Alterra guides for lower profits on stake reduction in Icelandic unit

Alterra Power Corp (TSE:AXY) on Friday revised downwards its 2017 and 2018 profit and revenue guidance in view of an upcoming bond settlement that will cut its stake in Icelandic geothermal business HS Orka hf to 53.9%.

The Canadian renewables company, which currently owns 66.6% in HS Orka, said in a press release that its subsidiary Magma Energy Sweden has entered into an agreement for a final settlement of its USD-71.3-million (EUR 69.2m) non-recourse bond that matured on July 16. The collateral under the bond is shares of HS Orka hf representing a 12.7% ownership stake. The settlement will see this transferred to the bondholder, a consortium of Icelandic pension funds, Fagfjarfestasjoourinn ORK.

The agreement is expected to be completed within a 60-day period following the satisfaction of certain conditions. After that, Alterra’s interest in HS Orka hf will shrink to 53.9% and it will continue to manage the Icelandic company and consolidate its financial results.

In regard to the change in ownership, Alterra now forecasts adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for 2017 of USD 47.2 million, instead of USD 49.2 million, while revenues are seen to be USD 4 million lower than previously expected, at USD 86.5 million. Generation for 2017 is seen to remain almost unchanged at 1,526 GWh, against 1,595 GWh.

For 2018, Alterra lowered its guidance for adjusted EBITDA to USD 52 million from USD 56.6 million, while revenue projections were downgraded to USD 92.2 million from USD 100.7 million. Generation from its renewable power plants is anticipated to stand at 1,886 GWh, as compared to the 2,046 expected previously.

Alterra Power manages 825 MW of renewable energy capacity in Canada, the US and Iceland, including wind, geothermal and solar parks. Following the deal, it will own a share corresponding to 363 MW of the total.

(USD 1.0 = EUR 0.851)

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