TransAlta (TA) M&A announcement summary

Deal rationale and strategic fit

• Acquisition of two fully contracted natural gas-fired peaking facilities in Colorado totaling 318 MW expands presence in the Western U.S. and aligns with growth strategy.

• Both assets are 100% contracted to investment-grade counterparties under 25+ year tolling agreements, enhancing contracted cash flow profile and stability.

• Establishes a strategic foothold in a region with strong growth prospects and supports redeployment of cash flows into further growth opportunities.

• Strengthens business risk profile and continues a track record of accretive, on-strategy acquisitions leveraging competitive advantages.

Financial terms and conditions

• Total transaction value is US$1.0 billion: US$750 million in assumed senior secured debt and US$250 million raised via equity financing, including a $350 million bought deal with a 15% over-allotment option.

• Bought deal offering consists of 18.2 million shares at $19.20 per share, with up to $53 million in additional proceeds possible.

• If the acquisition does not close, proceeds will be used to reduce debt or fund other growth opportunities.

• Expected to deliver immediate low- to mid-single digit accretion to free cash flow per share.

Synergies and expected cost savings

• Immediate accretion to free cash flow per share anticipated in the first full year.

• Operational, insurance, and tax synergies expected.

• Bringing asset management and operations in-house to enhance returns.

• Potential upside from availability incentive payments.