US$100 Million Transformative, Project Financing Announced by SolarBank and CIM Group to Fund 97 MW of Renewable Energy Assets in the United States
- Secured major US$100 million project financing without share dilution
- Company retains majority ownership in 97 MW solar portfolio
- Strategic partnership with established infrastructure investor CIM Group
- Structured financing allows for staged funding based on project completion
- Investment demonstrates market confidence in SolarBank's growth strategy
- Funding contingent on project completion milestones - no immediate access to capital
- CIM Group captures 100% of investment tax credit sales
- Project development subject to various regulatory approvals and permits
- Risks associated with securing additional financing for initial project development
- Success dependent on maintaining favorable government incentives for solar power
Insights
SolarBank secures $100M non-dilutive project financing from CIM Group for 97MW solar portfolio while maintaining majority ownership and favorable economics.
This $100 million financing arrangement with CIM Group marks a strategic milestone in SolarBank's evolution as an independent power producer. The transaction employs an innovative structure as preferred equity investment at the project level rather than a dilutive share issuance, allowing SolarBank to maintain majority ownership while accessing substantial growth capital.
The financial terms are notably advantageous - CIM receives only a
The funding mechanism is deliberately staged -
The redemption framework provides balanced exit options: SolarBank can call the investment at the greater of fair market value or a capital multiple after 5+ years, while CIM's put option is at the lower of these metrics, establishing downside protection for both parties.
Currently at Mandate Letter stage, execution risk remains present. SolarBank must secure interim financing to reach mechanical completion milestones before accessing CIM funding, representing a near-term capital requirement that investors should monitor.
97MW solar portfolio significantly expands SolarBank's generation capacity through strategic financing that leverages tax credit transferability without shareholder dilution.
The 21 solar projects totaling 97MW represent substantial scale expansion for SolarBank's independent power production business. With average project size around 4.6MW, these appear targeted toward community solar applications rather than utility-scale developments, suggesting stable, contracted revenue streams.
This transaction strategically positions SolarBank in the competitive U.S. renewable energy market by building recurring revenue through power generation assets. The structure leverages CIM Group's ability to monetize tax credits through the Inflation Reduction Act's transferability provisions, creating mutual value.
CIM Group's participation as an established infrastructure investor signals confidence in both SolarBank's development capabilities and the underlying project economics. The milestone-based funding approach ensures accountability while deploying capital efficiently.
Development challenges remain significant - particularly securing interconnection approval, which has become a major bottleneck for U.S. solar projects. The disclosure explicitly acknowledges these risks along with community solar contracting requirements, permitting processes, and potential policy shifts.
The NewHoldCo joint venture structure preserving majority SolarBank ownership while providing non-dilutive growth capital represents an innovative approach to scaling renewable energy development. If successfully executed, this framework could become a repeatable model for SolarBank's continued expansion while optimizing their capital structure in the current interest rate environment.
Financing to accelerate SolarBank's growth as an owner of solar power projects in the
"The financing is another major milestone in SolarBank's plans to grow its status as an independent power producer. Assuming full funding, SolarBank will retain a majority ownership interest in what is expected to be 21 solar energy projects with a total capacity of 97 MW," said Dr. Richard Lu, President and CEO of SolarBank. "The Transaction has been structured such that SolarBank does not have to issue any new shares, as the financing is being completed at the project company level."
"CIM Group has a long history of developing and investing in essential infrastructure projects that seek to benefit communities and the environment," said Kyle Hatzes, Managing Director, Infrastructure & Impact Investments, CIM Group. "This transaction with SolarBank to grow its portfolio of solar projects underscores our ongoing commitment to the renewable energy sector and our focus on supporting innovative companies leading the energy transition across
CIM shall acquire non-convertible preferred equity interests in New HoldCo (the "CIM Equity"). Pursuant to a membership interest purchase agreement to be entered into by New HoldCo and ASP, New HoldCo will purchase the membership interests of identified project companies that wholly own 97 MW of power generating capacity (the "Portfolio" or the "Projects") directly or indirectly from ASP, subject to the satisfaction of customary conditions precedent. New HoldCo would advance
Each Project is anticipated to sell investment tax credits ("ITCs") to one or more creditworthy third-party buyers pursuant to one or more tax credit transfer agreements in accordance with the requirements of Section 6418 of the Internal Revenue Code of 1986, as amended (the "Code" and each a "TCTA").
CIM shall receive a coupon, payable semi-annually, equal to
There are several risks associated with the Transaction and development of the Projects. The development of any project is subject to receipt of interconnection approval, receipt of a community solar contract, required permits, the continued availability of third-party financing arrangements for the Company and the risks associated with the construction of a solar power project. In addition, governments may revise, reduce or eliminate incentives and policy support schemes for solar power, which could result in future projects no longer being economic. The Transaction is subject to the execution of definitive documentation setting out all of the representations, warranties, covenants and conditions precedent associated with the Transaction. There is a risk that definitive documentation may not be executed or that the conditions precedent to the Transaction are not satisfied. In such case, no funding will be advanced under the terms of the Transaction. SolarBank will also need to secure the financing required to develop the Projects to mechanical completion and substantial completion, as prior to such milestone none of the funding from the Transaction will be available. Please refer to "Forward-Looking Statements" for additional discussion of the assumptions and risk factors associated with the Project and statements made in this press release.
About CIM Group
CIM is a community-focused real estate and infrastructure owner, operator, lender and developer. Since 1994, CIM has sought to create value in projects and positively impact the lives of people in communities across the
About SolarBank Corporation
SolarBank Corporation is an independent renewable and clean energy project developer and owner focusing on distributed and community solar projects in
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements and forward-looking information within the meaning of Canadian securities legislation (collectively, "forward-looking statements") that relate to the Company's current expectations and views of future events. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as "will likely result", "are expected to", "expects", "will continue", "is anticipated", "anticipates", "believes", "estimated", "intends", "plans", "forecast", "projection", "strategy", "objective" and "outlook") are not historical facts and may be forward-looking statements and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements. In particular and without limitation, this news release contains forward-looking statements pertaining to the Company's expectations regarding its industry trends and overall market growth; the Company's growth strategies the expected energy production from the solar power projects mentioned in this press release; the terms of the Transaction, including the size of the potential financing and its expected structure; the receipt of interconnection approval, permits and financing to be able to construct the Projects; the receipt of incentives for the Projects; and the size of the Company's development pipeline. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release.
Forward-looking statements are based on certain assumptions and analyses made by the Company in light of the experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate, and are subject to risks and uncertainties. In making the forward looking statements included in this news release, the Company has made various material assumptions, including but not limited to: the execution of definitive documentation for the Transaction; the satisfaction of all conditions precedent for the Transaction; obtaining the necessary regulatory approvals; that regulatory requirements will be maintained; general business and economic conditions; the Company's ability to successfully execute its plans and intentions; the availability of financing on reasonable terms; the Company's ability to attract and retain skilled staff; market competition; the products and services offered by the Company's competitors; that the Company's current good relationships with its service providers and other third parties will be maintained; and government subsidies and funding for renewable energy will continue as currently contemplated. Although the Company believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect, and the Company cannot assure that actual results will be consistent with these forward-looking statements. Given these risks, uncertainties and assumptions, investors should not place undue reliance on these forward-looking statements.
Whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks, uncertainties, assumptions and other factors, including those listed under "Forward-Looking Statements" and "Risk Factors" in the Company's most recently completed Annual Information Form, and other public filings of the Company, which include: the failure to execute definitive documentation for the Transaction; the failure to satisfy all conditions precedent for the Transaction; the Company may be adversely affected by volatile solar power market and industry conditions; the execution of the Company's growth strategy depends upon the continued availability of third-party financing arrangements; the Company's future success depends partly on its ability to expand the pipeline of its energy business in several key markets; governments may revise, reduce or eliminate incentives and policy support schemes for solar and battery storage power; general global economic conditions may have an adverse impact on our operating performance and results of operations; the Company's project development and construction activities may not be successful; developing and operating solar projects exposes the Company to various risks; the impact of tariffs; the Company faces a number of risks involving Power Purchase Agreements ("PPAs") and project-level financing arrangements; any changes to the laws, regulations and policies that the Company is subject to may present technical, regulatory and economic barriers to the purchase and use of solar power; the markets in which the Company competes are highly competitive and evolving quickly; an anti-circumvention investigation could adversely affect the Company by potentially raising the prices of key supplies for the construction of solar power projects; foreign exchange rate fluctuations; a change in the Company's effective tax rate can have a significant adverse impact on its business; seasonal variations in demand linked to construction cycles and weather conditions may influence the Company's results of operations; the Company may be unable to generate sufficient cash flows or have access to external financing; the Company may incur substantial additional indebtedness in the future; the Company is subject to risks from supply chain issues; risks related to inflation; unexpected warranty expenses that may not be adequately covered by the Company's insurance policies; if the Company is unable to attract and retain key personnel, it may not be able to compete effectively in the renewable energy market; there are a limited number of purchasers of utility-scale quantities of electricity; compliance with environmental laws and regulations can be expensive; corporate responsibility may adversely impose additional costs; the future impact of any future global pandemic on the Company is unknown at this time; the Company has limited insurance coverage; the Company will be reliant on information technology systems and may be subject to damaging cyberattacks; the Company may become subject to litigation; there is no guarantee on how the Company will use its available funds; the Company will continue to sell securities for cash to fund operations, capital expansion, mergers and acquisitions that will dilute the current shareholders; and future dilution as a result of financings.
The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. New factors emerge from time to time, and it is not possible for the Company to predict all of them, or assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement.
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SOURCE SolarBank Corporation
FAQ
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