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Atlantic Power Corporation Message Board

  • casaba61 casaba61 Mar 27, 2013 3:03 PM Flag

    Asset sales - $$$

    Maybe people should do some homework and see that the company is unloading some assets like plants and lines.. They will be getting cash for these they are still a very large power producer..

    Look at the mkt cap / revs.. this is silly

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    • jmesa Mar 27, 2013 5:03 PM Flag

      They also purchased Ridgeline in Dec 2012 for 88 mil

      Sentiment: Strong Buy

    • Atlantic Power may be a large power producer, but after selling those two natural gas power plants in Florida -because they couldn't renegoiate new economic power purchase agreements - it isn't as big as it used to be. Those two plants represented over 21% of Atlantic Power's free cash flow and when combined with the recent power transmission line sale in Calfornia the loss of cash flow is over 25%. The proceeds from these sales had to be used to pay down the company's huge debt load and there's lots more debt coming due in 2014.

      If that was the end of the problem maybe we could all be optimistic about the future of Atlantic Power; but, there are other AT natural gas plants that are in the process of renegoiating their power purchase agreements and management has stated that the negotiations are challanging. Meaning that future cash flows from those assets will be lower than they were in the past.

      As cash flow diminishes the ability to pay the severely reduced dividend comes into question. Managements guidance stated that the 2013 pro forma dividend payout ratio would still be 100% ( even after reducing it by 65%) of cash flow leaving absolutely no room for error. Sound familiar?

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