Algonquin Power & Utilities Corp. announced that it has priced the previously announced (i) underwritten public offering in the United States (the “U.S. Offering”) of US$750 million aggregate principal amount of 4.75% fixed-to-fixed reset rate junior subordinated notes series 2022-B due January 18, 2082 (the “U.S. Notes”); and (ii) underwritten public offering in Canada (the “Canadian Offering” and, together with the U.S. Offering, the “Offerings”) of C$400 million (approximately US$320 million) aggregate principal amount of 5.25% fixed-to-fixed reset rate junior subordinated notes series 2022-A due January 18, 2082 (the “Canadian Notes” and, together with the U.S. Notes, the “Notes”). Concurrent with the pricing of the Offerings, the Company entered into a cross currency interest rate swap, coterminous with the Canadian Notes, to convert the Canadian dollar denominated proceeds from the Canadian Offering into U.S. dollars, resulting in an effective interest rate to the Company of approximately 5.08% throughout the initial fixed-rate period of the Canadian Notes. The Offerings are expected to close on or about January 18, 2022, subject to customary closing conditions.
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AQN intends to use the net proceeds of the Offerings to partially finance the Company’s previously announced acquisition of Kentucky Power Company and AEP Kentucky Transmission Company, Inc. (the “Kentucky Power Acquisition”), provided that, in the short-term, prior to the closing of the Kentucky Power Acquisition, the Company expects to use the net proceeds of the Offerings to reduce amounts outstanding under existing credit facilities of the Company and its subsidiaries.
The U.S. Offering is being made to the public in the United States pursuant to a prospectus supplement filed under the Company’s base shelf prospectus dated November 18, 2021 (the “Base Shelf Prospectus”), which will form part of the Company’s effective registration statement filed with the U.S. Securities and Exchange Commission (“SEC”). The Canadian Offering is being made to the public in each of the provinces and territories of Canada pursuant to a prospectus supplement filed under the Base Shelf Prospectus.
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The joint book-running managers for the U.S. Offering are BofA Securities and Wells Fargo Securities and the lead underwriters for the Canadian Offering are RBC Capital Markets and TD Securities. The terms of the U.S. Notes will be set forth in a final prospectus supplement to be filed by AQN under AQN’s issuer profile on SEDAR and with the SEC and the terms of the Canadian Notes will be set forth in a final prospectus supplement to be filed by AQN under AQN’s issuer profile on SEDAR . The Base Shelf Prospectus and the related prospectus supplements will contain important information about the U.S. Notes and the Canadian Notes, respectively. Investors should read the Base Shelf Prospectus and the applicable prospectus supplement before making an investment decision.
The U.S. Notes will not be qualified for distribution to purchasers in Canada, or to residents of Canada, under the securities laws of any province or territory of Canada. The U.S. Notes may not be, directly or indirectly, offered, sold or delivered in Canada or to residents of Canada.
The Canadian Notes will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States or to U.S. persons without registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act of 1933 and applicable securities laws.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described in this news release, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
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