orka development projects as a result of a lowered outlook
on available power contract pricing. The Company remains
active with these projects and will look to develop them in the
future when market outlook improves.
Consolidated cash and cash equivalents at December 31, 2013 were $41.7 million
($39.2 million at December 31, 2012) of which $33.9 million is held by HS Orka.
Net Interest Results
Alterra's net interest in revenue remained stable in 2013, with a 2%
increase primarily due to new contractual revenues at HS Orka and the addition
of ABW Solar. 2013 EBITDA was consistent with 2012 with the exception of Toba
Montrose, where the EBITDA declined by $5.1 million due to non-recurring costs
related to the removal of the damaged portion of the penstock plus higher
insurance premiums in the period. These rockslide-related events caused net
interest in EBITDA to decrease by 8% (down $3.0 million).
The net interest cash position at December 31, 2013 was $38.1 million.
Iceland Operations (66.6% Interest)
The 100 MW Reykjanes plant generated 526,502 MWh of electricity (99% of
budget), and the 72 MW Svartsengi plant generated 326,026 MWh of electricity
(109% of budget), and continued to supply thermal energy for district heating.
Toba Montrose Operations (40% Interest)
The Toba Montrose facility generated 194,927 MWh of electricity, or 69% of the
generation projected for both units running at full service. Although the
Montrose facility was offline for repairs during the majority of the year, the
measured water flow for purposes of business interruption insurance payments
(attributed generation) was 94,290 MWh, for a combined pro forma generation of
289,217, or 102% of budget.
On December 13, 2012 a rockslide damaged a 300 meter section of the five
kilometer penstock (which supplies water from the intake to the power
generating plant) at the Montrose hydro facility. The penstock repairs were
completed and the plant resumed operation on September 22, 2013. Several site
improvements including protective berms were completed that will significantly
lessen the likelihood of any future damage or interruption.
The Company's proportionate share of the insurance proceeds received to date
is $15.2 million ($8.0 million for property damage and $7.2 million for
business interruption). At December 31, 2013 an insurance receivable of $3.4
million was recognized by Toba Montrose, of which $2.9 million currently
remains outstanding. The final $2.5 million property claim is being reviewed
with respect to eligible property costs and sub-limits and has not been
accrued for at December 31, 2013.
The project renewed its insurance package in September 2013 with earth
movement coverage capped at C$50.0 million. As a result, Toba Montrose agreed
with its lenders to temporarily defer distributions until a higher level of
earth movement coverage is re-established. Toba Montrose expects to obtain a
significantly higher level of coverage and is in discussion with the lenders
to extinguish the waiver and resume distributions once this coverage is in
Dokie 1 Operations (25.5% Interest)
The 144 MW Dokie 1 wind farm generated 151,268 MWh of electricity for the year
(reflecting 51% interest from January 1 to December 19, 2013 and 25.5%
interest for the remainder of the year), or 91% of budget. Generation is lower
than budget due to lower winds in the third quarter.
On December 20, 2013 the Company sold half of its 51% interest in the Dokie 1
wind farm to an affiliate of Fiera Axium Infrastructure, Inc. ("Fiera Axium"),
the Company's partner at Dokie 1 and Toba Montrose. The Company received
initial sales proceeds of $26.8 million, and may receive further earn-out
payments of up to C$2.3 million over the next three years depending on asset
performance. The Company retains a 25.5% ownership of Dokie 1 and continues to
operate and manage the project. The Company recognized a pre-tax gain on the
sale of $17.5 million in the year.
ABW Solar Operations (Sold)
On November 29, 2013 the Company sold its 10% interest in ABW to an affiliate
of Fiera Axium for proceeds of $9.8 million, recognizing a pre-tax gain of
$2.8 million. The Company had acquired the 10% interest in the ABW Solar
project, a 50 MW solar project in Ontario, Canada for $7.1 million in August
2013. The Company was the managing partner for the project, and held the ABW
Solar interest together with its partner, GE EFS.
Soda Lake Operations (100% Interest)
The 15 MW Soda Lake geothermal plant generated 67,512 MWh of electricity for
the year, or 99% of budget.
Expansion and Development Projects
Jimmie Creek hydro (formerly Upper Toba)
The Company holds 100% interest in the fully permitted 62 MW Jimmie Creek
project, and commenced construction activities in March 2014. The Jimmie Creek
Project is being delivered under an Engineering, Procurement, Construction
Management (EPCM) contract with SNC Lavalin. Project advancements during the
year included completion of drilling and seismic testing for the powerhouse
and intake locations, further hydrology work and continued construction
preparation with project contractors and consultants.
The Jimmie Creek project has a 40 year PPA with BC Hydro, has at a nameplate
capacity of 62 MW and projected annual firm energy of 114 GWh.
Shannon wind project
The Company holds a 100% interest in Shannon Wind Holdings LLC, a 202 MW wind
project located in Clay County, Texas, USA.
In December 2013, the Company completed certain construction activities to
ensure the Shannon wind project will qualify for the U.S. Production Tax
Credit, which included contracting with Mortenson to complete the initial
phase of on-site construction and contracting with Siemens Energy to begin
manufacturing the project's main power transformer.
In February 2014, $4.5 million of cash was deposited with Oncor Electric
Delivery Company LLC, the project's transmission service provider, which has
commenced the design and equipment procurement for the project's
Contract negotiations for construction, turbine supply, operations and
maintenance and other contracts are underway and the Company is working with
several financing parties in preparation for closing project financing, which
is projected for the second quarter of 2014.
The Company expects to sell electricity generated from the Shannon wind
project under a long term power hedging agreement which it is currently in
documentation. Subsequent to year end, Alterra entered into an exclusivity
agreement with a large energy infrastructure fund as a potential equity
partner for the project.
Dokie 2 wind farm expansion
Alterra holds a 51% interest in a planned expansion of the Dokie 1 wind farm
(Dokie 2) with projected additions to capacity of up to 156 MW. During the
year Alterra continued to collect data, conduct engineering work and perform
other studies to complete the assessment of the project.
South American geothermal projects
The Company holds a 30% interest in the Mariposa project in Chile and a 30%
interest in a number of early stage development projects in Peru. The
remaining 70% interest is held by EDC, who will fund the next $58.3 million in
projected expenditures at Mariposa, and $8.0 million and $6.0 million spend
respectively under the two Peruvian joint venture agreements. The next major
phase of activity at Mariposa is expected to include drilling large-diameter
rotary holes to confirm rock permeability, reservoir chemistry, fluid
chemistry and other resource parameters in order to finalize plant design. The
next steps of development for the Peruvian concessions include advanced
exploration activities designed to identify the best locations for power plant
development and construction.
Italian geothermal projects
The Company holds a 45% interest in the Mensano and Roccastrada geothermal
concessions, the 55% interest is held by Graziella who will fund approximately
$4.0 million for the joint venture's next development activities.
Alterra has commenced a reinjection program at the Reykjanes field, and will
refine the timeline for the Reykjanes expansion pending results from the
program. The key matters remaining prior to construction are conclusion of a
PPA, completion of project financing and confirmation of the resource field.
Other development projects
During 2013 the Company has continued to perform hydrology studies on the Bute
Inlet and other hydro projects and has maintained all existing permits and
licenses in good standing. The Company will continue to collect hydrology
data and maintain all projects in good standing despite writing down these
projects to nil for accounting purposes in the year, and will look to develop
these projects in the future when market outlook improves.
In Iceland, Alterra began an environmental assessment on the Bulandsvirkjun
hydroelectric project, which is owned 50% by HS Orka.
Ross Beaty, Alterra's Chairman, said, "2013 was a challenging year for us due
to a weaker power outlook in BC where so many of our development projects are
located, and the knock-on effects from the rockslide at Montrose in late 2012.
At year-end we decided to write off most of the historic costs carried on our
books for most of our development projects while retaining our interest in
these projects for when conditions recover in the future allowing their
development. Today, Montrose is back in operation and we have shifted our
development efforts to Texas where things look very promising at our 200 MW
Shannon wind project and where power markets remain strong. We have an
exceptional team and adequate financial capacity to manage our growth, and I
look forward to excellent results as 2014 progresses."
|Alterra Power will host a conference call to discuss financial and operating results on Friday, March 28, 2014 at
11:30 am ET |
|(8:30 am PT).
|North American participants dial 1-888-390-0546 and International participants dial 1-416-764-8688; the conference
ID is |
|The call will also be broadcast live on the Internet at
|The call will be available for replay for one week after the call by dialing 1-416-764-8677 and entering replay
PIN 147598. |
Cautionary Note Regarding Forward-Looking Statements and Information
Certain statements included in this news release may contain information that
is forward-looking within the meaning of certain securities laws, including
information and statements regarding prospective results of operations,
financial position, cash flows or growth potential. These statements are
based on factors or assumptions that were applied in drawing a conclusion or
making a forecast or projection, including assumptions based on historical
trends, current conditions and expected future developments. Since
forward-looking statements relate to future events and conditions, by their
very nature they require making assumptions and involve inherent risks and
uncertainties. Alterra cautions that although it is believed that the
assumptions are reasonable in the circumstances, these risks and uncertainties
give rise to the possibility that actual results may differ materially from
the expectations set out in the forward-looking statements. Material risk
factors include those set out in the management's discussion and analysis
section of Alterra's most recent annual report and quarterly report, and in
Alterra's Annual Information Form. Given these risks, undue reliance should
not be placed on these forward-looking statements, which apply only as of
their dates. Other than as specifically required by law, Alterra undertakes no
obligation to update any forward-looking statements or information to reflect
new information, subsequent or otherwise.
SOURCE Alterra Power Corp.
Peter Lekich, Corporate Communications Alterra Power Corp. Phone: 604.235.6719
To view this news release in HTML formatting, please use the following URL:
CO: Alterra Power Corp.
ST: British Columbia
NI: NASDAQ UTI ERN CONF
-0- Mar/28/2014 03:43 GMT
Press spacebar to pause and continue. Press esc to stop.