TransAlta to acquire 310 MW gas portfolio for $95M

Executive Summary

• TransAlta Corp. has entered into a definitive share purchase agreement to acquire Far North Power Corp. and its entire business operations in Ontario from an affiliate of Hut 8 Corp. and Macquarie Equipment Finance Ltd.
• The transaction involves the acquisition of four natural gas-fired generation facilities with a total capacity of 310 MW for a purchase price of $95 million.
• The acquisition is expected to be immediately accretive to free cash flow, adding approximately $30 million of average adjusted EBITDA annually, and is expected to close by early Q1 2026.

Key Details

• Transaction Structure: Definitive share purchase agreement to acquire Far North Power Corp.
• Target Assets: Far North Power Corp. owns and operates four natural gas-fired generation facilities in Ontario:
  • Iroquois Falls (120 MW)
  • Kingston (110 MW)
  • North Bay (40 MW)
  • Kapuskasing (40 MW)
• Total Capacity: 310 MW.
• Purchase Price: $95 million, subject to working capital and other adjustments.
• Price per Unit: Approximately $306 per kilowatt (kW).
• Financing: To be financed using cash on hand and draws on credit facilities.
• Financial Impact:
  • Adds approximately $30 million of average adjusted EBITDA per year.
  • Immediately accretive to free cash flow and cash yield upon closing.
  • Approximately 68% of the portfolio's gross margin is contracted to 2031.
• Strategic Rationale:
  • Augments and diversifies TransAlta's contracted portfolio.
  • Enhances competitive position in Ontario, increasing TransAlta's footprint in the province to 1,300 MW.
  • Provides merchant upside and synergies via TransAlta's energy marketing and trading team.
  • Assets are positioned for attractive recontracting opportunities post-contract period, with optionality given 167 acres of co-located land.
• Closing Conditions: Subject to customary closing conditions, including receipt of regulatory approvals.
• Expected Closing Date: Early first quarter of 2026.

Notable Quotes

• "With this acquisition, our position in Ontario increases through contracted and complementary assets. As electrification and population growth continues, the market will meaningfully rely on existing firm, dispatchable generation for grid reliability. Beyond the contract period these assets are attractively positioned for recontracting opportunities as well as with optionality given the 167 acres of co-located land. The transaction adds to our reliable and increasingly diversified portfolio, and we see long-term value in these assets," — John Kousinioris, President and CEO, TransAlta.
• "This acquisition is immediately accretive to cash flow and demonstrates progress towards our priority of pursuing strategic M&A," — Joel Hunter, Executive Vice-President, Finance and CFO, TransAlta.