ARR announces that its Great Bay subsidiary has entered into a $46 million royalty investment agreement with Longroad Energy.
An acquisition agreement
ARR (Altius Renewable Royalty) announces that its subsidiary Great Bay, jointly controlled with funds managed by Apollo, has entered into an investment agreement. This agreement is to support Longroad’s acquisition of the 70MWac Titan solar project in California. In addition, the company entered into an agreement with a syndicate of underwriters for a financing of up to $35 million Canadian.
Great Bay also holds a royalty on Longroad’s Prospero 2 solar project in Texas. Great Bay expects its Titan royalty to contribute approximately $3 to $3.5 million to its revenues in 2023. This fee will amount to at an average of $4.5 to $5 million per year over its first 10 years.
As part of the Titan acquisition, Longroad is buying back existing coverage associated with the project. Thus, from 2026 onwards, approximately 70% of expected revenues will be based on the market. Indeed, the remainder of the revenue remains related to contracted capacity payments and renewable energy credits.
In addition, ARR will fund its 50% share of the investment in the royalties. Its partner, Apollo, will fund an equivalent amount. Pete Keel, Longroad’s CFO, states:
“Longroad is excited to work with Great Bay again using their innovative royalty financing as part of our capital structure. Great Bay’s flexible, partner-like investment approach is a perfect fit for our business and we look forward to working with its team again in the future as we continue to grow our operating portfolio.”
Innovative financing
ARR also announces that it has entered into an agreement with a syndicate of underwriters led by TD Securities Inc. and Cormark Securities Inc. Accordingly, the underwriters have agreed to purchase 3,900,000 common shares of the Company at a price of $9.00 CAD per share. This represents a total investment of $35 million Canadian.
In addition, ARR has granted the Underwriters an over-allotment option. This one aims at the acquisition of up to 585,000 additional shares at the issue price. This offer is exercisable in whole or in part. This is valid at any time up to 30 days after the closing of the offer.
Altius Minerals Corporation is participating in the offering. As such, the company has committed to purchase approximately C$21 million of shares at the issue price. This acquisition allows Altius to retain its approximate 59% stake in the company at the close of the offering. The net proceeds of the Offer will enable the Company to finance its 50% of the acquisition price.
The offering will close on December 8, 2022. The securities are offered for sale in the United States to institutional buyers. These are not subject to registration under U.S. law, so they cannot be sold or transferred.
