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Solar power company Canadian Solar Inc. completed the acquisition of solar power developer Recurrent Energy, from Sharp Corp. The transaction was supported by Export Development Canada’s issuance of Performance Security Guarantee of up to $75 million to backstop letters of credit issued against project development obligations by Recurrent Energy.
In addition, in conjunction with the acquisition, Credit Suisse will provide Recurrent Energy with a $150 million, one-year senior secured bridge loan.
The acquisition of Recurrent has increased Canadian Solar’s total solar project pipeline by about 4 GW to a total of 8.5 GW, including an increase in its late-stage project pipeline by about 1 GW to 2.4 GW. Recurrent’s seven late-stage projects totaling about 1 GW are located in California and Texas and are expected to be built and connected to the grid prior to the ITC expiration at the end of 2016.
This transaction increases Canadian Solar’s late-stage project pipeline in low risk geographies. Recurrent’s seven late-stage projects have long-term power purchase agreements with investment grade counterparties, and are expected to generate cash flow after completion, serving as the cornerstone for the launch of Canadian Solar’s own Yield-Co in the quarters ahead.
With the closing of the transaction on March 30, 2015, David Brochu has been appointed Recurrent’s new CEO to replace Arno Harris. Michael Metzner, Recurrent’s CFO is also stepping down from his role. This management transition had been planned in advance.