Author Topic: AT - Atlantic Power Corp  (Read 62904 times)

ander

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Re: AT - Atlantic Power Corp
« Reply #200 on: August 10, 2020, 10:26:23 AM »
Zero bullishness on renewals of expiring PPA assets for the most part.

Note attached.

Thx for sharing!

Note says "We would expect a buyer to be able to realize overhead cost synergies and utilize the over ~$500 million of NOLs (as at the end of 2019)."

I typically assume that NOLs cannot be used in most change of control transactions. I know there are exceptions. Anyone do any work to substantiate that an acquirer of AT would be able to use their NOLs?

And this is from Q1 '17 Transcript:
Rupert M. Merer - National Bank Financial, Inc., Research Division - Analyst
In your presentation, you have some disclosure on the NOLs and the expiry schedule, so you've got about $619 million there. It says some of the
NOLs are subject to limitations on their use. But just wondering what options you may be considering to monetize those NOLs or what may be
available to you?
James J. Moore - Atlantic Power Corporation - CEO, President and Director
They are harder to monetize than they were, I forget how many years back, but there's been tightening up on people's ability to sell NOLs or to
monetize them externally. We're primarily looking at our NOLs as use against internal operating cash. Anything else, Terry?
Terrence Ronan - Atlantic Power Corporation - CFO, Principal Financial & Accounting Officer, EVP and Corporate Secretary
No, I think we're looking to utilize against income in the future.
Rupert M. Merer - National Bank Financial, Inc., Research Division - Analyst
Okay. So it could be supportive on the economics on any growth projects in the future?
Terrence Ronan - Atlantic Power Corporation - CFO, Principal Financial & Accounting Officer, EVP and Corporate Secretary
That's right.
« Last Edit: August 10, 2020, 10:35:32 AM by ander »


bizaro86

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Re: AT - Atlantic Power Corp
« Reply #201 on: August 10, 2020, 04:20:45 PM »
I agree that the hydro is the value here. I have a nibble worth of the prefs, and am thinking about adding the common. I do have a question regarding the Mamquam option. Their disclosure (and disclosure from previous owner Transcanada power) says BC Hydro has the option to buy (at "fair market value") or extend the PPA every five years.

Does anyone know how that "or" works? Basically, my question is does BC Hydro have to either buy them out or extend the PPA? Or could they choose to not exercise either option and just let it expire in 2027? That would give Atlantic a lot less leverage, as BC Hydro is the only potential buyer here.

In the first scenario, I suspect the PPA gets renewed at the same terms. In the second, I think it gets renewed at much lower contribution margin.

valuedontlie

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Re: AT - Atlantic Power Corp
« Reply #202 on: August 11, 2020, 05:44:39 AM »
they are starting to get pretty aggressive with the buybacks lately and even indicated another potential SIB...

a very interesting way to play AT would be to own the $2.50 strike Jan2021 calls for $0.05 (!!!)... i purchased a few contracts yesterday at this price... given the stability of share prices over the past 5-6 years, it seems like almost no volatility is priced into this...

Philbert77

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StubbleJumper

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Re: AT - Atlantic Power Corp
« Reply #204 on: August 13, 2020, 06:48:40 AM »

StubbleJumper

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Re: AT - Atlantic Power Corp
« Reply #205 on: August 13, 2020, 06:55:29 AM »
they are starting to get pretty aggressive with the buybacks lately and even indicated another potential SIB...

a very interesting way to play AT would be to own the $2.50 strike Jan2021 calls for $0.05 (!!!)... i purchased a few contracts yesterday at this price... given the stability of share prices over the past 5-6 years, it seems like almost no volatility is priced into this...


A belated note: I think that you have found an asymmetric bet with the OTM options.  Those are generally good opportunities, but the challenge will be to get enough volume to make it worthwhile.  A "good" outcome would be a share price of perhaps $3 at Christmas, which would net $45/contract minus commissions.  But you'd probably want to find 100 or 200 contracts to make it worthwhile, and you'd want to use a broker that doesn't bend you over too badly on option commissions. 

Interesting idea.  Thanks for sharing.


SJ


ander

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Re: AT - Atlantic Power Corp
« Reply #206 on: August 13, 2020, 07:23:54 AM »
So what's this about?

https://www.sec.gov/Archives/edgar/data/1419242/000110465920093988/tm2027239-1_s3.htm


Looks like a shelf-prospectus to me....


SJ

They did one in December 2017. They last for 3 years I believe. So just refiling, but it's possible that they acquire something very attractive as CEO alluded to on earnings call, but did not pull the trigger as he said.

"We've been very active out looking at things, but very disciplined. We've looked at a lot of interesting things this year. We've looked at one deal that could be company-transforming, but we didn't pull the trigger on it."

Philbert77

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Re: AT - Atlantic Power Corp
« Reply #207 on: August 13, 2020, 11:46:00 AM »
Yeah - would be interesting if they acquired something - might actually move the dial.

StubbleJumper

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Re: AT - Atlantic Power Corp
« Reply #208 on: August 13, 2020, 12:04:14 PM »
Yeah - would be interesting if they acquired something - might actually move the dial.


To make a large move, they'd probably need to get the covenants waived on their existing term-loan (interest coverage and leverage ratio).  On 2 or 3 occasions, they have renegotiated the interest rate and other parameters of that loan, so it's quite possible that the creditor might agree.  But, it does represent a bit of a constraint.


SJ

SafetyinNumbers

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Re: AT - Atlantic Power Corp
« Reply #209 on: August 13, 2020, 12:04:44 PM »
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.