Canadian Solar Inc. (NASDAQ: CSIQ) and SkyPower Limited have entered into a purchase and international joint venture agreement. Under the agreement, Canadian Solar will acquire a majority interest in 16 solar projects representing approximately 190 to 200 MW from SkyPower.
Each of these projects Canadian Solar is acquiring has been awarded a 20-year power purchase contract by the Ontario Power Authority. Fifteen of these contracts were issued under Ontario's Feed-In-Tariff Program, and one was issued as part of Ontario's Renewable Energy Standard Offer Program. These projects are in the advanced permitting stage and are expected to commence construction in 2013 and be fully operational in 2014. They are expected to generate over $800 million in revenue for Canadian Solar.
Canadian Solar and SkyPower have also agreed to form a 50-50 international joint venture focused on developing solar power plants in select emerging markets. The company expects to start generating revenue from this global strategic initiative within the next two to three years.
The transaction price is approximately $185 million, to be paid at certain milestones. Canadian Solar will assume certain security deposits. In conjunction with the transaction, a five-year warrant is being issued to SkyPower for 9.9 percent of Canadian Solar's outstanding shares, with a strike price of $5.00.
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