The Transaction
Northland Power Income Fund (the “Fund”), a publicly-traded independent power producer, acquired Northland Power Inc. (“NPI”), its manager and a developer, owner and operator of independent power generation assets in a $1.5 billion transaction.
The transaction was transformational for the Fund and came at a time when it was at a crossroads due to changes in the tax treatment of Canadian income trusts. Historically, NPI had focused on developing projects which would typically be sold to the Fund once they were fully commissioned. However, NPI had begun to evolve into a long term owner and operator as well as a developer. The Fund also lacked an internal management team, making it difficult to operate independently.
The transaction involved complex valuation and structuring issues due to NPI’s large pipeline of development assets. This resulted in a structure that recognized value for the former NPI shareholders as value was actively realized.
About the Company
After giving effect to this transaction, the Fund became one of Canada’s largest independent power producers with 870 MW of generating capacity, including natural gas, cogen, wind and biomass facilities. In addition, the Fund also had an extensive development pipeline of ‘clean and green’ projects totalling over 2,600 MW.
Crosbie’s Role
Crosbie was initially retained by the Independent Trustees of the Fund to consider strategic options. We subsequently advised the Trustees on an appropriate process and transaction structure and quarterbacked the negotiations with NPI. Crosbie also provided a valuation and a fairness opinion.
A complicating factor in this transaction was that NPI and the Fund shared a common management team which were conflicted due to their ownership interest in NPI. As a result, Crosbie’s role as an independent advisor was particularly critical in assisting the Trustees of the Fund.