Trading symbol ATPWF on NASDAQ.
ArcLight Capital Partners is a leading private equity investment firm focused exclusively in the electric power and energy sectors with more than $6.8 billion in managed assets, including ArcLight Funds I & II. ArcLight will share in the upside of the original projects and further growth of Atlantic Power, since ArcLight Funds I & II are the indirect owners of Atlantic Power Management, LLC (“Atlantic Power Management”) which manages Atlantic Power. Atlantic Power Management earns an incentive fee equal to 25% of the product of the increase in cash distributions paid to investors above the initial level of $1 per IPS per year, times the number of common shares outstanding.
Sample distribution makeup in the following release:
TORONTO, ONTARIO – (MARKET WIRE) – 07/15/09 – Atlantic Power Corporation (TSX: ATP.UN) (the “Company”) today announced its distribution for the month of July 2009. A distribution of $0.0912 per Income Participating Security (“IPS”) will be payable on August 31, 2009 to holders of record at the close of business on July 31, 2009.
Each of the Company's Income Participating Securities is comprised of one common share and $5.767 aggregate principal amount of 11% subordinated notes. The total distribution of $0.0912 reflects a cash dividend per common share of $0.0383 and an interest payment of $0.0529 for the month of July 2009.
Distros for first half of 2009:
Schwab typically did the following on 1000 shares (monthly distro):
ATPWF - a note from Roger Conrad's weekly blurb
Finally, I want to comment on fourth quarter and full year results for Atlantic Power Corp (TSX: ATP-U, OTC:ATPWF), as well as guidance for 2009 and beyond. This week, I had the opportunity to dine with the company’s principals and get a little more background on their recently reported results.
Unlike our other picks, Atlantic is basically an investment corporation, rather than a pure operating company. Management invests largely in operating power plants and power lines (Path 15 in California) that generate large, secure streams of cash flow. It then hedges that cash flow against everything from fuel costs and market power prices to currency swings.
Virtually all debt on the project level is structured to be paid off when existing sales contracts expire. Most of the projects are natural gas-fired, and the cost of the fuel is also hedged with purchase contracts and financial instruments. The contracts, meanwhile, are almost exclusively with investment grade companies and government entities, the exception being a deal with wholly regulated PNM Resources (NYSE: PNM). And there’s never been a default by a regulated utility on a power purchase contract.
It all adds up to a solid package the health of which was underscored by solid first quarter earnings. The payout ratio for 2008–as a percentage of distributable cash flow–sank to just 59 percent, and management bumped up the dividend as well.
Among my questions to the principals CEO Barry and CFO Pat Welch (not related) were Atlantic’s exposure to future carbon regulation and its recent move to invest in biomass projects. On carbon dioxide (CO2), the gist is the company has only very limited exposure through one operating plant, which is likely to enjoy at least some favorable rate treatment. On biomass, the projects are relatively small in nature and the company is taking it slow on investment to minimize cash flow exposure.
The bottom line is Atlantic’s yield of nearly 13 percent looks safe as ever. Note that it’s now roughly 60 percent debt interest (not withheld in Canada) and 40 percent equity interest (withheld at a 15 percent rate in Canada but considered to be a qualified dividend). And that distribution looks set to keep growing going forward. Buy Atlantic Power Corp up to USD8. Note dividends are paid in Canadian dollars, which should be a major benefit if and when oil prices begin to pick up again.