the Company’s securities still outstanding, as its investment thesis is contingent on a clean balance sheet post-closing. If the agreement with I Squared is not approved, Atlantic Power would remain an independent public company and the Preferred shares would remain outstanding as perpetual, cumulative securities. We expect they would continue to carry the lowest credit rating of our rated securities. As our existing PPAs expire, all our securities will face a more challenging credit environment.
We do not expect there will be another opportunity for Preferred shareholders to cash out at this price. Given the risks of holding under these alternative scenarios, we recommend that Preferred shareholders take this opportunity to realize significant value and redeploy their cash elsewhere.
6.
Is there any chance that the price offered for any of the securities will be raised?
The prices in the I Squared Capital offer for each of the securities of Atlantic Power are set and final. These prices were negotiated with I Squared Capital. We negotiated down to pennies. If this deal fails, the prices of all our securities may revert to significantly lower trading ranges.
If we received an unsolicited proposal from another bidder that is or would be reasonably expected to lead to a superior proposal, we would be permitted to engage with that party, subject to a right to match and termination fee in favor of I Squared Capital. We have not, however, received any approaches from potential competing bidders.
Each of the four securities classes must receive the approval of at least 66 2/3% of shares (or bonds) voted, or the transaction fails. As Benjamin Franklin said, we’ll hang together or we’ll hang separately.
Given current markets and based on our expectations for both values and risks going forward as an independent company, the management and the Board strongly support voting “FOR” the transaction, allowing our securityholders the opportunity to receive a total cash payout and to redeploy proceeds elsewhere.
The past six years have seen a decline in power prices that we would not have projected. Although the future is unknowable, we believe that the right risk-adjusted decision is to sell at US$3.03. If this transaction is not approved by our securityholders, we can still direct our cash flow toward getting to net debt neutral or, in the alternative, toward share repurchases. Perhaps markets will reward our profile more than they have in the past six years. In another context, however, Oscar Wilde warned about a triumph of hope over experience.
In the six years that I have been CEO, we focused first on fixing, then, as best we could, trying to grow the business, all the while being open to selling the Company at a fair price. We have been patient and dogged in seeking the best price for the business we could obtain. The agreement with I Squared Capital represents the best opportunity we have had to get all our securityholders fair value for their positions. Thinking and acting like the fellow owners we are and trying to serve the interests of all our securityholders, we enthusiastically encourage you to vote “FOR” the transaction.
In closing, I would like to thank all of our securityholders for their support, loyalty, and patience.
/s/ James J. Moore, Jr.
James J. Moore, Jr.
President and Chief Executive Officer
March 1, 2021
If you have questions about how to vote or require assistance voting, please contact our proxy solicitation agent, Kingsdale Advisors, at 1-866-229-8263 or contactus@kingsdaleadvisors.com. Your vote is important regardless of the number of shares you own. The voting deadlines and virtual meeting dates are as follows:
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Security
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Voting Deadline
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Meeting Date
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Common shares
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10 a.m. Monday, April 5, 2021
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Wednesday, April 7, 2021
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Preferred shares
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11 a.m. Monday, April 5, 2021
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Wednesday, April 7, 2021
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Convertible debentures
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10 a.m. Tuesday, March 16, 2021
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Thursday, March 18, 2021
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