Author Topic: AT - Atlantic Power Corp  (Read 70208 times)

petec

  • Hero Member
  • *****
  • Posts: 2559
Re: AT - Atlantic Power Corp
« Reply #210 on: August 14, 2020, 10:23:32 AM »
Yeah - would be interesting if they acquired something - might actually move the dial.

I would love to see a merger between Atlantic Power and Polaris Infrastructure. Both are super cheap on cash flow and underlevered vs peers. Atlantic Power needs places to invest it's free cash flow for the next 5 years and Polaris could use it's lower cost of capital. It would also remove the PPA cliff that keeps ATP at a discount and would given the combined company lots of time to replace that cash flow by 2025 with investments. Also with the combo of hydro/geothermal and a much bigger market cap and liquidity, it all of a sudden becomes investable for ESG investors.

Jim mentioned the focus was on North America but this deal makes so much sense, I think the combined valuation rerate would make it worth the risk.

I'm long both, FWIW.

Much as I like the idea (and am long both) Polaris has plenty of cash flow, most of which come from a PPA expiring in 2028 IIRC. Iím not sure the deal delivers all the benefits you list.
FFH MSFT BRK BAM ATCO LNG IHG TFG


SafetyinNumbers

  • Hero Member
  • *****
  • Posts: 718
Re: AT - Atlantic Power Corp
« Reply #211 on: August 14, 2020, 10:53:20 AM »
Yeah - would be interesting if they acquired something - might actually move the dial.

I would love to see a merger between Atlantic Power and Polaris Infrastructure. Both are super cheap on cash flow and underlevered vs peers. Atlantic Power needs places to invest it's free cash flow for the next 5 years and Polaris could use it's lower cost of capital. It would also remove the PPA cliff that keeps ATP at a discount and would given the combined company lots of time to replace that cash flow by 2025 with investments. Also with the combo of hydro/geothermal and a much bigger market cap and liquidity, it all of a sudden becomes investable for ESG investors.

Jim mentioned the focus was on North America but this deal makes so much sense, I think the combined valuation rerate would make it worth the risk.

I'm long both, FWIW.

Much as I like the idea (and am long both) Polaris has plenty of cash flow, most of which come from a PPA expiring in 2028 IIRC. Iím not sure the deal delivers all the benefits you list.

I know they have plenty of cash flow but some of their funding sources are more expensive because they are project based. By combining with Atlantic power that could result in cheaper corporate financing which is especially attractive to finance high return projects in South America.

No question both are really cheap but the narratives surrounding them keep the valuations compressed. It's a catalyst to unlock value and to take advantage of lower cost of capital from being a larger company and being able to get exposure to new shareholders like passive ones that come through being more liquid and having a bigger market cap.

StubbleJumper

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1462
Re: AT - Atlantic Power Corp
« Reply #212 on: August 17, 2020, 06:57:19 AM »

Rolling blackouts in California:

https://www.kcra.com/article/california-blackouts-2020-pge-heat-wave-august-15/33614032


Maybe it will become more attractive to renew the PPA for the Oxnard Generating station, given the troubles in California?  If you are expand your wind industry, you kind of need some form of back-up.


SJ

Philbert77

  • Jr. Member
  • **
  • Posts: 81
Re: AT - Atlantic Power Corp
« Reply #213 on: September 02, 2020, 06:18:42 AM »


Maybe it will become more attractive to renew the PPA for the Oxnard Generating station, given the troubles in California?  If you are expand your wind industry, you kind of need some form of back-up.


SJ

Looks like you were on to something, SJ.

https://investors.atlanticpower.com/2020-09-02-Atlantic-Power-Corporation-Provides-Update-on-Cadillac-and-Oxnard-Plants

StubbleJumper

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1462
Re: AT - Atlantic Power Corp
« Reply #214 on: September 02, 2020, 06:53:17 AM »


Maybe it will become more attractive to renew the PPA for the Oxnard Generating station, given the troubles in California?  If you are expand your wind industry, you kind of need some form of back-up.


SJ

Looks like you were on to something, SJ.

https://investors.atlanticpower.com/2020-09-02-Atlantic-Power-Corporation-Provides-Update-on-Cadillac-and-Oxnard-Plants


Good stuff!  Too bad it's only a one-year deal.  But, better than a kick in the pants, I guess.


SJ

ander

  • Full Member
  • ***
  • Posts: 208
Re: AT - Atlantic Power Corp
« Reply #215 on: September 02, 2020, 07:11:02 AM »
Any guess as to "modest" EBITDA contribution level?

They did $2 million a couple of years ago.

SafetyinNumbers

  • Hero Member
  • *****
  • Posts: 718
Re: AT - Atlantic Power Corp
« Reply #216 on: September 02, 2020, 07:25:03 AM »
$2m is pretty modest.

More cash to buy stock back with though.

ander

  • Full Member
  • ***
  • Posts: 208
Re: AT - Atlantic Power Corp
« Reply #217 on: September 02, 2020, 08:51:12 AM »
Wonder what the dynamic is and why they only got 1 year. I guess they don't have much negotiating leverage. Maybe the idea is AT wants to keep rolling for 1 year until they have more leverage because there's an even higher need for non-renewable energy so they can get a better deal.

StubbleJumper

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1462
Re: AT - Atlantic Power Corp
« Reply #218 on: September 02, 2020, 09:03:45 AM »
Wonder what the dynamic is and why they only got 1 year. I guess they don't have much negotiating leverage. Maybe the idea is AT wants to keep rolling for 1 year until they have more leverage because there's an even higher need for non-renewable energy so they can get a better deal.


My guess is that it's the other way around.  The power distributor in California probably desperately needs some standby capacity (the politics must be intense right now), but is likely looking for a bigger and better solution than a shitty old 49 MW NG generating station.  If it takes a couple of years to find the bigger and better solution, then at least the owners of the little, outdated 50 MW stations might get a few bucks for a few years.

Squeeze whatever you can from those old assets...


SJ