GUELPH, Ontario, Jan. 9, 2019 /PRNewswire/ -- Canadian Solar Inc. (the "Company", or "Canadian Solar") (CSIQ), one of the world's largest solar power companies, today announced that it has completed the closing of its first equity securitization in Japan. This transaction is the first equity securitization in the world to be backed by long-term contracted solar assets.
Canadian Solar successfully raised JPY6.3 billion (US$58 million) from a diversified mix of Japanese and Korean institutional investors in its inaugural offering of equity backed securities, Canadian Solar Securitized Green Equity Trust 1. Proceeds from the offering were originally deployed to acquire Canadian Solar's 34MWp operating solar portfolio, comprising the 23.8MWp Smart Solar Yamaguchi-Aio Solar Power Plant and the 10.2MWp CSJ Kamikitagun Rokunohemachi Solar Power Plant. Canadian Solar recognized revenue from sale of the plants in the third and fourth quarter of 2018.
The two projects have existing debts that have been raised through a non-recourse project bond structure developed using financial securitization techniques. The securitization of the equity portion of the capital structure brings the whole-business securitization concept one step further and culminates into a total securitization of solar assets. The investment period matures in September 2037 and the securities have been rated as Green 1, the highest Environmental, Social and Governance (ESG) investment tier by the Japan Credit Rating Agency, Ltd (JCRA). The underlying solar power plants have each further received the investment grade rating of "A" from JCRA for its non-recourse project bonds.
Electricity generation from the CSJ Kamikitagun Rokunohemachi Solar Power Plant and the Smart Solar Yamaguchi Aio Solar Power Plant is purchased by Tohoku Electric Power Co., Inc. and Chugoku Electric Power Company under 20 years feed-in-tariff (FIT) contracts at the rates of JPY36 (US$0.33) and JPY40 (US$0.37) per kWh, respectively. Canadian Solar's asset management arm, Canadian Solar Asset Management K.K., has been appointed as the Asset Manager to manage the securitized portfolio. Canadian Solar O&M Japan also provides Operations and Maintenance (O&M) services for the remaining duration of the 20 years FIT period. The two solar power plants utilize MaxPower modules supplied by Canadian Solar and began commercial operations in late 2016.
"We are delighted to originate this ground-breaking transaction and to take solar securitization to the next level. We are proud of our continuous achievements to drive Environmental, Social and Governance (ESG) investment growth in Japan. Since 2017, our Japanese asset management arm has rapidly expanded to manage over JPY 60 Billion (US$540 million) of ESG investment platforms, including the TSE-listed Canadian Solar Infrastructure Fund (TSE:9284)," commented Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar. "We plan to grow our ESG investor base to provide further avenue for institutional and retail investors who are increasingly looking to diversify their portfolios into supporting clean energy transition and secure an investment opportunity in solar assets backed by attractive long-term yields."
Goldman Sachs Japan Co., Ltd, acted as sole structuring agent and sole placement agent for the transaction.
The securities have been assigned the Green 1 rating in accordance with the ICMA's Green Bond Principles and Japan's Ministry of the Environment's Green Bond Guidelines. The Green 1 rating is the investment criteria for asset that demonstrates the best in class performance in environmental impact, disclosure transparency and sustainability. The portfolio is expected to produce 38,580 MWh of clean solar energy annually, or sufficient to reduce 25,441 tons of carbon dioxide emissions.
About Canadian Solar Inc.
Founded in 2001 in Canada, Canadian Solar is one of the world's largest and foremost solar power companies. As a leading manufacturer of solar photovoltaic modules and provider of solar energy solutions, Canadian Solar also has a geographically diversified pipeline of utility-scale power projects in various stages of development. In the past 17 years, Canadian Solar has successfully delivered over 30 GW of premium quality modules to over 150 countries around the world. Furthermore, Canadian Solar is one of the most bankable companies in the solar industry, having been publicly listed on NASDAQ since 2006. For additional information about the company, follow Canadian Solar on LinkedIn or visit www.canadiansolar.com.
Canadian Solar's Safe Harbor/Forward-Looking Statements
Certain statements in this press release are forward-looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially. These statements are made under the "Safe Harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by such terms as "believes," "expects," "anticipates," "intends," "estimates," the negative of these terms, or other comparable terminology. Factors that could cause actual results to differ include general business and economic conditions and the state of the solar industry; governmental support for the deployment of solar power; future available supplies of high-purity silicon; demand for end-use products by consumers and inventory levels of such products in the supply chain; changes in demand from significant customers; changes in demand from major markets such as Japan, the U.S., India and China; changes in customer order patterns; changes in product mix; capacity utilization; level of competition; pricing pressure and declines in average selling prices; delays in new product introduction; delays in utility-scale project approval process; delays in utility-scale project construction; delays in the completion of project sales; continued success in technological innovations and delivery of products with the features customers demand; shortage in supply of materials or capacity requirements; availability of financing; exchange rate fluctuations; litigation and other risks as described in the Company's SEC filings, including its annual report on Form 20-F filed on April 26, 2018. Although the Company believes that the expectations reflected in the forward looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements. Investors should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and Canadian Solar undertakes no duty to update such information, except as required under applicable law.