CA - Top shareholder Starboard seeks sale of Algonquin's renewables business

2023-07-06 09:33:24 ET

Algonquin Power & Utilities ( NYSE: AQN ) would benefit from a sale of all or a substantial majority of its unregulated renewables business by ensuring lower leverage, a safer dividend, a greener asset base and higher rate base growth than peers and thus afford a higher valuation, Starboard Value said Thursday in a letter to the company's board.

The company's largest shareholder with a 7.5% stake said Algonquin's ( AQN ) valuation has been harmed by several factors, most notably excessive leverage and a high dividend payout ratio, but Starboard said the problems can be solved through a sale of all or most of the Renewable Energy Group.

Starboard said the best path to achieving these objectives would be a sale of the substantial majority of Algonquin's ( AQN ) renewables assets, including the 42% stake in Atlantica Sustainable Infrastructure.

A sale would bring a substantial influx of cash with which to pay down debt and repurchase shares, and Algonquin ( AQN ) would become "a best-in-class mid-sized utility with a highly attractive financial profile where the significant majority of earnings come from stable, regulated businesses," Starboard said.

More on Algonquin Power & Utilities:

• Financial and valuation comparison to sector peers
• Analysis: Algonquin and Atlantica: Strategic Reviews Could Be A Major Catalyst
• Stock price return: Up 24.5% YTD, down 37% in the past 12 months

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