Q1 2021 Innergex Renewable Energy Inc Earnings Call
The <unk> 2021 first quarter results conference call and webcast at this time, all participants on the phone and Internet art and listen only mode.
Following the presentation, we'll conduct a question and answer session on <unk>.
And institutional investors and instructions will be and provided at that time for you the queue for questions.
And anyone has any difficulties hearing the conference. Please press star followed by Bizzaro for operator assistance at any time.
I'd like to remind everyone that this conference call is being recorded.
I'll now turn the conference over to carrying the Shaw <unk>.
Senior director of Communications. Please go ahead.
Hi, everyone and thank you for dragging on it.
And like the specified that this conference will be out of in English and members of the media are invited to ask their questions by phone and after this call.
The presentation supporting today's discussion is available as we speak on the on page of our website and through the bogey that you know and Chegg Dot com.
This call contains forward looking statements within the meaning of applicable securities laws.
The corporation believes that the expectations and assumptions on which forward looking statements are based on if he's on the bolt on through the current circumstances listeners are cautioned not to rely unduly on forward looking statements as motions kenzie Kevin's and it's what appears to be correct.
The forward looking information contained herein is made as of the date of the call and the corporation does not undertake any obligation to update or revise any forward looking information whether as a result of the events or circumstances occurring after the date skyros unless so required by law.
During this call we will refer to financial measures that are the best recognized the according to international financial reporting standard.
Please refer to that on the as far as the measure sections of the MTN, Inc. For more information.
Our speakers today will be Mr. Theres, all sorts of new Chief Financial Officer will present, the Q1 results and Mr. Michel and said, he president and Chief Executive Officer, who will review of a personal highlights and I'll turn the conference over to Mr.
Thank you Karen good morning, everyone.
Before we start I would like to inform you that we have prepared a supplement of information to the first quarter report that explains in detail on the February 2021, Texas events have impacted our results.
I recommend that you read that section throughout the complete overview of the situation since today I will present a summary.
However, the supplement provides a broader set of normalized payable and information on the recent proceedings.
As you can see on page seven we have four operating facilities and Texas three.
Three of which with power edges.
However, all of them to a different and extent of recorded extra ordinary nodal revenues derived from either price caused by the unprecedented the weather conditions with 17 million for Foard City 38 million for Phoebe.
<unk> million for flopped up and $65 million for Shannon.
But as we said many times before.
The power edges contained virtual hourly energy obligations, which are the negative impact of $71 million for VB 114 million for flopped up and $93 million for Shannon.
As a result.
And as previously estimated in our press release in February the net financial impact on a consolidated basis, the reach precisely 81 $2 million.
On the next page.
We normalized our first quarter results to exclude the Texas the impact on our revenues adjusted EBITDA and our loss before income tax.
As you can see foard city, and Phoebe extra ordinary rip and use our deducted from the revenues and adjusted EBITDA.
To arrive to a normalized figures of $135 million and $88 million respectively.
As far as the negative impact of the power and Beiges surge of PB it on.
And it's been deducted from the change in fair value of financial and instruments.
Whereas the net negative impact of the take the storm on the two joint ventures, Shannon and flat up I've been excluded from the share of loss of joint ventures.
Here the normalized loss from joint ventures remain high at $144 million due to <unk> share of the impairment charges and the project level for Shannon and flat top.
In fact, I've shown on page nine.
Following the storm, we have seen a year of risk premium on Texas and investment, which has caused the discount rate to increase substantially from December 2020.
Therefore, the recalculation of value in use of these assets at the project level became Lord and their respective carrying value on the balance sheet, Consequently, and object to recognize and the first quarter. Its share of these impairment charges as part of the share.
[noise] of lots of joint ventures.
The share of impairment charges was cap to the maximum amount equal to our investment value of those assets on our consolidated balance sheet.
Consequently, the investment value at the end of March 31st 2021 per boat assets is zero.
Also.
In regard to the cash settlements. It is worth mentioning that I thought the March 31, 2021, the foard city of 17 million gain recognized during the storm and recorded as accounts receivable as of the end of February was subsequently paid in March.
However, the liabilities for Phoebe we're not at all and are still part of the consolidated balance sheet as the accounts payable on.
As for Shannon and flat top the liabilities were not settled and remain at the project level balance sheet, which given it is accounted for as equity pickup method. Consequently are not included in interjects consolidated accounts payable.
Now, let me comment on recent procedures with regards to Shannon and flat top.
As implied in the press release dated February 17, Shannon and slapped up I filed the four force measure.
In order to protect all right until the evening on force measure take place we have filed a temporary injunction to prevent flopped up and shannon's edge provider to exercise its remedies on the projects.
The aiming and that then on May six and the decision should be rented there at the latest by me 20th.
Now looking ahead, the worst case scenario of following these procedures would be the foreclosure of the projects.
Should this worst case scenario happens.
The recurring negative impact to the free cash flow would be at approximately $4 $2 million per year until the flip point.
This scenario would also mean and avoid the cash outflow of $76 million.
In other words on third this worst case scenario the.
Of all you did cash outflow when compared to the minor of recurring loss on free cash flow and make this potential foreclosure outcome and more.
More profitable scenario for our shareholders.
Given the other investment opportunities the corporation is evaluating on the recurring basis.
Now to be able to compare the results of this quarter with the same period last year, we have normalized the results to remove the impact from the Texas of seven.
Therefore, the resolve that I will cover today will be on the normalized basis.
On page 11 for the quarter ended March 31, 2021 on a normalized basis production and revenues were up six and 2% respectively compared to the same period last year.
Adjusted EBITDA was down by 3%. This decrease was mainly attributable to a lower contribution from wind facilities and friends and I draw electric facilities and BC, both due to lower revenues.
And by Iron of prospective expense over lower general and admin expenses adjusted EBITDA proportionate was down by 2%.
On page 12 for the three months period ended March Hydro electric power generation segment generated $14 $5 million and not just the EBITDA, representing a 12 per cent decrease compared to the same period last year, mainly due to lower revenue derived from almost.
The exclusively from the lower production at the facilities and British Columbia.
The decrease was partly offset by higher venue from either production or variety of operational expense at the Quebec City deeds.
Wind power generation segment generated $82 $8 million and normalized adjusted EBITDA, representing a 2% increase compared to the same period last year.
This increase was mainly attributable to the Montana acquisition in 2020 and to all of your contribution from the Foard City first of the deed due to a combined effect of Io with the news and lower Opex. These items were partially offset by a lower contribution from the wind facility and friends.
Due to lower wind regime.
Solar power generation shut ins segment generated $5 $9 million and normalized adjusted EBITDA, representing a 4% increase compared to the same period last year. This increase was mainly explained by the contribution of the thought about the op acquisition in 2020, partially offset by lower contribution.
From the Phoebe solar facility attributable to a net unfavorable impact of lower revenues due to lower selling price.
On page 30 for the quarter ended March 31st the joint ventures, and associates contributed $8 million to the normalized adjusted EBITDA proportionate debt compare with the contribution of $7 $5 million and the same quarter last year.
Yeah.
This increase was mainly due to a higher contribution from the Chile facilities from a combined favorable impact of lower operating expense over lower revenue.
Despite all of your production.
This increase is also explained by a higher contribution from facilities and BC from lower operational expense.
The higher contribution from the Shannon and set up as the day, mostly due to higher average selling prices and the higher contribution of the visit the norville wind facility in Quebec also contributed to this increase.
In addition, the proportional production tax credit decreased from $18 $1 million to $17 $4 million was due to lower production tax credits earned from the lower production at Shannon and flat Doug first of the D.
Overall normalized adjusted EBITDA proportionate decreased by 2% compared to the same period last year.
Continuing on page 14.
The increase and long term debt is related largely to the draws made.
Two the draws.
The main tour the construction of the Griffin Trail project.
In addition, the corporate revolving credit facility was used for reimbursing the outstanding balance of the Altair out term loan on January 11 2021.
On page 15.
Changes and the total assets the mainly from the reduction and value of our investment in joint ventures and associates as mentioned before.
The change and shareholder equity is explain to the dividend declared on common and preferred share totaling $22 $9 million.
And the total comprehensive loss of $172.5 million.
As shown on the next page the normalized free cash flow as decreased by $2 million on the trailing 12 month basis.
The unfavorable variance and free cash flow was mainly due to an increase and principal payments stemming from the Phoebe and Foard City Commission in late 2019 and from the month of an acquisition from mid 2020, the BC hydro imposed curtailment in mid 2020.
And the recovery of maintenance Capex expenditures from the sale of interest of Cop. These items were partially upset by the contribution from the Phoebe and Foard City has the duty.
And from the sulfur at Al and Montana acquisition and.
And also of.
The decrease in interest payment on the corporate revolving credit facility concurrent with the hydro Quebec private placement.
For the trailing 12 months ended March 31st the normalized payout ratio amounted to 140% of free cash flow compared with 113% for the corresponding per yard last year.
Now before I conclude the.
And the guidance provided in February 2021 remain relevant when compared with the normalized 2021 financial.
Performance at the.
The moment, despite a lower Q1 generation, we are not revising the guidance since it is still possible to reach these projections on the normalized basis before the end of Q4.
In the event that the worst case scenario materializes, we will debt and revise our guidance at the time.
On that note I will give the floor to Michel for the operational review of the past quarters.
Thank you and I'll pass well.
Yes.
This is the type of quarter that we would rather forget.
But it is making us even more committed and resolve to execute on our growth strategy and to continue to diversify and our portfolio.
We will not forget.
And we will make our best effort. So that this type of crisis, we will not be recurring.
We have moved away from these power hedge the structure and have shown that we could develop project different league with both Foard City and Griffin Trail.
Bolt project could benefit from future of high prices and Texas.
So we have lived through this takes this crisis, we have learned the hard way.
But now it is time to move on.
So no.
So now let's focus on the bright side of the great opportunity that lies in front of us.
We have had some great news and this quarter besides of the crisis and the operation So let's try to focus on this.
Well I'm glad to report that yield Kras just as of last night reached this you the commercial operation date on there. These are long term PPA, so and we're very proud and happy to report on this.
Lot of people at the work pretty hard on this project over the last months and it was a challenging.
The period with the COVID-19 and the restriction on traveling for us to go on our site. So all of our dedicated team did a great job and now we can sell this electricity 200 megawatt of solar is being had and had up to our portfolio. So congrats on the our team very happy on this.
The final.
Sustained net sustained but the final construction finance.
Finally, all of this nation will be probably a.
Be towards the end of June and from there, we'll be able to do the tax equity.
Financial close on.
By something in the mid July and I would conclude the final construction and tax equity contribution we will beat them reimbursing the bridge.
Bridge construction to tax equity.
On on the order of good note E on to our $6 nine megawatt and France has reached a again the full commissioning so that's and other good news on the on debt quarter.
And Griffin Trail as we mentioned is now very advent and actually reading the report from our construction crews we should be topping all of the 80 megawatt.
And would be totally installed by the end of this week and they should be starting producing power by the mid June so that full QD could be reached by beginning of July and JV towers, yeah $80. Thank you.
What did I say, well anyway any day goodbye.
And then the only 25 Meg of window that is true that two two on it yet I'm sorry the dollars.
And so that that plant should be in the full full operational to take advantage of the high prices and Texas in summertime.
We have also.
Resumed the work in epic this hydro facility and the north of Quebec.
Glad to see that we this year again, we can reach these are these construction site.
And with special Health and safety.
Precaution, we have full access to the site and construction is resuming.
Our regular.
I would say at full strength in the and this summer Fortinet, Inc. We still forecast the C with the by the end of next year.
Now on the development activities, we're seeing some good.
Good.
Movement, and the power prices and Chile. So we are still advancing our development activities. There you probably have seen the copper price is going through the roof.
And which is a good thing for Peru, and Chile as you know those two countries are a big producer of copper and although the had been the.
Our economy has been hit hard by the COVID-19.
The the future looks bright for these two countries and we're still committed to the flop project and this area.
As we go through the quarters, we're getting ready for starting construction in Hawaii.
We have been advancing on both permitting and construction negotiation and the final engineering on four of these projects. So the.
The first the construction should start by the Middle of next fall very happy also.
Pulling through these.
Engineering and construction negotiation I think we are learning a lot on.
As you know storage is a big part of our future strategy and I think that storage coupled with battery coupled with solar will play a big role and many more.
Many area and the well to supply future of electricity and Interconnects in the east.
On the forefront of that new area.
We also are advancing and glad to report that we have finally signed the agreement with the <unk>.
Supply of the battery for our tunnel.
Project and friends.
We have signed and we are the first commercial customer of Hydro, Quebec Division of low so pretty happy to be the first and.
And all fully and some other project will follow with them.
We have come together and learned a lot in our teams. So that this is this is the right. This is basically some investment.
And in time and resources, so that both teams can work better in the future to the love even more project.
And as well as you know storage is a big part of our strategy.
We have been talking about hydrogen green hydrogen.
And we have hired now a.
The seasoned.
Veteran Tim that the business. So that we are now building our team and expertise expertise to take advantage of future government support for green hydrogen.
Now if we're looking at our prospective project.
We are still focused on our strategy, which is the lobbying solar and wind in the United States very I would say very encourage by the policy that are being discussed to support future project in the United States ITC PTC.
And kind of the PTC also for hydrogen and saw more of local support in the state of California, and Washington are being discussed to support green hydrogen and see in the future. So I think that the unite.
United States is showing a great leadership in order to have more and more renewable energy in their portfolio mix.
We are seeing also in Europe that those countries France.
Germany and others are also supporting future renewable energy.
<unk> to be part of the future mix of the electrification of the economy, So very happy to have build out.
Stronger and stronger presence and friends all.
And also have higher and being able now to initiate some development and solar as well and France. So we have now 18 that suits focusing as well on <unk> on the solar and friends and we should see some benefit from these the.
Effort in the near future.
Canada is or Quebec is now being studied and we had the great news and the last couple of months.
Now we have seen that the government of Quebec.
And together with hydro, Quebec is going to put forward a calls for.
And RFP for renewable energy and.
Anywhere between 205 hundred megawatt in the and the end of the year or beginning of next year. So that's very positive for US as you know we are we have been working and in Canada, and Quebec, specifically, so our team on and are focusing on trying to desktop some some old project and we were working.
On the in the past.
And frankly this is the first of a few more RFP for the future so things looks even better and better also in our core market or on market.
So basically this is what we've been doing and blast the quarter and since we had a lot of time passed on on Texas I would open up the question, but before that that would the tanks are all routine debt southwest team that I have worked hard lately as you can.
And.
These number has been moving.
Moving around and we have these.
The representation that that's completed the.
I would like also to the extent my thanks to all you the analyst the are going through these.
<unk> numbers.
Or are you happy to and <unk>.
Have you support us and I'm open it up now the debt.
Florida. Thank you.
Okay.
Thank you ladies and gentlemen, if you have a question. Please press star followed by the one on your Touchtone phone, you'll hear of tone acknowledging your quest okay.
And what are the RSC, ladies and show you lift the handset if you're using a speaker phone before passing any keys.
And your first question comes from the line of.
Of David Quezada with Raymond James. Please go ahead Sir.
Thanks, Good morning, everyone. My first question here just on the.
The off take agreements for Shannon and flat top.
I'm, just wondering if and where you're at with I guess potentially altering or unwinding those hedge contracts and if you've had any conversations with the tax equity providers around potentially doing that.
Well I mean it.
It's a little bit difficult to two.
And to discuss these thing right now we're in the build of trying to solve that a court.
But I would say any of that.
If we're to reinvest and in those which is I don't know.
I wouldn't say very likely.
And then we would we would try to get rid of these things, but as you've seen and heard jumps on what I've seen at the worst case scenario, we have put it in front of you is that we would have.
And of those those investment completely so.
Anything that would come could come out of these negotiation would be a little bit better than actually us writing writing it up completely.
Absolutely fair enough. Thank you and then just one other question I guess just related to.
The U S market in general I'm, just curious about.
When you see some pretty encouraging trends like the increased commercial and industrial demand for renewable power of the more supportive regulatory backdrop I'm wondering if you can just talk about what how things have developed any color you can share on your earlier stage development portfolio.
And and maybe whatever activities in terms of securing land that youre undertaking for the for the next I guess phase of projects.
Fair enough.
We've talked a little bit and and.
The one of our project to.
And 200 megawatt solar development in the Ohio have been making it a little bit of the press lately.
The amino where that's a 200 megawatt solar that we are advancing wear and the middle of the per.
Permitting and.
Well I would say public hearing.
And this thing is advancing very well also we have also of some term sheet with the.
Offtake or that have been the advanced quite a bit. So this is the probably the most of that Vince, but we're working towards our target, which is around 600 megawatts of solar and.
And outside of Texas.
We have PGM, we have Pennsylvania can and.
And Kentucky, and and like I said, the Ohio through.
Uh huh.
And I'm forgetting the name of it.
Palomino I'm sorry, and then we also are advancing in the northwest working as well with when Youre seeing that we have a little bit of over 400 megawatt worth of the wind in.
And now we're at Vince.
The projects. So those are also advancing.
I would say that the.
<unk> is building up as well.
In the in different market, we have now a new <unk> and.
The new small office in the east coast to cover the east as well, so I think that debt were making good strides.
And why will get also a third of the RFP and getting a we're getting ready also to answer the future Rfps.
Batteries of opportunity are being look.
The hydro, Quebec, and and joint venture with Hydro, Quebec, we are trying to find good spots to.
And to deploy batteries in the United States.
No I mean, we were focusing a lot of our activities now and the in the states because like you are saying there is definitely a lot of support political support bolt on federal and state.
The level.
That's great color, Thanks, Michelle I'll get back in the queue. Thank you.
The next question comes from line of Rupert <unk> with National Bank. Please go ahead.
Good morning, everyone.
Good morning.
Backseats of Texas have you seen any any precedents and Texas, where projects have been recapitalized or re contracted and what would a scenario look like where you would consider recapitalizing. Your assets would you need just to see a change to the hedge contracts or or reduced our liability as well.
Well, we've been trying to negotiate.
Negotiate some discount on the.
On the total liability of already and the voice so far.
On the hedge provider have resisted any.
Negotiation in and.
And discounting these these and voices or.
Of course, if if court gives us a little bit more room and we're in front of the of our of the judge So we're waiting for.
The result, a hearing has had happened on the May six and the judge said that he would render his decision by the May 'twenty one.
So if we have a positive.
No there, we may ruberg half of little bit more leverage to negotiate something else.
Mind, you that we have a boat in.
And Shannon and.
The flat to up we have also partners that we would have to agree on.
Or not I mean, we would have the are not willing to put more capital we would have to come up with some kind of the.
A resolution on how we would recapitalize these things and.
Tax equity would have to wave also some of there.
Economy for us to to decide to go ahead and all in all of you heard also that channel Francois has mentioned that the hour per se perceive this.
Discount rate for Texas has gone up.
And therefore, we would we would have to see some future.
Future.
Creative return for us to put more money in those strong trust and certainly.
Have.
A different power hedge on.
On the country configuration, instead of having the power edge. So it's a lot of the.
A lot of the stuff to negotiate that before we could put some money. So that's why we and we wanted to give us the perspective, the all of the financial community that worst case walking away from flat to up and Shannon and we of writing it off from our books anything else could be.
Positive.
I would guess the finished Lee we would.
And we would be very careful before putting more capital.
But we never know right.
And of course, this giving us some.
On some wins and some some headroom there to negotiate with all of the the stakeholder it might make sense, but.
This is Lee we we want to focus on something else we have the great.
Outcome, we have great opportunities and our core market.
And it's very unfortunate what we have lived through Texas as I mentioned.
The Mi has turned the page and were full.
We are.
Forward looking into the great other opportunities, but we will not forget like I said, you know we have learned and we're not going to put ourselves in the same situation.
That's the fees.
Have there been any court precedent and Seattle in Texas that might indicate.
Where are the things that are headed with your question.
Well the there's still some.
The <unk> have been some ruling just yet but not the not.
The full extent that we would we would like we're following others of course, some has gone to New York and in New York debt differently was not very successful so.
But the fact that two judges and take in consideration of our.
Our representation and so.
A little bit positive, but again I don't want to give any hope to the to the market on Texas if we.
If we win something.
Good, but like I said pumps to move on from Texas and.
And by the way our hearing.
As and pictures, yes.
And I seem to share if we if we're successful there we might have some.
Some of some potential.
The capacity.
The two.
She makes a little bit better but.
I don't want to focus on on.
On this.
Myself I've of move on.
Okay.
Very good I'll get back on the true.
<unk>.
Your next question comes from the line of.
Sean Stewart with TD Securities.
Thank you and good morning.
A couple of questions.
Just and finish off Texas the the.
First case scenario you you highlighted with the the $4 2 million.
Free cash flow until the flip point.
That was based on I think 2020 results.
Consider that representative of.
And what those assets are capable of and a normal environment, we were under the impression of it might be a little bit higher than that.
Yes, that's a good point.
And look back where we never did really hired and 5 million at the knee year since their inception and <unk>.
We were opening but those project costs or carry some shape and the basis was higher than the original forecast.
And that's that's a good point so we used $4 two until the point. So obviously those project were back ended in terms of cash flow greater cash, but you can refer to our value and use that we've disclosed for the impairment charges with higher discount rates two of the proxy figures.
On the evaluation, we're making on those projections.
That may koppers.
Do you have the evaluation if you don't like the of $4 two but so far I mean, historically that is the best proxy we can provide debt we've achieved on those project debt.
I think that takes us.
Had the in the last few years and some challenging and the basis.
The risk between the and the node and the hub that.
Did and measure it.
And did minimize the potential revenue of these things I would without saying that the overtime.
The and transmission system that these basis would have been reduced overtime.
And the after flip point as we all set tax equity with the.
With the.
A structure where directly after flip point the project doesn't have that much debt and perhaps would generate a whole lot more capital.
Capital of cash.
Cash flow.
But in the latest few years as.
So on the phone so I said, the Shannon and particularly has not been.
Big producer and flat to up wishes.
Ben Commission had a little bit of issue with the.
Some commissioning deficiency from from Vista, some blade repair mint.
We're on the way also and it's on.
Grades on those fleets were supposed to be to be done and actually are being done by business as we speak.
So I mean, we're sad to potentially lead let these asset goal.
But.
Type of of commitment or financial commitment that we have to to look considering the relatively.
Poor performance of the last few years of these assets.
Or not.
Putting.
I would say that it is not necessarily a very.
Appealing financial proposal as we speak and.
And of course, we would have to do something with the existing power hedge which might also include some of some more capital to be.
To be put into those projects zone and.
And also Sean you should remember those projects are a fixed return type of tax equity investment with movable flipped dates and as we disclosed in Q4 dose of flip date for Shannon and flat top.
On the back of the recent years the performance we're on the.
<unk> estimates.
And the flip day.
Move until a certain fixed returns just too.
The kit to make it the.
Thank you.
Lots of moving pieces, thanks for that.
The second question is is there any update on the the timeline for the arbitration process with BC hydro on on loss.
Cheers curtailments.
And yet were scheduled to be early September zone.
Yes.
Okay.
Okay. That's all I have for now thanks very much.
You.
The next question comes from the line of Nelson, the niche with RBC capital markets.
Great. Thanks.
So just to follow up on all of the Texas questions.
I I didn't really understand.
The impact on Shannon, So you've written it down to two.
Zero, but like the net impact for Shannon was about 14 million or the like if you take your share and if you net of the revenues.
And the power of hedges so.
Should we be thinking that.
The net impact on Shannon's 14 million, but if you discount the.
And the cash flows.
It.
The net amount of zero.
Thinking about it the right way.
Okay. So just for clarification, so with those.
And EMEA range from noise I don't know what you can.
The body can do too.
Okay.
Yeah.
And the pickups.
That.
The changes are.
Odds of broader depending on their net earnings are net.
So the what.
And what has happened is that takes the farm net.
Got it said that victory.
And you had the balance.
Yeah.
Ed.
<unk>.
And so youre cutting off there I can't I can't hear you very well no I don't know if it's on the other side.
Very bad noisy it seems that there is the.
Alright.
It sounded like it is coming from Mr Nelson and fine.
Oh, you know what let me mute, let me mute while I.
Listen to your response.
That's much better than the actual okay. So.
So yes, so part of the loss of Shannon of Kid that loss of the Texas Star the loss of <unk>.
Decrease the.
The.
The beginning that you on the balance sheet of debt investment value because we.
And we take the beginning value on the investments then we decreased it by and the net turning gain or net earning losses and then and then after the impairment calculation is a totally different of view of calculating.
And so Shannon was not having so much of the room as at December 20th when we did the impairment calculation, but now with digital.
With this increase and risk premium required and Texas, and the increase and discount trade.
That has created that the value and use calculated as Lord debt.
Carrying value on the balance sheet of that project. So it took the fully suppressed. The story then the storm and the impact on the storm on that net earnings. So I don't know what you've got the difference so really what caused the impairment is the increase and discount rate on the back of higher risk premium. So this is.
Our call after all I mean.
Would quantify the and permanent as being of call. It through all of the effects of the storm because the risk premium that has gone up following the storms and so we needed that as triggered for accountants to make a reassessment of the impairment calculation on the asset.
And that Q1, which we typically do.
Around Q3 of Q4, but I thinks its precise enough I think sort of thoughts when he met these debt since we got $65 million of revenue and the loss of power and <unk>.
And 93, Thats 28, our share is 14 exact but.
I think thats, the one of the issue with China and its debt had since the beginning when when it was owned by Alastair.
Hi.
Performed really poorly and had that completed also a deficit in terms of the.
The total accounts of hole to CD at the time, so if you take that and into consideration.
And we would have this well.
Well I guess already.
And this liability to overcome before the the flip point.
The occurring so when you take all of this into consideration.
I would agree that the Shannon.
It is on perhaps on the border line for us to decide if we put more money in or not.
Flat to up as of this.
Definitely definitely more difficult.
Or easier decision to make Shannon and I would agree that it's on the border line situation and depending on on the outcome shannan might be the little bit more.
Attractive in terms of potential reinvestment and then flat to up.
Okay, that's clear, but essentially.
On the Shannon net impact was $14 million, yes, yes, you are saying is.
And what Youre, saying is youre kind of border of line in terms of weather.
Like walk away from that project or not.
Whereas flat topic.
More definitive decision.
Yes, Okay. So the next question I have is about Hawaii.
In terms of.
I just want to ask you started some you've given I.
And I guess the limited notice to proceed on a few projects have you locked and all of the project cost for those projects, where you'd start of construction I guess with much higher steel prices and all of the other commodity prices copper and everything you've highlighted as well everything is going up but Ah.
I'm just wondering how the.
The construction costs for Hawaii is.
As compared to them.
What do you kind of modeled and a few years ago and when you bid the projects and also.
What the situation is now in terms of locking and.
Pricing.
It's a good point.
And it's true that a lot.
A lot of pressure is on the raw material and what have you. So that's.
Our team is working hard with the.
And with local trade and we also since there was not that big of a project.
We have undertaken to do some of the.
The.
Internally some construction management early.
And manage all of saw some supply.
So we wouldn't have a full EPC type for the smaller project and also on the island, there's not that many big contractor.
Acting on the EPC range of our team are finalizing these are these.
And these contractual agreement we will disclose the up.
And I would say the updated numbers probably and.
On the call of <unk>.
Q Q3, and the eater and August or and the in November.
And give you a little bit more detail on.
On the future revenue and and total cost, but it's true that it's a little bit challenging I guess everybody's seeing some.
Some of these the pressure on pricing.
But we had secured the battery component and also of solar panels and.
Previously so.
Quite a bit of the dos.
Rice's were fixed the early on.
Okay. Thanks, and then just one last question and the MD&A I know I know, it's been kind of going on for I think the disclosure was there the last quarter as well, but theres been a number of.
<unk> financial covenants that patents that have been kind of tripped and a lot of thats been moved to.
As the current liability.
And you just talked about a few of them and give a bit more color in terms of I think it's like M. You wind the others.
And there was like a French project there is a I think mountain mountaineer.
On the Aero as well yeah, Yeah, and can you just kind of run through some of them and say like is this something of that you'll have to.
Kind of resolved pretty quickly or yes, I'll just leave it there.
Well <unk> has been on the.
On this for a while because you remember San John went bankrupt and we had to.
And to do the sales operation, we had and we are actually now doing ourself of.
On the operation on <unk> remember that we are doing self operating all through the ESP. The I guess the peninsula. So for US. It was it was the natural and we hired all of the.
The prior employees of St. John and the now are part of our team.
The issue, we had was to have access to the software and renewable sheet.
And it's called a resetting of keys and stuff like that that were caught into the sandy on the bankruptcy and we had the hard time, having this.
Given the back to us.
Through but true all kinds of negotiation. We also found out that they were in the older supplier debt could <unk>.
Supply these the software update and we have now and they're in agreement with these these new supplier and.
So I guessed it.
By next quarter everything should should be now and normal we have very good relationship with the the existing lenders who was the technical default, but things will be put back in the order where <unk> will do the self operating of these asset and it will be recognized by banks.
And to do so and we'll finalize the and the agreement with this joint venture and remember that <unk> is is the joint venture with the first nation to make mark from the the guests be peninsula. So you know of checks will will provide the service point of service for for the project so that should it should be fine.
<unk> bye.
Bye bye and the next call.
<unk> should be back and normal and that's for the month of and air is a little bit silly.
It's an insurance commitment regarding flooding all of it of anywhere and on <unk>.
Hi, there.
The flooding, but anyway.
It was over and overseeing when the insurance policy were put back together and that had triggered this technical default it's being now.
Being fixed and.
Don't expect any any big issue there.
And then in France.
Remember that I spoke about of Vista.
Problem with blades in the flat to up while we have this blade.
<unk> also in <unk>.
And in France.
Now this debt that's come up with with the repair or enhancement of their blades to make them stronger and that should also solve the issue.
And as you as you know we have been curtailed for quite a bit by the health and the same.
Safety Department and France.
After two blades at the at fail that should also be settled but that those are not very material.
I think that and you and mantra and there will be fixed quickly and.
And it should be getting back to normal on dos.
Yep.
Okay. Thanks, Thanks for the color I'll leave it there and get back in queue. Thanks.
Yes.
The next question comes from the line of Mark Jarvi CIBC capital markets.
Good morning, everyone.
Hi can you hear me, yes, yes, yes.
I'll start with the last comment and just on the resolving those covenant issues is there cash trapped at any of the project levels that will be sort of unencumbered and come back to.
To the top of the house, one close the issues are resolved and the coming quarters.
And you might have some.
And that was that was the trap there and also through the the sandy on.
A bankruptcy.
They were and $19 million.
$19 five to $19 8 million letter of credit.
You.
Towards the in favor of of the project to secure some.
Some I would say.
Obligation under the construction contract and supply agreement from San John.
Since the Syngenta was not able to to do these modification.
And we actually called on this letter of credit and now it's.
It's been sitting in the <unk> accounts of we didn't show and the first quarter, but it will show and the second quarter. So with all of that money on the end and you have enough money to cover any.
I would say deficiencies that were indentified the.
See what the.
And on <unk>.
Okay, and then coming back to Shannon and flat top of force measure.
The challenge is increasingly like if it doesn't go your way.
Top you would walk away.
Other implications are there in terms of.
Is there any penalties or anything else beyond just the the.
On the foregone cash in terms of repercussions from the tax equity or your partners and then I guess implications.
Walking away from this project and the foreclosure of it you think it has any implications on security and tax equity in the future.
Well I think that.
She is there and and city.
No we've been handling this crisis with.
And with consulting would be and our elder partner of Blackrock and Starwood and in the case of Shannon.
We're doing our best I mean, it was pretty difficult too.
Two two.
And to deal with this crisis I don't think that any tax equity investors.
And would take us for I would say.
They gave us some refurbishment on other stuff we have negotiating we are negotiating with wells Fargo as we speak for Greif.
Griffin trail and the aircrafts, the two finalize things and there are and phebe. So.
You know who are who can blame us giving the fact that this was an extreme weather event tax equity was asking do you have these type of the power hedge.
The structure, so it's still a little bit difficult for them now to tell us that it was another good one.
I agree it was not agree the aside but they were the one who.
We're pushing for it.
And in the case of Shannon and actually we were trying to reduce the power of hedge exposure for more than a year and.
And the we're being difficult about it and so forth and so forth because when the altera had put.
And in the Q D.
I think that we're a little bit optimistic on the long term forecast. Since then we had when we acquired Alterra reduced this long term forecast and wanted to reduce also the amount of supplied energy on there the <unk>.
Power edge agreement and.
And they were the ones who were reluctantly wanted us to reduce debt exposure. So all and all I don't think they can.
Put this on us in the sense that.
If it doesn't make any sense for us to put more money and intuit, we've done what we have to do we're.
We're acting as.
A good operator on sites, we've been negotiating and operating the site is the best as we can do now putting putting more capital in the structure that is a lose lose our proposal for us that doesn't make much sense. So I don't think anybody can.
And keep us.
Okay.
Yes.
Annabelle for debt.
So you don't foresee that the as you go to get more tax equity for other U S project debt this year.
And your ability or the changing.
Changing.
The partner with based on the previous history and you can you think people will look through this and.
The.
Quite easy to find the tax equity and going forward.
Well like I said, we we are now with Wells Fargo finalizing the.
The tax equity.
Commitments for four of Hillcrest and we're the same thing at the and Griffin Trail.
Like I said.
We are honest with everybody. We're open book, we're doing our best to try to solve the seizure. We're fighting the fight that we have to fight and court I don't know what else we can do.
And then Griffin trademark is a good example of of different configuration with the tax equity and debt.
That make the job. So we're very happy with this one I think port as ways to continue on tax equity and I think it's clearly understood by the financial community that this is of one off nonrecurring events.
And I agree with you Michele and I don't think we're the only one.
Got cut in there so.
And Jack and provided a few comments around them.
Pieces of the puzzle and Texas in terms of of what happened on the corner what happened post quarter. If you could just fast forward to the end of Q2, maybe just on the consolidated cash balance sheet with CV, which you seem to be able to resolve and.
Where will your sort of consolidated cash b like what adjustments do we have to make from quarter and and then depending on what happens if you walk away or don't walk away, a slight pop and Shannon how else could that impact the sort of the proportionate or sort of cash balance for Ireland.
Okay. Good the very.
Good question, Mark So of PBF will save my comments, because we're into discussion. So <unk> mentioned, the cash settlement as and those happen so the cash payment and resides as at the.
And of March within our accounts payable and constantly added statements so depending on the outcome of our discussion.
The scenario.
And we might see.
We will have the according our accounting transaction and that regards but as force Shannon and flat top.
And in a worst case scenario of what you need to understand that for the balance sheet part you know the value of those two asset as and.
Equity pickup is zero at the end of March will no further adjustment on the balance sheet, if we foreclose on those two projects.
Maybe a slight adjustment that we are carrying at the consolidated level.
Cumulative translation adjustment on the OCI and the accumulated other comprehensive income so maybe a million or two of the adjustment that we would need to finalize on our statement may be some tweaking on our deferred tax in that regard as well, but really the foreclosure of.
Those two projects those project car as a standalone debt.
The only comes from data and the impact we can see on the balance sheet for those assets going for clothes, and Q2 would be limited to the dollar impact for other comprehensive income and maybe different tax and then following the forecast that we foreclose.
And.
The first of June debt, the earning for April and May are ours. So you will see the earnings flowing share gain on.
Joint Ventures for April and March and then after no records of additional revenues for the remaining of the year, but kind of to make photo of me just to make sure Mark in the case of plot of Shan and no financial.
Commitment or cash would be.
And would be true to flat of Shannon.
There is no recourse to two and checks on that basis. So in the worst case, we just end of the.
The the keys over there and the Theres no cash debt.
And <unk> would have to send to flat type of Shannon exactly and the accounts payable reside that their project levels. So the foreclosed the become the edge counterpart.
Ownership, and it's becoming into core EPS and <unk> will be used at all on their own but on the consolidated EBIT for the even for the <unk>.
<unk> fees.
Legal fees have been agreed in front of the judge that those are for the flat to up and trend and the account and the legal fees are paid out of the.
Plateau, and churn and the accounts yes.
And then.
The once again some of the higher prices.
The parts of the Q2.
Is that a net benefit of any again any hedge issue there in terms of what's going on with some of those higher prices.
And I'll leave it there and hopefully we went out and you're talking about.
Mark.
And that the comments were made under the and DNA of higher pricing and Texas. This is comparing Q1 versus Q1 a year ago.
And the iron.
And parts of April we also saw some higher prices in Texas and you are right.
Right.
<unk> benefited from it but PV was with.
Had a little bit of of lost on on the OSU days, yes, yes, nothing to compare with the the other.
Alright.
Great. Okay. Thanks for taking all my questions.
Thank you.
Your next question comes from the line of Angie.
Hey, Dan <unk> with <unk> capital markets.
And good morning.
First off I appreciate all the great details on the types of situations, but just looking forward a bit but I'd like to update on the on the pace of organic growth and project development.
But and Shelly you provided the details on the polymer project can you just talk about some of the other advanced you of solar projects that you have on the pipeline.
And then maybe some more color on the Beaumont activities in France, particularly now with the out of focus on solar.
Well in the.
And frankly, if I start with France, we had secured now and our plan for 60 megawatts of solar but mind you that it's a little bit early we have to go through all of the permitting a lot of stuff with the team on underground did very well there. So I think we have the.
And the approach that can generate a few more solar project and the near future and that the same area I won't go too much and the details just giving you a little bit of the.
Of the updates of what we're doing over there and of.
And in solar.
And I don't want to name the type of project just yet.
But the palomino is the 200 megawatt project and we have a few more.
<unk> from 75 to 150 megawatt spread between the Pennsylvania.
Kentucky.
And the northwest the Ids.
And as to get to around the six 600 megawatts like we said by 2023 2024 ish.
And to deploy the solar panel that we had the previous you've bought the if you remember that our guaranteeing us the.
But the full amount of the ITC the 30% ITC.
Commitment. So these are debt.
And is the strategy the other wind I, rather not to disclose too much about it just yet.
But we're making some good.
The headwind on to make kit.
Joe and.
And the wind, but we're making.
Good advancement and on some of those wind them up and as well.
And I mentioned also Chile, where.
Price power prices are if you look at the <unk>.
Latest few months have improved and also the shutting of shutting down of the coal has accelerated and <unk> just announced the Dr. Shutting down some more some more coal facility in Chile. So I think that we are.
And well positioned and the good news I think it's it's Quebec.
Potential the Rfps.
Also one thing that the.
Minister and Hydro, Quebec has made.
Public is the fact that the are open to and extension of at least 10 years on our existing facility and since we are the first one to have put a wind project and.
In the guests of the Peninsula, our project are going to be.
Quantifying for this extension and.
And remember that we have the.
And roughly 600 megawatt and the guests of the peninsula. So this is a very good news for US It would you would.
Create.
And.
And we'd see a positive.
Scenario, where we can think about extending this these project for another 10 years with we hope and attractive pricing.
Got it and just the follow up on the last points of the day extension that would be with.
And I suppose and minimal.
And the investments required.
No. It's just just to guarantee that we well of guarantee or AE.
A program, where we can prove that under a prudent maintenance capex. This facility can sustain the other 10 years mind you that we have overtaken the self operation and get the peninsula really early on and our team has done a great job.
In managing these.
Preemptive.
The Capex and we've shown that the availability of these machine, we've been really proactive and catching early the effect on generator of bearings and all kinds of.
Of I would say initiatives from our team has made these machine available and we think.
The majority of them can can extend their life for another 10 years, we've been very very.
<unk> and maintaining the the blades we have been the.
E, creating a lot of innovation in crack detection and blades and being proactive and repairing these little cracks a little bit like you're.
And your windshield on the on a car if you have a slew of the crash you can go in the half of them repair quite.
And quite effectively and very cheaply versus waiting and seeing that crack going and then suddenly you have to change the windshield, while we've been in the forefront of innovation by having these very very powerful camera to take look at the the blades and have the software detecting these little.
Crack and having a very.
It is.
Way to repair it from from the top of the blades, and having and that sales going down and having all kinds of compounds that tend to be.
Use even when it's cold and the guests the finish of auto repair. These blades. So we're very confident that.
The 600 megawatt Jean machine can be extended.
For another 10 years without major Capex.
And I appreciate the great detail and I'll leave it there. Thank you.
And your last question comes from the line of Rupert <unk> with National Bank.
Thank you just a couple of quick questions and I know, we're getting long on this call and I'll follow up on on the Quebec market Youre.
You're talking about re contracting the the gas projects, what's the opportunity for re powering those projects at the end of those contracts will have sort of an opportunity that well yet yes.
And we'll be we're working on it right I mean, it's.
The early the early stage discussion with the with the <unk>.
<unk> and hydro, Quebec, they are putting debt are together, but theoretically the would be open up to have an extension of 10 years and adding US also bid for a repowering scenario to extend the life of these assets by another 20 or 25 years. So all in all of the it could be and extension of <unk>.
10 years, plus 20, or 25 years of a new contract so for us it's a great opportunity.
To enhance the these are these existing facility and make sure that.
They're there and the portfolio of for very long term.
Great. Thanks, and then on Griffin Trail and I think you show it still lives.
On the contracted just remind us of what's the the long term planning and now you're still evaluating potential off takes on Griffin trail.
Well as the perfect scenario would be something close to what we have the in foard City and remember that Foard City has 300 megawatt under PPA and produce PPA and 50 megawatts being merchant.
And so hoping to hopefully in the next.
Little a little while.
I think that the crisis, now and Texas has a mix up a little bit of the.
Offer and demand.
And the there will be some.
A lot of activities in Texas regarding these potential.
The restructuring into.
You have a lot of our power hedges that will be.
Looking for potential of PPA. So I don't think that the next six months or so will be.
Good day parts and 82.
Renegotiate PPA.
On the other and.
Maybe a lot of the utility and potential also some customer.
It might have been burned on debt crisis, so who knows.
This is the long term game.
Griffin trail would be to reduce a little bit the exposure on the.
On merchant on merchant, but until we finalize with Phebe phebe.
TB.
And I still has the spa and so we'd love to be able to have a different structure or reduce this exposure on that power edge, but until we do.
We've seen that the Griffin trail is is a natural hedge and in that area of being 225 megawatt fully merchant so.
On the long run we would rather see.
Less merchant exposure, but for the time being we're perfectly happy to have Griffin trail fully merchant.
Okay very good thank you.
Sure.
And.
Mr. Sean there are no further questions at this time.
Thank you very much. Thank you everyone and we will reconvene in August. Thank you. Thank you everybody. Thank you.
Ladies and gentlemen, you may now disconnect your lines.
Okay.
Okay.
Yes.
And then.
And.
Yes.
Yes.
Okay.
Okay.