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Ascendant agrees $365m sale to Canadian firm

Deal agreed: work progressing on Belco’s new North Power Station (Photograph by Akil Simmons)

Ascendant Group has accepted a takeover bid worth around $365 million from a Canadian utility group.

Yesterday’s announcement of the intended sale to Algonquin Power & Utility Corporation marks the conclusion of a four-month evaluation of “strategic alternatives” by Ascendant.

The deal signed by Ascendant is worth $36 a share to shareholders, representing a premium of more than 63 per cent over last Friday’s closing price of $22 on the Bermuda Stock Exchange.

Shareholder and regulatory approval is needed before closure of the deal, which Ascendant expects to happen in the second half of this year.

The common shares of Algonquin, which is based in Oakville, Ontario, are listed on both the Toronto Stock Exchange and the New York Stock Exchange under the ticker symbol “AQN”.

The company has approximately $10 billion worth of total assets and operates natural gas and water utilities, as well as electricity companies.

Algonquin states that it is “committed to being a global leader in the generation of clean energy through ownership of or investments in long-term contracted wind, solar and hydroelectric generating facilities representing over two gigawatts of installed capacity”.

An Ascendant spokesman said: “Algonquin has the capital resources, operational knowledge and experience in technological innovation necessary to advance the company’s efforts to introduce renewable energy and meet future challenges that will benefit the community as a whole.”

He added: “They currently own and operate 54 energy facilities, of which approximately 90 per cent are renewable.”

The spokesman said Algonquin had pledged to run Ascendant’s businesses from Bermuda and retain the Bermudian employee base.

Algonquin added it would also introduce advanced training, to be carried out in Bermuda and abroad.

The Ascendant spokesman said: “The company will continue initiatives such as the voluntary early retirement programme but is committed to no company-initiated job cuts.”

He added that Algonquin’s commitment to renewable energy and power storage development would help the island to achieve a move away from fossil fuels and boost employment in new technologies.

Angela Berry, chairwoman of The Regulatory Authority, which oversees the electricity sector, said: “As the RA regulates Belco, we will evaluate the proposed change of control of Belco in accordance with the provisions of applicable legislation and any ministerial directions.

“The next step in the process, from the RA’s perspective, will be for Belco to submit a formal application for a change of control, so that the RA can make an informed decision.”

Walter Roban, the Minister of Home Affairs, whose responsibilities include the Department of Energy, said: “I note the announcement around the sale of Ascendant Group Ltd today. There are considerable steps before this is finalised.

“I am confident that once an application is made to the Regulatory Authority, there will be a robust review, to determine that Algonquin Power & Utilities Corporation has a strategy that is in line with the IRP and this Government’s commitment to drive down energy costs for the Bermuda public and ensure a more affordable and sustainable energy future for the island.”

Mr Roban told the House of Assembly in March that the new owner would be expected to be “transparent, inclusive and collaborative” and referred to labour disputes over the dismissal of several Bermudian staff last year.

Asked about other bidders considered by Ascendant, a spokesman for the company replied: “The process was very robust — and there was interest from many reputable international firms. We do not want to comment further for the sake of confidentiality.”

Ascendant said that the integration of additional low-cost renewable energy into Belco’s supply mix was “expected to contribute to lower energy costs”.

The company added: “For Bermuda, Algonquin has committed to introducing modern energy technologies and will look to accelerate the introduction of renewables, conservation, and battery storage for the island.

“The current board has provided the strategy that has brought Ascendant this far. We have laid the foundation for reliably powering Bermuda in cleaner, more efficient, and more cost-effective ways. Algonquin will bring the knowledge, the experience and the capital necessary to carry Ascendant into the future.

“All parties will work diligently to obtain all necessary approvals so the transition can happen in a timely manner to minimise any disruption to our companies, employees and our customers.”

Ian Robertson, chief executive officer of Algonquin, said: “The acquisition of Bermuda Electric Light Company builds materially on our international growth programme through the addition of this high-quality utility, an acquisition which will be immediately accretive to earnings.

“In addition to Ascendant customer and employee benefits coming from the scale of our existing utility operations, we are confident that our demonstrated capability in renewable energy development can help Bermuda realise on its carbon reduction aspirations.”