Ascendant reports $1.9m loss
Ascendant Group Ltd, which is the subject of a takeover bid by a Canadian utilities company, has reported a loss of $1.9 million for the first six months of the year.
That compares to reported earnings of $3.1 million for the same period in 2018. The company said earnings were impacted by the changes to core earnings from operations, as well as $4.6 million in restructuring charges related to the sale of the company.
Shareholders of the company will meet on Friday to consider a $365 million offer by Algonquin Power and Utilities Corp for the shares in Ascendant, which includes Belco. Shareholders would receive $36 per share under the proposed deal, which is backed by the company’s board of directors.
In its financial statement, Ascendant said its core earnings from operations during the first six months were $2.7 million, compared with $4.1 million a year ago.
It said the decrease was largely the result of lower electricity demand at Belco, in addition to a small increase in depreciation expense. This was partially offset by 21 per cent growth in Ascendant’s non-utility businesses and $2.2 million lower corporate expenses.
Cashflow provided by operations, before changes in non-cash working capital balances, decreased $4.3 million, to $9.8 million for the six- month period that ended on June 30. The decrease was primarily driven by decreased Belco revenues and restructuring charges, offset by cost savings at Belco and Ascendant.
Capital expenditures for the six-month period were $73.1 million compared to $36.5 million for the same period of 2018, reflecting execution of the company’s capital plan including Belco’s replacement generation, battery storage and transmission and distribution modernisation projects, the company said.
The company’s share repurchase programme was suspended on April 1 as a result of the invitation for proposals for the purchase of the company. Trading was suspended on June 3 in anticipation of the announcement that the company had signed an agreement for the sale of the company, pending shareholder and regulatory approvals, and resumed on June 4.
The company’s board of directors has declared a quarterly dividend of 11.25 cents per common share. Year-to-date, the company has declared dividends totalling 22.50 cents per common share.
Ascendant said its capital plan progress continued in the first half of the year with engines delivered for the North Power Station and ongoing upgrades to transmission and distribution infrastructure. The company said continued cost reductions were made through operational efficiencies and implementation of an early retirement programme.
Sean Durfy, chief executive officer, said: “The company has identified a prospective buyer, Algonquin Power and Utilities Corp, that has a long track record of renewable energy generation in the North American market and has the capital resources, operational knowledge and experience in technological innovation to bring more renewable energy to Bermuda. The board is in support of Algonquin purchasing the company and is asking shareholders to approve the sale.”
Dennis Pimentel, president of Belco, said: “Belco is continuing the construction of the $120 million replacement generation and commissioned the battery storage project at the North Power Station. We also continue to invest in upgrades to the transmission and distribution grid to ensure reliability of the system but also to allow the integration of more renewables as per the release of the much anticipated Integrated Resources Plan by the Regulatory Authority on July 25.
“The company supports the IRP and all efforts to improve Bermuda’s environment and reduce greenhouse emissions wherever possible. Belco is currently in the review process to determine how it can work with the Authority to implement this aspirational plan and ensure a continued supply of safe, reliable and cost-effective power for our customers.”
Mr Durfy added: “In addition, the company’s efforts to reduce costs are bearing fruit. Considering declining sales, these costs savings are critical to keeping rates in check. Our non-regulated businesses continue to perform well and experienced healthy growth of 21 per cent compared to the first six months of 2018.”
Should Ascendant shareholders approve the deal on Friday, the bid by Algonquin would require regulatory approval before going ahead.
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