Capital Power Announces Strategic Acquisition of Two Flexible Generation Assets in PJM and a $500 Million Offering of Common Shares

Press Release

April 14, 2025

Acquisition Highlights:

• Strategic entry into PJM²: establishes a foothold in the largest and most liquid North American power market with strong fundamentals for natural gas power generation, enhancing strategic positioning for Capital Power.
• Positions Capital Power as one of five North American independent power producers (“IPPs”) with over 10 GW of natural gas capacity: adds 2.2 GW of natural gas capacity to the Company’s Flexible Generation³ portfolio, strengthening Capital Power’s position as the 5^th largest non-regulated operator of flexible and reliable natural gas assets in North America.⁴
• Continues North American expansion and diversification strategy: increases diversification in Capital Power’s portfolio, no single market will represent more than 30% of net capacity.
• Strategically positioned, high quality assets: Hummel Station is one of the largest, newest, and most efficient combined-cycle natural gas assets in PJM MAAC⁵ (“Hummel”) and the Rolling Hills plant is a combustion turbine natural gas asset and a flexible peaker with fast ramping capability (“Rolling Hills”), both of which support the reliability of PJM’s electricity grid and position Capital Power for growth opportunities in PJM and North America more broadly.
• Attractive valuation: approximately 7x 5-year (2026-2030) average enterprise value (“EV”) / Adjusted EBITDA⁶, a comparable valuation multiple to Adjusted EBITDA estimated for 2026, the first full year of ownership post-Acquisition.
• Expected to be immediately accretive in the first full year of ownership: approximately 17-19% 5-year (2026-2030) average AFFO per share⁶ accretion, significantly above previous acquisitions by Capital Power.
• Prudent financing plan: financing plan maintains Capital Power’s strong, investment grade credit rating and $500 million common share offering fully satisfies Capital Power’s equity funding requirement for the Acquisition.

1. Converted from US dollars to Canadian dollars using a 1.3890 exchange rate, as reported by the Bank of Canada on April 11, 2025.
2. Pennsylvania – New Jersey – Maryland Interconnection.
3. Flexible Generation is defined as natural gas generation assets and energy storage business.
4. Based on net unregulated capacity utilizing S&P Global Market Intelligence database of gas-fired generation operators (February 2025) and referenced against publicly disclosed sources where available.
5. Mid-Atlantic Area Council region.
6. See Non-GAAP Financial Measures and Ratios.

EDMONTON, Alberta – Capital Power Corporation (“Capital Power” or the “Company”) (TSX: CPX) announced today that an indirect wholly-owned subsidiary of the Company has entered into a definitive agreement with Hummel Station Intermediate Holdings III, LLC and Rolling Hills Generating Holdings, LLC, each a subsidiary of LS Power Equity Advisors, LLC, to acquire:

1. 100% of the equity interests in Hummel Station, LLC, which owns the 1,124 MW Hummel Station, a combined-cycle natural gas facility in Shamokin Dam, Pennsylvania (the “Hummel Acquisition”); and
2. 100% of the equity interests in Rolling Hills Generating, L.L.C., which owns the 1,023 MW Rolling Hills plant, a combustion turbine natural gas facility in Wilkesville, Ohio (the “Rolling Hills Acquisition” and together with the Hummel Acquisition, the “Acquisition”).

The net purchase price of the Acquisition is expected to be US$2.2 billion (~CAD$3.0 billion), subject to customary post-closing adjustments, including working capital and estimated transaction expenses. The Acquisition is expected to close in the third quarter of 2025, subject to receipt of regulatory approvals and the satisfaction of other customary closing conditions.

Following the closing of the Acquisition, Capital Power will be positioned as one of five North American IPPs with over 10 GW of natural gas capacity. The Acquisition is consistent with Capital Power’s strategy to acquire Flexible Generation assets, and consistent with the Company’s growth focus in the U.S. and PJM market, which is the largest and most liquid North American power market. Capital Power plans to leverage its deep knowledge and experience in plant operations and power trading and origination to commercially optimize these assets and help drive long-term value as part of its broader fleet.

The Acquisition reflects an attractive valuation of approximately 7x 5-year (2026-2030) average EV / Adjusted EBITDA⁶, a comparable valuation multiple to 2026E Adjusted EBITDA⁶, the first full-year of operations after the Acquisition, and below the average multiple Capital Power has paid on previous acquisitions of Flexible Generation assets. Capital Power expects the Acquisition to generate average annual Adjusted EBITDA of approximately $443 million for the 2026-2030 period and to be, on average, approximately 17-19% accretive to AFFO per share⁶ over the same period, based on expected permanent financing, which exceeds the mid-to-high single digits accretion of Capital Power’s previous gas acquisitions.

“Capital Power’s acquisition of Hummel and Rolling Hills expands our U.S. generation fleet and advances our position as a leading North American power producer”, said Avik Dey, President and CEO of Capital Power. “With our expansion into the largest and most liquid power market in North America, we continue to deliver on our strategy. These plants will bolster our Flexible Generation portfolio and align with our commitment to provide reliable, affordable power solutions that support a balanced approach to the energy expansion. As a leading operator in North America, our ability to integrate these assets, optimize performance and enhance returns through our robust trading platform underpins the long-term value we expect these acquisitions will provide for our shareholders.”

“Acquiring these high-quality assets aligns with our financial and strategic objectives as we execute on accretive growth opportunities that diversify our Flexible Generation fleet across North America, while maintaining our investment grade credit rating and balance sheet strength” said Sandra Haskins, SVP Finance and CFO of Capital Power. “The Hummel and Rolling Hills assets offer an attractive entry point in PJM.”

Net proceeds from Capital Power’s concurrent $500 million common share offering will fully address the equity funding requirement for the Acquisition. The remaining funding will be sourced from a combination of some or all of the following (i) cash on hand from a prior equity issuance and asset divestitures; (ii) longer term debt financing; (iii) other immediately available funds, including potential draws under Capital Power’s existing credit facilities; and (iv) funding provided under Acquisition Term Loan Facilities, as defined and outlined in further detail below.

The Company has entered into a commitment letter dated April 14, 2025 (the “Commitment Letter”) with a Canadian chartered bank affiliate of TD Securities Inc. for a fully underwritten $2 billion senior unsecured term loans. In addition, the Company has access to $1 billion under its existing revolving credit facilities, which are currently undrawn. If drawn, repayment or refinancing of the facilities is expected through the issuance of senior notes and/or hybrid notes or other sources, subject to market conditions and other factors.

This funding plan maintains Capital Power’s investment grade credit rating and preserves its strong balance sheet and financial flexibility.

Common Share Offering

The Company has entered into an agreement with a syndicate of underwriters (the “Underwriters”) led by TD Securities Inc. and CIBC Capital Markets to issue 8,060,000 common shares of Capital Power (the “Common Shares”), on a bought deal basis, at an issue price of $43.45 per Common Share (the “Offering Price”), for total gross proceeds of approximately $350 million (the “Public Offering”). The Company has granted the Underwriters an over-allotment option to purchase, in whole or part, up to an additional 1,209,000  Common Shares at the Offering Price to cover over-allotments, if any, exercisable at any time and from time to time until the date that is thirty (30) days following the closing of the Public Offering. If the over-allotment option is exercised in full, gross proceeds from the Public Offering will be approximately $403 million.

Additionally, the Company will issue, at the Offering Price, 3,455,000 Common Shares for $150 million on a private placement basis (the “Private Placement”), to Alberta Investment Management Corporation. The Common Shares sold pursuant to the Private Placement will be subject to a statutory hold period of 4 months and one day from the closing date of the Private Placement. TD Securities Inc. is acting as sole agent and sole bookrunner on the Private Placement.

The gross proceeds of the Public Offering and the Private Placement will be used by Capital Power to fund a portion of the purchase price for the Acquisition. The closings of the Public Offering and the Private Placement are not conditional upon the completion of the Acquisition. If the Acquisition is not completed, the Company intends to use the net proceeds from the Public Offering and the Private Placement to finance future growth opportunities including acquisitions, finance its capital development expenditures, reduce its outstanding indebtedness or for other general corporate purposes.

The Public Offering will be offered in all provinces and territories of Canada by way of a prospectus supplement (the “Prospectus Supplement”) to Capital Power’s base shelf prospectus dated June 12, 2024 (the “Base Shelf Prospectus”). The Prospectus Supplement will be filed with the securities commissions or securities regulatory authorities in all of the provinces and territories of Canada on or before April 16, 2025. The Common Shares will also be offered on a private placement basis in the United States to “qualified institutional buyers” (as defined in Rule 144A of the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”)) pursuant to an exemption from the registration requirements of the U.S. Securities Act. Completion of the Public Offering and Private Placement are subject to certain conditions including receipt of all necessary approvals, including the approval of the Toronto Stock Exchange. The closings of the Public Offering and Private Placement are anticipated to occur on or about April 22, 2025. The closing of the Private Placement is conditional on the concurrent closing of the Public Offering and closing of the Public Offering is conditional on the concurrent closing of the Private Placement.

The above is a summary of the Public Offering. For further information, please refer to the term sheet accessible on the System for Electronic Data Analysis and Retrieval + (“SEDAR+”) at www.sedarplus.ca and the Prospectus Supplement qualifying the offering of Common Shares, which will be filed on SEDAR+.

Access to the Base Shelf Prospectus, the Prospectus Supplement, and any amendments to the documents will be provided in accordance with securities legislation relating to procedures for providing access to a prospectus supplement, a base shelf prospectus and any amendment. The Base Shelf Prospectus is, and the Prospectus Supplement will be (within two business days of the date hereof), accessible on SEDAR+ at www.sedarplus.ca. The Common Shares are offered under the Prospectus Supplement. An electronic or paper copy of the Base Shelf Prospectus, the Prospectus Supplement (when filed), and any amendment to the documents may be obtained without charge, from TD Securities Inc. at (i) 1625 Tech Avenue, Mississauga, Ontario L4W 5P5 Attention: Symcor, NPM; (ii) by telephone at (289) 360-2009; or (iii) by email at sdcconfirms@td.com or from CIBC Capital Markets at (i) 161 Bay Street, 5^th Floor, Toronto, ON M5J 2S8; (ii) by telephone at (416) 956-6378; or (iii) by email at mailbox.canadianprospectus@cibc.com, by providing the contact with an email address or address, as applicable. The Base Shelf Prospectus and Prospectus Supplement contain important, detailed information about the Company and the proposed Public Offering. Prospective investors should read the Base Shelf Prospectus and Prospectus Supplement (when filed) before making an investment decision.

Acquisition Term Loan Facilities

For purposes of financing the Acquisition, the Company has entered into a Commitment Letter dated April 14, 2025 with a Canadian chartered bank affiliate of TD Securities Inc. Pursuant to the Commitment Letter, the lender has agreed to provide, on a fully underwritten basis, senior unsecured term loan facilities in an aggregate principal amount of up to $2 billion (the “Acquisition Term Loan Facilities”). The Acquisition Term Loan Facilities are comprised of two tranches, with the first tranche, a non-extendible, non-revolving, syndicated term credit facility, in the aggregate principal amount of $1 billion and maturing in 2028, and the second tranche, a non-extendible, non-revolving, syndicated term credit facility, in the aggregate principal amount of $1 billion and maturing in 2027. If drawn, repayment or refinancing of the Acquisition Term Loan Facilities is expected through the issuance of senior notes and/or hybrid notes or other sources, subject to market conditions and other factors.

First Quarter Update

Based on preliminary information, Capital Power’s business and financial performance for the quarter ended March 31, 2025, as measured by Adjusted EBITDA⁶ and AFFO⁶, has been modestly better than management’s expectations for the first quarter and confirms expectations underlying the 2025 guidance released in January. Updated guidance for full year 2025 will be provided closer to the time of closing of the Acquisition. 

U.S. Securities Law Disclosures

The distribution of this announcement may be restricted by law in certain jurisdictions, and persons into whose possession any document or other information referred to herein should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

No securities regulatory authority has either approved or disapproved of the contents of this news release. This announcement does not constitute an offer of securities for sale in the United States, nor may any securities referred to herein be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act, and the rules and regulations thereunder. The securities referred to herein have not and will not be registered under the U.S. Securities Act or any state securities law, and except pursuant to exemptions from registration requirements of the U.S. Securities Act and any applicable state securities laws, may not be offered or sold in the United States.

Advisors

Evercore is acting as sole M&A financial advisor to Capital Power, TD Securities Inc. is advising Capital Power on financial matters, and Simpson Thacher & Bartlett LLP is acting as legal advisor to Capital Power with respect to the Acquisition.

Facilities Overview

	Hummel	Rolling Hills