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TransAlta Announces Key Actions to Support Transition to Clean Power
CALGARY, Alberta (January 14, 2016) – TransAlta Corporation (“TransAlta” or the “Company”) (TSX: TA; NYSE: TAC) today announced the key actions it is taking to support its transition from coal to gas-fired and renewable generation in the Province of Alberta and maximize its financial flexibility. These actions include revising the dividend to $0.16 per share on an annualized basis and suspending the Premium DividendTM, Dividend Reinvestment and Optional Common Share Purchase Plan (the “DRIP”) effective immediately. TransAlta also confirmed today that it remains on track to meet its 2015 and 2016 guidance.
“The actions we are taking today are prudent and proactive steps that will maximize our long-term financial flexibility,” said Dawn Farrell, President and Chief Executive Officer. “We are taking action now to ensure we can manage our transition from a position of strength.”
TransAlta is executing the following actions:
• Revise the Dividend – The revised dividend of $0.16 per share on an annualized basis represents a 15% to 20% payout of Comparable Free Cash Flow based on 2016 guidance and will provide TransAlta with incremental cash of approximately $150 million annually.
• Suspend the DRIP – The DRIP will be suspended effective immediately to stop shareholder dilution. TransAlta does not currently expect to raise additional equity in 2016 as the incremental cash from the dividend revision will be used to strengthen its balance sheet.
• Reposition the Capital Structure – TransAlta will focus on raising non-recourse debt to fund upcoming corporate debt maturities. The Company expects to raise $400 to $600 million of project level debt in 2016 to fund the next material debt maturity of U.S. $400 million in 2017 and plans to execute a similar strategy for the 2018 debt maturities of CAD $177 million and U.S. $520 million.
• Secure a Coal Transition Agreement – TransAlta will negotiate with the Government of Alberta, using a principles based approach, to ensure the Company has the certainty and capacity needed to invest in clean power. An important aspect of these negotiations will be the Government of Alberta’s commitment to treat coal-fired generators fairly and not unnecessarily strand capital.
• Identify and Develop Growth Opportunities – Over the next 15 years, TransAlta will focus on replacing coal generating assets with gas-fired and renewable generation assets.
These actions, combined with initiatives completed in 2015, will allow TransAlta to build the financial capacity and flexibility required to ensure the Company is well positioned for the next 15 years to efficiently address upcoming debt maturities and capitalize on opportunities in gas-fired and renewable generation that will arise as Alberta transitions from coal to clean power.
2015 and 2016 Guidance
In advance of its Fourth Quarter 2015 Earnings Release, TransAlta confirms that its results for 2015 will be within the revised guidance ranges discussed during its Third Quarter 2015 Conference Call, subject to potential regular year-end adjustments relating to force majeure provisions that will be reviewed as part of the financial close process.
Additionally, TransAlta is reaffirming its outlook for 2016, also discussed on its Third Quarter 2015 Conference Call, as summarized below:
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