ALGONQUIN POWER & UTILITIES CORP. $8.77 (Toronto symbol AQN; Shares outstanding: 208.0 million; Market cap: $2.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.4%; www.algonquinpower.com) has agreed to buy Park Water Company for $327 million U.S. Algonquin will make the purchase through its Liberty Utilities subsidiary.
Park Water owns and operates three regulated water utilities that produce, treat, store, distribute and sell water in southern California and western Montana. The three utilities collectively serve 74,000 customers and have more than 1,000 miles of distribution pipelines.
Algonquin is also buying the Odell project, a 200-megawatt wind farm in the U.S. that’s currently under construction. The project, which spans Minnesota’s Cottonwood, Jackson, Martin and Watonwan Counties, will cost an estimated $313.5 million U.S. to complete.
Odell has a 20-year power purchase agreement with a subsidiary of Xcel Energy, a diversified utility operating in the U.S. Midwest. That cuts its risk. To help pay for the project, Algonquin is selling 16,9 million common shares at $8.90 each to raise $150 million. In conjunction with the share issue, Emera Inc., a recommendation of The Successful Investor, will buy 7.9 million shares from Algonquin for $70 million. That will let Emera maintain its 24.1% interest in Algonquin.
Algonquin is a buy.
