Altius Renewable Royalties Announces New US$40 Million Funding for US Battery Storage Developer Solar Plus with a 1.8 GW Pipeline
ST. JOHN’S, Newfoundland and Labrador–(BUSINESS WIRE)–Altius Renewable Royalties Corporation (“ARR”) (ARR: TSX, ATRWF: OTCQX) is pleased to announce that its jointly controlled subsidiary, Great Bay Renewables LLC (“Great Bay”), has entered into a transaction with the United States energy developer, Hodson Energy, LLC (“Hodson”), to obtain future royalties related to Hodson’s portfolio of solar storage and battery development projects. Great Bay is jointly controlled by ARR and certain funds managed by subsidiaries of Apollo Global Management, Inc.
New York-based Hodson is committing its entire portfolio of solar and storage projects located primarily in the U.S. Mid-Atlantic region and any additional projects added in the future to this new royalty investment structure. with Great Bay. Great Bay will receive a royalty on all projects developed and sold by Hodson until a minimum total return threshold is met. The target IRR threshold is consistent with the upper end of the base hurdle rate range of 8-12% previously disclosed by Great Bay before taking into account potential realizations in the value of longer-term options.
Terms of trade
The US$40 million royalty investment in Hodson will be invested in installments over approximately the next three years as Hodson completes certain milestones in the progress of the project, with an initial investment at closing of US$14 million. U.S. dollars. Approximately US$9.8 million of the initial investment will be used to retire an existing development loan facility and acquire new projects, resulting in a total portfolio of 1.8 GWac after Great Bay’s investment .
As individual pipeline projects are developed, Great Bay will receive a 3% royalty on each project’s gross revenues. This will continue until a minimum target valuation threshold of the total royalty portfolio is reached. Once created, the individual royalties will apply for the lifetime of the respective projects. In addition to royalties, Great Bay has the option of receiving a portion of the project’s sales proceeds. Any cash Great Bay chooses to receive under this option would be included in the target return. Great Bay also has the option to invest an additional $20 million in royalty funding in the future.
As part of the transaction, Great Bay also received warrants to purchase a minority stake in Hodson common stock.
Commenting on the new partnership with Hodson, Frank Getman, CEO of Great Bay, said: “We are delighted to add another high quality developer to our developer royalty program. This is another example of Great Bay’s flexible, partner-like capital backing a quality project developer as the broader renewable energy sector faces the current challenges of interconnection delays, inflation, higher interest rates and supply chain issues. These challenges create a significant opportunity for our patient long-term investment offering,” added Getman. “It’s ‘go-time’ right now for Great Bay.”
RS Gill, Founder and CEO of Hodson, added: “We are delighted to partner with Great Bay to help us develop our existing pipeline of high quality projects and enter a new phase of growth. In addition to pursuing previously identified and new opportunities in PJM and MISO territories, we now have the bandwidth and financial resources to explore new opportunities and relationships in Texas and the greater Southwest region. Great Bay’s financing structure enables us to achieve our objectives and provides Hodson with the financial flexibility we need to pursue our strategic objectives.“
Great Bay was advised on this transaction by a team of advisors from CCA Capital LLC led by Martin Pasqualini and a legal team from Pierce Atwood LLP led by Kris Eimicke. Hodson Energy was advised on this transaction by an advisory team from Verdonck Partners led by Patrick Verdonck and a legal team from Willcox Savage led by Brian Purcell and a legal team from Nelson Mullins led by Prem Malali.
ARR is a newly formed renewable energy company in the business of providing long-term, royalty-level investment capital to renewable energy developers, operators and originators. ARR has 16 renewable energy royalties representing 3,510 MW of renewable energy, diversified by wind, solar, stage of development or operation and regional power pool in the United States. The Company combines industry expertise with innovative, partner-focused solutions to drive the growth of the renewable energy sector as it fulfills its critical role in enabling the global energy transition.
This press release contains forward-looking information. Statements are based on management’s reasonable assumptions and expectations and ARR makes no representation that actual events will meet management’s expectations. In some instances, forward-looking information may be identified by terms such as “plans”, “believes”, “could”, “estimates”, “expects”, “may”, “should”, “will” or “would”. Although ARR believes that the expectations expressed in these forward-looking statements are based on reasonable assumptions, these statements are not guarantees of future performance and actual results or developments may differ materially from those projected. Readers should not place undue reliance on forward-looking information.ARR does not undertake to update the forward-looking information contained herein, except in accordance with securities regulations.