TransAlta Corp. completes $345M bond offering for TransAlta OCP LP

On July 20, 2018, TransAlta Corporation (“TransAlta”) completed a $345 million secured bond offering, by way of a private placement for its newly formed limited partnership, TransAlta OCP LP (the “Issuer”), which was secured by, among other things, a first ranking charge over all but a nominal percentage of the equity interests in the Issuer and its general partner, and a first ranking charge over all of the Issuer’s accounts and certain other assets (the “Financing”). Bondholders also have the benefit of an indirect priority claim over roughly 95% of each annual off-coal payment required to be made by the Government of Alberta (the “Province”) pursuant to an Off-Coal Agreement dated November 24, 2016 (the “Off-Coal Agreement”), which was entered into in connection with the cessation of coal-fired emissions in Alberta, between the Province and TransAlta, TransAlta Generation Partnership, TransAlta Cogeneration, L.P. and Keephills 3 Limited Partnership.

The bonds are amortizing and bear interest from their date of issue at a rate of 4.509% per annum, payable semi-annually and maturing on August 5, 2030. The bonds have a preliminary rating of BBB, with a Stable trend, by DBRS.

Net proceeds of the Financing were used to make an advance to TransAlta, the proceeds of which were used to redeem all of all of TransAlta’s outstanding 6.40% Medium Term Notes, due November 18, 2019.

Norton Rose Fulbright Canada LLP was counsel for TransAlta with a team led by Nicole Sigouin (Financial Services) and comprised of Seemal Patel, Evelyn Li and Kathy Snow (Securities), Amanda Plastina, Russell Dufault and Liliana Carpico (Financial Services), Karen Galpern (Research/Insolvency), Evan Cobb (Insolvency), Dion Legge and Brian Milne (Tax), Justin Pettigrew (Securities) and Marlow Gereluk (Financial Services).

McCarthy Tétrault LLP was counsel for Agent and Bondholders with a team led by Gordon Baird (Financial Services) and comprised of Scott Bergen (Securities), Shauvik Shaw and Cristina Arantes (Financial Services), Jamey Gage (Insolvency) and Stefanie Morand (Tax).

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