Chinese solar power developer Canadian Solar has completed the $265 million acquisition of Recurrent Energy from Sharp Corporation.
The deal, first announced last month, sees the Sharp offload its U.S.-based project development subsidiary amid rumors strongly refuted that it is seeking an exit strategy from the solar business.
For Canadian Solar, the acquisition furthers its global PV reach, expanding its solar project pipeline by around 4 GW, taking its total PV pipeline to 8.5 GW, of which 2.4 GW is at late-stage development.
Seven late-stage projects formerly belonging to Recurrent Energy have now come under the Canadian Solar umbrella, adding 1 GW of soon-to-be-completed capacity to the companys U.S. portfolio, chiefly in the states of California and Texas.
These low-risk additions to Canadian Solars pipeline have pre-approved power purchase agreements (PPAs) in place with what the company terms "investment grade counterparties", and will boost Canadian Solars bottom line significantly, generating a steady cash flow that will underpin the roll-out of the companys own yieldco later this year.
As part of the terms of the acquisition, Recurrent Energy will be provided with a $150 million senior secured bridge loan from Credit Suisse, while the Export Development Canada (EDC) has issued $75 million worth of Performance Security Guarantees to cover all outstanding debts issued against Recurrent by project developers.
Following the finalization of the acquisition on March 30, David Brochu, Recurrents former COO, has been appointed as the new CEO, replacing Arno Harris, while Michael Metzner has also stepped down from his role as CFO.
"I am honored to lead this exceptional team, with our new parent Canadian Solar, as we further strengthen our position in North Americas solar energy market," said Brochu. "We look forward to transitioning our business model to own and operate assets, as we embark on construction of more than 1 GW of solar PV projects over the next two years."
Canadian Solar chairman and CEO Shawn Qu added that the acquisition helps to position Canadian Solar among the leading global solar energy companies. The deal not only serves to strengthen Canadian Solars exposure to the U.S. market, but also serves as a stark reminder of Sharps wider difficulties, said IHS Technology’s Ash Sharma last month.
"Our view is that the sale of Recurrent is probably more of a reflection of Sharps difficult financial position in the past few years rather than it viewing solar negatively," Sharma told pv magazine in February.
This week, it was reported in Reuters that Sharp has no plans to quit or sell the solar business. "We are currently undergoing fundamental structural reforms for the recovery of the profitability of solar business, but there are no facts to Sharp withdrawing from solar business at this time," said Kazushi Mukai, head of Sharps energy unit.