Algonquin Power & Utilities Corp (AQN) has declared its intention to initiate the process of selling the Renewable Energy Group. The company's Board of Directors, working alongside their independent financial advisor, undertook an evaluation of their operations over the preceding months, with the aim of enhancing value for their shareholders.
According to statements from Chris Huskilson, who serves as the Interim Chief Executive Officer of AQN, he mentioned that the thorough evaluation of the business landscape led to the recognition of two strong entities within AQN. These entities comprise a well-situated regulated utility enterprise featuring diversified assets in favourable jurisdictions and a competitive renewables arm with substantial scale and strong assets. However, Huskilson shared the opinion that the complete value of the assets remains untapped under the existing configuration. Consequently, the company has concluded that channeling efforts towards advancing the regulated business while simultaneously pursuing the divestiture of the renewables business offers the optimal trajectory for AQN.
Huskilson further elaborated that there exists a strong belief within AQN that the planned sale will effectively unlock the inherent value of the company as a purely regulated utility entity. This strategic move is expected to streamline the organizational structure and empower the company to concentrate on regulated investment opportunities that entail lower risk. This approach is anticipated to lead to heightened operational efficiency and a greater emphasis on capital discipline. The proceeds obtained from the renewables transaction are anticipated to play a pivotal role in debt reduction and funding share buybacks. Alongside these objectives, the company aims to fortify the existing dividend, decrease the cost of capital, and uphold the BBB credit rating in the investment grade category. Concurrently, AQN will actively endeavor to maximize the potential of the renewables business and position it under new ownership capable of steering its long-term prosperity throughout the ongoing energy transition.
