TransAlta announces close of Solomon power station acquisition

TransAlta announced that through its subsidiaries, it has successfully completed the acquisition of the Solomon power station for U.S. $318M. The Solomon power station is fully contracted with Fortescue Metals Group Ltd. under a long-term Power Purchase Agreement, or PPA, and will support their iron ore mining operations in the Solomon Hub, located in the Pilbara region of Western Australia. The initial term of the PPA is 16 years after which Fortescue has the option to either extend the PPA by an additional five years under the same terms, or to acquire the facility from TransAlta for a value equivalent to the five year extension. The acquisition is expected to generate unlevered after-tax returns in the low double digits and pre-financing cash flows of approximately $40M per year.