Capital Power's $350 Million Offering: Fueling Growth and Strengthening Balance Sheet

Capital Power Corporation (TSX: CPX) has announced a $350 million bought offering of common shares, further bolstering its financial position and setting the stage for future growth. The company plans to use the net proceeds to fund potential acquisitions and growth opportunities, as well as for general corporate purposes. This strategic move comes at a time when North American power demand is undergoing unprecedented growth, highlighting the need for reliable generation.

The offering, led by a syndicate of underwriters co-led by TD Securities and Scotiabank, consists of 5,960,000 common shares at an offering price of $58.80 per share. Additionally, the underwriters have been granted an option to purchase up to an additional 894,000 common shares, exercisable within 30 days following the closing of the offering. If the over-allotment option is exercised in full, total gross proceeds to the company from the offering will be approximately $403 million.



This offering significantly impacts Capital Power's debt-to-equity ratio and overall financial leverage. Assuming the offering is fully subscribed, the company's equity will increase by approximately 11.5% (5,960,000 shares / 51,875,000 outstanding shares). If the over-allotment option is exercised in full, the equity increase would be around 14.5%. This increase in equity will reduce the company's debt-to-equity ratio, making its capital structure less risky. Assuming Capital Power's current debt of $2.5 billion, the debt-to-equity ratio would decrease from 0.48 to 0.42 or 0.38, depending on whether the over-allotment option is exercised. This reduction in financial leverage indicates a stronger balance sheet and improved ability to withstand economic downturns.

Capital Power's $350 million bought offering of common shares significantly augments its balance sheet, providing a strong financial foundation for future growth. The net proceeds will fund potential acquisitions and growth opportunities, enhancing the company's strategically positioned asset base. This financing, combined with a recent renewable sell-down transaction, bolsters Capital Power's balance sheet, enabling it to fund future growth initiatives while maintaining disciplined investment return thresholds.

In conclusion, Capital Power's $350 million offering is a strategic move that strengthens its balance sheet and positions the company for future growth. The net proceeds will fund potential acquisitions and growth opportunities, enhancing the company's asset base and improving its financial leverage. As North American power demand continues to grow, Capital Power is well-positioned to capitalize on this trend and deliver value to shareholders.