JUNO BEACH, Fla., Sept. 8, 2016 /PRNewswire/ -- NextEra Energy
Partners, LP (NYSE: NEP) today announced that it has entered into
an agreement with a subsidiary of its sponsor, NextEra Energy
Resources, LLC, to acquire an indirect 24 percent interest in
Desert Sunlight Investment Holdings, LLC. When completed, the
acquisition will expand NextEra Energy Partners' portfolio of
contracted renewable energy projects to approximately 2,788
megawatts (MW).1
"This acquisition further demonstrates our ability to acquire
assets at attractive yields that will be accretive for our
investors, as well as the continued strength of the pipeline of
growth opportunities that our sponsor, NextEra Energy Resources,
provides," said Jim Robo, chairman
and chief executive officer. "In addition, NextEra Energy Partners'
continued ability to access the equity markets aligns with our
previously communicated flexible and opportunistic approach to
advance our growth strategy and deliver unitholder distributions
consistent with the expectations we've outlined. NextEra Energy
Partners, in our view, remains the premier YieldCo in the
space."
Desert Sunlight Investment Holdings, LLC owns two project
entities, which together make up the Desert Sunlight Solar Energy
Center, a 550-MW solar generation plant located in Riverside County, Calif. The high-quality
solar energy center consists of 8 million panels capable of
generating enough power for 160,000 homes. The projects are fully
contracted under long-term power purchase agreements with strong
creditworthy counterparties and remaining average contract lives of
21 years. NextEra Energy Resources, which currently owns 50 percent
of the projects, will remain the managing member upon completion of
the transaction.
NextEra Energy Partners expects to complete the acquisition in
the fourth quarter of 2016, subject to the satisfaction of
customary closing conditions, for a purchase price of $218 million. The purchase price considers
approximately $258 million of the
existing non-recourse project debt and is subject to working
capital adjustments. The partnership expects to fund the
transaction through the net proceeds of an issuance of common
units.
NextEra Energy Partners expects the acquisition to contribute
adjusted EBITDA of approximately $43 million
to $53 million and cash available for distribution (CAFD) of
approximately $21 million to $26
million, each on an annual run-rate basis as of Dec. 31, 2016. The acquisition is expected to
contribute to an increase in the third-quarter distribution to an
annualized rate of $1.365 per common
unit from a current annualized rate of $1.32 per common unit. The acquisition is also
expected to increase NextEra Energy Partners estimated incremental
debt capacity at the holding company to approximately $375 million to $475 million and support NextEra
Energy Partners' current expectations of 12 to 15 percent per year
growth in limited partner distributions through 2020 off a base of
its fourth-quarter 2015 distribution per common unit at an
annualized rate of $1.23. Following
this acquisition, NextEra Energy Partners affirms its previously
announced expectations of a $230 million to
$290 million CAFD run rate for the NextEra Energy Partners
portfolio as of year-end 2016, net of incentive distribution rights
fees.
NextEra Energy Partners, LP
NextEra Energy Partners, LP (NYSE: NEP) is a growth-oriented
limited partnership formed by NextEra Energy, Inc. (NYSE: NEE) to
acquire, manage and own contracted clean energy projects with
stable, long-term cash flows. Headquartered in Juno Beach, Fla., NextEra Energy Partners owns
interests in wind and solar projects in North America, as well as natural gas
infrastructure assets in Texas.
The renewable energy projects are fully contracted, use
industry-leading technology and are located in regions that are
favorable for generating energy from the wind and sun. The seven
natural gas pipelines in the portfolio are all strategically
located, serving power producers and municipalities in South Texas, processing plants and producers
in the Eagle Ford Shale, and commercial and industrial customers in
the Houston area. The NET Mexico
Pipeline, the largest pipeline in the portfolio, provides a
critical source of natural gas transportation for low-cost,
U.S.-sourced shale gas to Mexico.
For more information about NextEra Energy Partners, please
visit: www.NextEraEnergyPartners.com.
Definitional and Additional
Information
This news release refers to adjusted EBITDA and CAFD
expectations for the acquisition of the indirect interest in the
Desert Sunlight Solar Energy Center. NextEra Energy Partners'
adjusted EBITDA expectations represent projected revenue less fuel
expense, project operating expenses, corporate general and
administrative expenses, plus other income and deductions,
including incentive distribution rights fees plus income from
equity method investments. Projected revenue as used in the
calculations of projected EBITDA represents the sum of projected
operating revenue plus the earnings impact from the amortization of
convertible investment tax credits plus the reimbursement for lost
revenue received pursuant to a contract with NextEra Energy
Resources.
CAFD is defined as cash available for distribution and
represents adjusted EBITDA less (1) a pre-tax allocation of
production tax credits, less (2) a pre-tax allocation of the
earnings impact from convertible investment tax credits, less (3)
debt service, less (4) maintenance capital, less (5) income tax
payments, less (6) other non-cash items included in adjusted EBITDA
if any. CAFD excludes changes in working capital.
1The megawatt total presented in this news release
for NextEra Energy Partners' portfolio of contracted renewable
energy projects upon completion of the acquisition excludes
non-economic ownership interests in equity method investments.
Cautionary Statements and Risk Factors That
May Affect Future Results
This news release contains "forward-looking statements" within
the meaning of the federal securities laws. Forward-looking
statements are not statements of historical facts, but instead
represent the current expectations of NextEra Energy Partners, LP
(together with its subsidiaries, NEP) regarding future operating
results and other future events, many of which, by their nature,
are inherently uncertain and outside of NEP's control.
Forward-looking statements in this news release include, among
others, statements concerning cash available for distributions
expectations and future operating performance. In some cases, you
can identify the forward-looking statements by words or phrases
such as "will," "may result," "expect," "anticipate," "believe,"
"intend," "plan," "seek," "aim," "potential," "projection,"
"forecast," "predict," "goals," "target," "outlook," "should,"
"would" or similar words or expressions. You should not place undue
reliance on these forward-looking statements, which are not a
guarantee of future performance. The future results of NEP and its
business and financial condition are subject to risks and
uncertainties that could cause NEP's actual results to differ
materially from those expressed or implied in the forward-looking
statements, or may require it to limit or eliminate certain
operations. These risks and uncertainties include, but are not
limited to, the following: NEP has a limited operating history and
its projects include renewable energy projects with a limited
operating history. Such projects may not perform as expected; NEP's
ability to make cash distributions to its unitholders is affected
by wind and solar conditions at its renewable energy projects;
NEP's business, financial condition, results of operations and
prospects can be materially adversely affected by weather
conditions, including, without limitation, the impact of severe
weather; As a result of the acquisition of NET Holdings Management,
LLC (the Texas pipeline business),
NEP's operations and business have substantially changed. NEP's
expansion into the natural gas pipeline industry may not be
successful; NEP may fail to realize expected profitability or
growth, and may incur unanticipated liabilities, as a result of the
Texas pipelines acquisition; NEP
is pursuing the expansion of natural gas pipelines in its portfolio
that will require up-front capital expenditures and expose NEP to
project development risks; NEP's ability to maximize the
productivity of the Texas pipeline
business and to complete potential pipeline expansion projects is
dependent on the continued availability of natural gas production
in the Texas pipelines' areas of
operation; Operation and maintenance of renewable energy projects
involve significant risks that could result in unplanned power
outages, reduced output, personal injury or loss of life; The wind
turbines at some of NEP's projects and some of NextEra Energy
Resources, LLC's (NEER) right of first offer (ROFO) projects are
not generating the amount of energy estimated by their
manufacturers' original power curves, and the manufacturers may not
be able to restore energy capacity at the affected turbines; NEP
depends on the Texas pipelines and
certain of the renewable energy projects in its portfolio for a
substantial portion of its anticipated cash flows; Terrorist or
similar attacks could impact NEP's projects or surrounding areas
and adversely affect its business; NEP's energy production and
pipeline transportation capability may be substantially below its
expectations if severe weather or a natural disaster or
meteorological conditions damage its turbines, solar panels,
pipelines or other equipment or facilities; The ability of NEP to
obtain insurance and the terms of any available insurance coverage
could be materially adversely affected by international, national,
state or local events and company-specific events, as well as the
financial condition of insurers. NEP's insurance coverage does not
insure against all potential risks and it may become subject to
higher insurance premiums; Warranties provided by the suppliers of
equipment for NEP's projects may be limited by the ability of a
supplier to satisfy its warranty obligations, or by the terms of
the warranty, so the warranties may be insufficient to compensate
NEP for its losses; Supplier concentration at certain of NEP's
projects may expose it to significant credit or performance risks;
NEP relies on interconnection and transmission facilities of third
parties to deliver energy from its renewable energy projects and,
if these facilities become unavailable, NEP's wind and solar
projects may not be able to operate or deliver energy; NEP's
business is subject to liabilities and operating restrictions
arising from environmental, health and safety laws and regulations;
NEP's renewable energy projects may be adversely affected by
legislative changes or a failure to comply with applicable energy
regulations; A change in the jurisdictional characterization of
some of the Texas pipeline
entities' assets, or a change in law or regulatory policy, could
result in increased regulation of these assets, which could have
material adverse effect on NEP's business, financial condition,
results of operations and ability to make cash distributions to its
unitholders; NEP may incur significant costs and liabilities as a
result of pipeline integrity management program testing and any
necessary pipeline repair or preventative or remedial measures; The
Texas pipelines' operations could
incur significant costs if the Pipeline and Hazardous Materials
Safety Administration or the Railroad Commission of
Texas adopts more stringent
regulations; PetrĂ³leos Mexicanos
(Pemex) may claim certain immunities under the Foreign Sovereign
Immunities Act and Mexican law, and the Texas pipeline entities' ability to sue or
recover from Pemex for breach of contract may be limited; Portions
of NEP's pipeline systems have been in service for several decades.
There could be unknown events or conditions or increased
maintenance or repair expenses and downtime associated with NEP's
pipelines that could have a material adverse effect on NEP's
business, financial condition, results of operations, liquidity and
ability to make distributions; Natural gas operations are subject
to numerous environmental laws and regulations, compliance with
which may require significant capital expenditures, increase NEP's
cost of operations and affect or limit its business plans, or
expose NEP to liabilities; Natural gas gathering and transmission
activities involve numerous risks that may result in accidents or
otherwise affect the Texas
pipelines' operations; NEP's partnership agreement restricts the
voting rights of unitholders owning 20% or more of its common
units, and under certain circumstances this could be reduced to
10%; NEP does not own all of the land on which the projects in its
portfolio are located and its use and enjoyment of the property may
be adversely affected to the extent that there are any lienholders
or leaseholders that have rights that are superior to NEP's rights
or the BLM suspends its federal rights-of-way grants; NEP is
subject to risks associated with litigation or administrative
proceedings that could materially impact its operations, including,
without limitation, proceedings related to projects it acquires in
the future; NEP's wind projects located in Canada are subject to Canadian domestic
content requirements under their Feed-in-Tariff contracts; NEP's
cross-border operations require NEP to comply with anti-corruption
laws and regulations of the U.S. government and non-U.S.
jurisdictions; NEP is subject to risks associated with its
ownership or acquisition of projects that remain under
construction, which could result in its inability to complete
construction projects on time or at all, and make projects too
expensive to complete or cause the return on an investment to be
less than expected; NEP relies on a limited number of customers and
NEP is exposed to the risk that they are unwilling or unable to
fulfill their contractual obligations to NEP or that they otherwise
terminate their agreements with NEP; NEP may not be able to extend,
renew or replace expiring or terminated power purchase agreements
(PPAs) at favorable rates or on a long-term basis; NEP may be
unable to secure renewals of long-term natural gas transportation
agreements, which could expose its revenues to increased
volatility; If the energy production by or availability of NEP's
U.S. renewable energy projects is less than expected, they may not
be able to satisfy minimum production or availability obligations
under NEP's U.S. Project Entities' PPAs; If third-party pipelines
and other facilities interconnected to the Texas pipelines become partially or fully
unavailable to transport natural gas, NEP's revenues and cash
available for distribution to unitholders could be adversely
affected; NEP's growth strategy depends on locating and acquiring
interests in additional projects consistent with its business
strategy at favorable prices, NextEra Energy Operating Partners,
LP's (NEP OpCo) partnership agreement requires that it distribute
its available cash, which could limit NEP's ability to grow and
make acquisitions; NEP's ability to consummate future acquisitions
will depend on NEP's ability to finance those acquisitions; Lower
prices for other fuel sources may reduce the demand for wind and
solar energy; Reductions in demand for natural gas in the United States or Mexico and low market prices of natural gas
could materially adversely affect the Texas pipelines' operations and cash flows;
Government regulations providing incentives and subsidies for clean
energy could change at any time and such changes may negatively
impact NEP's growth strategy; NEP's growth strategy depends on the
acquisition of projects developed by NextEra Energy, Inc. (NEE) and
third parties, which face risks related to project siting,
financing, construction, permitting, the environment, governmental
approvals and the negotiation of project development agreements;
Acquisitions of existing clean energy projects involve numerous
risks; Renewable energy procurement is subject to U.S. state and
Canadian provincial regulations, with relatively irregular,
infrequent and often competitive procurement windows; NEP may
continue to acquire other sources of clean energy, including,
without limitation, natural gas and nuclear projects, and may
expand to include other types of assets including, without
limitation, transmission projects, and any further acquisition of
non-renewable energy projects, including, without limitation,
transmission projects, may present unforeseen challenges and result
in a competitive disadvantage relative to NEP's more-established
competitors. A failure to successfully integrate such acquisitions
with NEP's then-existing projects as a result of unforeseen
operational difficulties or otherwise, could have a material
adverse effect on NEP's business, financial condition, results of
operations and ability to grow its business and make cash
distributions to its unitholders; NEP faces substantial competition
primarily from regulated utilities, developers, independent power
producers, pension funds and private equity funds for opportunities
in North America; The natural gas
pipeline industry is highly competitive, and increased competitive
pressure could adversely affect NEP's business; Risks Related to
NEP's Financial Activities; NEP may not be able to access sources
of capital on commercially reasonable terms, which would have a
material adverse effect on its ability to consummate future
acquisitions; Restrictions in NEP OpCo's subsidiaries' revolving
credit facility and term loan agreements could adversely affect
NEP's business, financial condition, results of operations and
ability to make cash distributions to its unitholders; NEP's cash
distributions to its unitholders may be reduced as a result of
restrictions on NEP's subsidiaries' cash distributions to NEP under
the terms of their indebtedness; NEP's subsidiaries' substantial
amount of indebtedness may adversely affect NEP's ability to
operate its business and its failure to comply with the terms of
its subsidiaries' indebtedness could have a material adverse effect
on NEP's financial condition; Currency exchange rate fluctuations
may affect NEP's operations; NEP is exposed to risks inherent in
its use of interest rate swaps; NEE exercises substantial influence
over NEP and NEP is highly dependent on NEE and its affiliates;
NEER may lose key employees assigned to manage the Texas pipelines; NEP is highly dependent on
credit support from NEE and its affiliates. NEP's subsidiaries may
default under contracts or become subject to cash sweeps if credit
support is terminated, if NEE or its affiliates fail to honor their
obligations under credit support arrangements, or if NEE or another
credit support provider ceases to satisfy creditworthiness
requirements, and NEP will be required in certain circumstances to
reimburse NEE for draws that are made on credit support; NEER or
one of its affiliates is permitted to borrow funds received by
NEP's subsidiaries, including, without limitation, NEP OpCo, as
partial consideration for its obligation to provide credit support
to NEP, and NEER will use these funds for its own account without
paying additional consideration to NEP and is obligated to return
these funds only as needed to cover project costs and distributions
or as demanded by NEP OpCo. NEP's financial condition and ability
to make distributions to its unitholders, as well as its ability to
grow distributions in the future, is highly dependent on NEER's
performance of its obligations to return all or a portion of these
funds; NEP may not be able to consummate future acquisitions from
NEER or from third parties; NextEra Energy Partners GP, Inc. (NEP
GP) and its affiliates, including, without limitation, NEE, have
conflicts of interest with NEP and limited duties to NEP and its
unitholders, and they may favor their own interests to the
detriment of NEP and holders of NEP common units; Common units are
subject to NEP GP's limited call right; NEE and other affiliates of
NEP GP are not restricted in their ability to compete with NEP; NEP
may be unable to terminate the Management Services Agreement among
NEP, NextEra Energy Management Partners, LP (NEE Management), NEP
OpCo and NEP GP (MSA); If NEE Management terminates the MSA, NEER
terminates the management sub-contract or either of them defaults
in the performance of its obligations thereunder, NEP may be unable
to contract with a substitute service provider on similar terms, or
at all; NEP's arrangements with NEE limit NEE's liability, and NEP
has agreed to indemnify NEE against claims that it may face in
connection with such arrangements, which may lead NEE to assume
greater risks when making decisions relating to NEP than it
otherwise would if acting solely for its own account; The credit
and business risk profiles of NEP GP and its owner, NEE, could
adversely affect any NEP credit ratings and risk profile, which
could increase NEP's borrowing costs or hinder NEP's ability to
raise capital; NEP's ability to make distributions to its
unitholders depends on the ability of NEP OpCo to make cash
distributions to its limited partners; If NEP incurs material tax
liabilities, NEP's distributions to its unitholders may be reduced,
without any corresponding reduction in the amount of the IDR fee;
Holders of NEP's common units have limited voting rights and are
not entitled to elect NEP's general partner or NEP GP's directors;
NEP's partnership agreement restricts the remedies available to
holders of NEP's common units for actions taken by NEP GP that
might otherwise constitute breaches of fiduciary duties; NEP's
partnership agreement replaces NEP GP's fiduciary duties to holders
of its common units with contractual standards governing its
duties; Even if holders of NEP's common units are dissatisfied,
they cannot initially remove NEP GP without NEE's consent; NEE's
interest in NEP GP's and the control of NEP GP may be transferred
to a third party without unitholder consent; The IDR fee may be
transferred to a third party without unitholder consent; NEP may
issue additional units without unitholder approval, which would
dilute unitholder interests; Reimbursements and fees owed to NEP GP
and its affiliates for services provided to NEP or on NEP's behalf
will reduce cash distributions to or from NEP OpCo and from NEP to
NEP's unitholders, and the amount and timing of such reimbursements
and fees will be determined by NEP GP and there are no limits on
the amount that NEP OpCo may be required to pay; Discretion in
establishing cash reserves by NextEra Energy Operating Partners GP,
LLC may reduce the amount of cash distributions to unitholders;
While NEP's partnership agreement requires NEP to distribute its
available cash, NEP's partnership agreement, including, without
limitation, provisions requiring NEP to make cash distributions,
may be amended; NEP OpCo can borrow money to pay distributions,
which would reduce the amount of credit available to operate NEP's
business; Increases in interest rates could adversely impact the
price of NEP's common units, NEP's ability to issue equity or incur
debt for acquisitions or other purposes and NEP's ability to make
cash distributions to its unitholders; The price of NEP's common
units may fluctuate significantly and unitholders could lose all or
part of their investment and a market that will provide unitholders
with adequate liquidity may not develop; The liability of holders
of NEP's common units, which represent limited partnership
interests in NEP, may not be limited if a court finds that
unitholder action constitutes control of NEP's business;
Unitholders may have liability to repay distributions that were
wrongfully distributed to them; Except in limited circumstances,
NEP GP has the power and authority to conduct NEP's business
without unitholder approval; Contracts between NEP, on the one
hand, and NEP GP and its affiliates, on the other hand, will not be
the result of arm's-length negotiations; Unitholders have no right
to enforce the obligations of NEP GP and its affiliates under
agreements with NEP; NEP GP decides whether to retain separate
counsel, accountants or others to perform services for NEP; The New
York Stock Exchange does not require a publicly traded limited
partnership like NEP to comply with certain of its corporate
governance requirements; NEP's future tax liability may be greater
than expected if NEP does not generate NOLs sufficient to offset
taxable income or if tax authorities challenge certain of NEP's tax
positions; NEP's ability to use NOLs to offset future income may be
limited; NEP will not have complete control over NEP's tax
decisions; A valuation allowance may be required for NEP's deferred
tax assets; Distributions to unitholders may be taxable as
dividends; Unitholders who are not resident in Canada may be subject to Canadian tax on gains
from the sale of common units if NEP's common units derive more
than 50% of their value from Canadian real property at any time.
NEP discusses these and other risks and uncertainties in its annual
report on Form 10-K for the year ended December 31, 2015 and other SEC filings, and this
news release should be read in conjunction with such SEC filings
made through the date of this news release. The forward-looking
statements made in this news release are made only as of the date
of this news release and NEP undertakes no obligation to update any
forward-looking statements.
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SOURCE NextEra Energy Partners, LP