NextEra Energy Partners, LP NEP declared the pricing of a public offering of 10,402,000 common units. Priced at $29.48 per common unit, the offering is expected to close on Sep 14. The units represent limited partner interests in the partnership.
The partnership has also granted underwriters a 30-day option to buy an additional 1,560,300 common units. The partnership intends to use the proceeds from the unit offering to fund its recently announced purchase of a 24% stake in Desert Sunlight Investment Holdings and for general partnership purpose.
Energy companies routinely issue units to fund acquisitions and organic growth projects. The prevailing low interest rate environment enables them on this front as they get access to cheaper financing.
Purpose of the Offering
NextEra Energy Partners has inked a deal with an affiliate of its sponsor, NextEra Energy, Inc. NEE, to purchase a 24% stake in Desert Sunlight Investment Holdings, LLC, for a consideration of approximately $218 million.
Desert Sunlight owns two projects, of which one is the 550-megawatt (“MW”) Desert Sunlight Solar Energy Center in Riverside County, CA. The plant utilizes 8 million panels, generating enough power for 160,000 homes. The projects are fully contracted under long-term power purchase agreements and have remaining average contract lives of 21 years.
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NextEra Energy Partners expects the acquisition to provide accretion in the range of nearly $43–$53 million to 2016 adjusted EBITDA and $21–$26 million to cash available for distribution. The deal is also expected to result in an increase in third-quarter 2016 distribution from the current annualized rate of $1.32 per unit to $1.365. (Read more: NextEra Energy Partners to Buy Stake in Desert Sunlight).
Zacks Rank & Key Picks
NextEra Energy Partners carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the same space are Ormat Technologies, Inc. ORA and Gevo, Inc. GEVO. Ormat Technologies sports a Zacks Rank #1 (Strong Buy), while Gevo carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .
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Click to get this free report NEXTERA ENERGY (NEE): Free Stock Analysis Report GEVO INC (GEVO): Free Stock Analysis Report ORMAT TECH INC (ORA): Free Stock Analysis Report NEXTERA ENERGY (NEP): Free Stock Analysis Report To read this article on Zacks.com click here.