Altius Renewable Royalties Announces New Operating Royalty Investment and CDN$35 million Bought Deal Financing
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.
Altius Renewable Royalties Corp. (TSX: ARR) (OTCQX:ATRWF) (“ARR”, the “Corporation”, or the “Company”) reports that Great Bay Renewables II (“Great Bay”), its subsidiary that is jointly-controlled with funds managed by affiliates of Apollo Global Management (“Apollo”), has entered into a US$46 million royalty investment agreement with Longroad Energy (“Longroad”) to support Longroad’s acquisition of the 70 MWac Titan Solar project in Imperial County, CA (“Titan”).
Titan represents Great Bay’s first royalty investment in California. Longroad is a top-tier developer, owner, and operator of renewable energy projects that owns 1.5 GW of wind and solar projects across the US and operates and manages a total of 3.5GW on behalf of itself and third parties. Great Bay also holds a royalty on Longroad’s operating Prospero 2 solar project in Texas.
As part of the Titan acquisition, Longroad is buying down an existing hedge associated with the project such that starting in 2026 approximately 70% of the expected revenues will be market-based with the remainder relating to contracted capacity payments and renewable energy credits.
The royalty investment has been structured using royalty rates that vary over time and achieve Great Bay’s investment hurdles while optimizing Longroad’s project level cash flow profile. Great Bay expects its royalty on Titan to contribute approximately US$3 - $3.5 million to its revenues in 2023, and to average US$4.5-$5 million annually over its first 10 years.
ARR will fund its 50% share of the royalty investment with an equivalent amount funded by Apollo, its Great Bay level joint venture partner.
Frank Getman, CEO of Great Bay, commented, “Longroad is one of the best in the business. We are pleased to close our second royalty investment with Longroad, particularly as this investment proves a new use case for the adoption of our royalty financing, namely to support third-party project acquisitions. Our flexible, partner-like capital is increasingly proving itself to be competitive with other available sources of capital in the market today, with now approximately US$300 million in royalty investment agreements signed since inception.”
“Longroad is excited to once again work with Great Bay by using its innovative royalty financings part of our capital structure”, said Pete Keel, Longroad’s CFO. “Great Bay’s flexible, partner-like investment approach is a great fit with our business and we look forward to working with its team again in the future as we continue to grow our operational portfolio.”
Brian Dalton, CEO of ARR, commented, “Our Great Bay joint venture continues to steadily build upon its first mover advantage in bringing royalty financing to the renewable energy natural resource sector and to grow and diversify its portfolio of cash-flowing royalties. The new power region and use case attributes of the Titan royalty financing further support our outlook regarding the growing size of our potential addressable market as we continue to work to rapidly scale up the business. Today’s concurrent bought-deal equity financing announcement further supports this ambition with additional deployment-focused cash liquidity.”
CDN$35 Million Bought Deal Financing
The company is also pleased to announce that it has entered into an agreement with a syndicate of underwriters led by TD Securities Inc. (the “Lead Underwriter” and collectively the “Underwriters”) pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 3,900,000 common shares of the Company (the “Shares”) at a price of CDN$9.00 per Share (the “Issue Price”) for aggregate gross proceeds of approximately CDN$35 million (the “Offering”).
The company has granted the Underwriters an over-allotment option (the “Over-Allotment Option”) to purchase up to an additional 585,000 Shares at the Issue Price, exercisable in whole or in part at any time up to 30 days after the closing of the Offering.
Altius Minerals Corporation (“Altius”) is participating in the Offering and has committed to purchase approximately CDN$21 million in Shares at the Issue Price to allow Altius to maintain its approximate 59% ownership of the Company at closing of the Offering.
The Company intends to use the net proceeds from the Offering to fund its 50% of the acquisition price for Great Bay’s Titan royalty investment and for general corporate purposes.
The Offering is expected to close on or about December 8, 2022 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange (the “TSX”).
The securities to be issued under the Offering will be offered by way of prospectus supplement that will be filed in each of the provinces and territories of Canada under the Company's base shelf prospectus dated March 1,2022 and may be offered for sale in the United States to Qualified Institutional Buyers (as defined in Rule 144A under the United States Securities Act of 1933, as amended (the "1933 Act") by way of private placement pursuant to an exemption from the registration requirements of the 1933 Act.
The securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
ARR is renewable energy royalty company whose business is to provide long-term royalty level investment capital to renewable power developers, operators, and originators. ARR has 32 renewable energy royalties representing 735 MW of renewable power on operating projects and an additional approximately 6 GW on projects in development phase, across several regional power pools in the U.S. The Corporation also expects future royalties from Great Bay’s investments IN Bluestar Energy Capital and Hodson Energy. The Corporation combines industry expertise with innovative, partner-focused solutions to further the growth of the renewable energy sector as it fulfills its critical role in enabling the global energy transition.
This news release contains forward‐looking information as defined under Canadian securities laws which reflect management’s current expectations. Some of the specific forward-looking statements contained herein include, but are nonlimited to, the projected revenues on Great Bay’s royalty on Titan, statements with respect to the growth of the addressable market, the expected closing date of the Offering and the intended use of proceeds. The statements are based on reasonable assumptions and expectations of management and ARR provides assurance that actual events will meet management's expectations. In certain cases, forward‐looking information may be identified by such terms as "anticipates", "believes", "could", "estimates", "expects", "may", "shall", "will", or "would". Although ARR believes the expectations expressed in such forward‐looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those projected. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Readers should nonplace undue reliance on forward-looking information. ARR does not undertake to update any forward-looking information contained herein except in accordance with securities regulation. A number of factors could cause actual results to differ, possibly materially, from the results discussed in the forward-looking statements. Additional information about risks and uncertainties is contained in the filings of ARR under the Company’s profile at www.sedar.com.
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