Capital Power Announces Strategic Acquisition of Two Flexible Generation Assets in PJM and a $500 Million Offering of Common Shares

US$2.2 billion (~CAD$3.0¹ billion) acquisition expected to be immediately accretive to adjusted funds from operations per share

BASE SHELF PROSPECTUS IS ACCESSIBLE, AND PROSPECTUS SUPPLEMENT WILL BE ACCESSIBLE WITHIN TWO BUSINESS DAYS, ON SEDAR+

NOT FOR DISTRIBUTION TO THE U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

/EIN News/ -- Acquisition Highlights:

• Strategic entry into PJM²: establishes a foothold in the largest and most liquid North American power market with strong fundamentals for natural gas power generation, enhancing strategic positioning for Capital Power.
• Positions Capital Power as one of five North American independent power producers (“IPPs”) with over 10 GW of natural gas capacity: adds 2.2 GW of natural gas capacity to the Company’s Flexible Generation³ portfolio, strengthening Capital Power’s position as the 5^th largest non-regulated operator of flexible and reliable natural gas assets in North America.⁴
• Continues North American expansion and diversification strategy: increases diversification in Capital Power’s portfolio, no single market will represent more than 30% of net capacity.
• Strategically positioned, high quality assets: Hummel Station is one of the largest, newest, and most efficient combined-cycle natural gas assets in PJM MAAC⁵ (“Hummel”) and the Rolling Hills plant is a combustion turbine natural gas asset and a flexible peaker with fast ramping capability (“Rolling Hills”), both of which support the reliability of PJM’s electricity grid and position Capital Power for growth opportunities in PJM and North America more broadly.
• Attractive valuation: approximately 7x 5-year (2026-2030) average enterprise value (“EV”) / Adjusted EBITDA⁶, a comparable valuation multiple to Adjusted EBITDA estimated for 2026, the first full year of ownership post-Acquisition.
• Expected to be immediately accretive in the first full year of ownership: approximately 17-19% 5-year (2026-2030) average AFFO per share⁶ accretion, significantly above previous acquisitions by Capital Power.
• Prudent financing plan: financing plan maintains Capital Power’s strong, investment grade credit rating and $500 million common share offering fully satisfies Capital Power’s equity funding requirement for the Acquisition.
  

EDMONTON, Alberta, April 14, 2025 (GLOBE NEWSWIRE) -- Capital Power Corporation (“Capital Power” or the “Company”) (TSX: CPX) announced today that an indirect wholly-owned subsidiary of the Company has entered into a definitive agreement with Hummel Station Intermediate Holdings III, LLC and Rolling Hills Generating Holdings, LLC, each a subsidiary of LS Power Equity Advisors, LLC, to acquire:

1. 100% of the equity interests in Hummel Station, LLC, which owns the 1,124 MW Hummel Station, a combined-cycle natural gas facility in Shamokin Dam, Pennsylvania (the “Hummel Acquisition”); and
2. 100% of the equity interests in Rolling Hills Generating, L.L.C., which owns the 1,023 MW Rolling Hills plant, a combustion turbine natural gas facility in Wilkesville, Ohio (the “Rolling Hills Acquisition” and together with the Hummel Acquisition, the “Acquisition”).

The net purchase price of the Acquisition is expected to be US$2.2 billion (~CAD$3.0 billion), subject to customary post-closing adjustments, including working capital and estimated transaction expenses. The Acquisition is expected to close in the third quarter of 2025, subject to receipt of regulatory approvals and the satisfaction of other customary closing conditions.

Following the closing of the Acquisition, Capital Power will be positioned as one of five North American IPPs with over 10 GW of natural gas capacity. The Acquisition is consistent with Capital Power’s strategy to acquire Flexible Generation assets, and consistent with the Company’s growth focus in the U.S. and PJM market, which is the largest and most liquid North American power market. Capital Power plans to leverage its deep knowledge and experience in plant operations and power trading and origination to commercially optimize these assets and help drive long-term value as part of its broader fleet.

The Acquisition reflects an attractive valuation of approximately 7x 5-year (2026-2030) average EV / Adjusted EBITDA⁶, a comparable valuation multiple to 2026E Adjusted EBITDA⁶, the first full-year of operations after the Acquisition, and below the average multiple Capital Power has paid on previous acquisitions of Flexible Generation assets. Capital Power expects the Acquisition to generate average annual Adjusted EBITDA of approximately $443 million for the 2026-2030 period and to be, on average, approximately 17-19% accretive to AFFO per share⁶ over the same period, based on expected permanent financing, which exceeds the mid-to-high single digits accretion of Capital Power’s previous gas acquisitions.

“Capital Power’s acquisition of Hummel and Rolling Hills expands our U.S. generation fleet and advances our position as a leading North American power producer”, said Avik Dey, President and CEO of Capital Power. “With our expansion into the largest and most liquid power market in North America, we continue to deliver on our strategy. These plants will bolster our Flexible Generation portfolio and align with our commitment to provide reliable, affordable power solutions that support a balanced approach to the energy expansion. As a leading operator in North America, our ability to integrate these assets, optimize performance and enhance returns through our robust trading platform underpins the long-term value we expect these acquisitions will provide for our shareholders.”

“Acquiring these high-quality assets aligns with our financial and strategic objectives as we execute on accretive growth opportunities that diversify our Flexible Generation fleet across North America, while maintaining our investment grade credit rating and balance sheet strength” said Sandra Haskins, SVP Finance and CFO of Capital Power. “The Hummel and Rolling Hills assets offer an attractive entry point in PJM.”

Net proceeds from Capital Power’s concurrent $500 million common share offering will fully address the equity funding requirement for the Acquisition. The remaining funding will be sourced from a combination of some or all of the following (i) cash on hand from a prior equity issuance and asset divestitures; (ii) longer term debt financing; (iii) other immediately available funds, including potential draws under Capital Power’s existing credit facilities; and (iv) funding provided under Acquisition Term Loan Facilities, as defined and outlined in further detail below.

The Company has entered into a commitment letter dated April 14, 2025 (the “Commitment Letter”) with a Canadian chartered bank affiliate of TD Securities Inc. for fully underwritten $2 billion senior unsecured term loans. In addition, the Company has access to $1 billion under its existing revolving credit facilities, which are currently undrawn. If drawn, repayment or refinancing of the facilities is expected through the issuance of senior notes and/or hybrid notes or other sources, subject to market conditions and other factors.

This funding plan maintains Capital Power’s investment grade credit rating and preserves its strong balance sheet and financial flexibility.

Common Share Offering

The Company has entered into an agreement with a syndicate of underwriters (the “Underwriters”) led by TD Securities Inc. and CIBC Capital Markets to issue 8,060,000 common shares of Capital Power (the “Common Shares”), on a bought deal basis, at an issue price of $43.45 per Common Share (the “Offering Price”), for total gross proceeds of approximately $350 million (the “Public Offering”). The Company has granted the Underwriters an over-allotment option to purchase, in whole or part, up to an additional 1,209,000 Common Shares at the Offering Price to cover over-allotments, if any, exercisable at any time and from time to time until the date that is thirty (30) days following the closing of the Public Offering. If the over-allotment option is exercised in full, gross proceeds from the Public Offering will be approximately $403 million.

Additionally, the Company will issue, at the Offering Price, 3,455,000 Common Shares for $150 million on a private placement basis (the “Private Placement”), to Alberta Investment Management Corporation. The Common Shares sold pursuant to the Private Placement will be subject to a statutory hold period of 4 months and one day from the closing date of the Private Placement. TD Securities Inc. is acting as sole agent and sole bookrunner on the Private Placement.

The gross proceeds of the Public Offering and the Private Placement will be used by Capital Power to fund a portion of the purchase price for the Acquisition. The closings of the Public Offering and the Private Placement are not conditional upon the completion of the Acquisition. If the Acquisition is not completed, the Company intends to use the net proceeds from the Public Offering and the Private Placement to finance future growth opportunities including acquisitions, finance its capital development expenditures, reduce its outstanding indebtedness or for other general corporate purposes.

The Public Offering will be offered in all provinces and territories of Canada by way of a prospectus supplement (the “Prospectus Supplement”) to Capital Power’s base shelf prospectus dated June 12, 2024 (the “Base Shelf Prospectus”). The Prospectus Supplement will be filed with the securities commissions or securities regulatory authorities in all of the provinces and territories of Canada on or before April 16, 2025. The Common Shares will also be offered on a private placement basis in the United States to “qualified institutional buyers” (as defined in Rule 144A of the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”)) pursuant to an exemption from the registration requirements of the U.S. Securities Act. Completion of the Public Offering and Private Placement are subject to certain conditions including receipt of all necessary approvals, including the approval of the Toronto Stock Exchange. The closings of the Public Offering and Private Placement are anticipated to occur on or about April 22, 2025. The closing of the Private Placement is conditional on the concurrent closing of the Public Offering and closing of the Public Offering is conditional on the concurrent closing of the Private Placement.

The above is a summary of the Public Offering. For further information, please refer to the term sheet accessible on the System for Electronic Data Analysis and Retrieval + (“SEDAR+”) at www.sedarplus.ca and the Prospectus Supplement qualifying the offering of Common Shares, which will be filed on SEDAR+.

Access to the Base Shelf Prospectus, the Prospectus Supplement, and any amendments to the documents will be provided in accordance with securities legislation relating to procedures for providing access to a prospectus supplement, a base shelf prospectus and any amendment. The Base Shelf Prospectus is, and the Prospectus Supplement will be (within two business days of the date hereof), accessible on SEDAR+ at www.sedarplus.ca. The Common Shares are offered under the Prospectus Supplement. An electronic or paper copy of the Base Shelf Prospectus, the Prospectus Supplement (when filed), and any amendment to the documents may be obtained without charge, from TD Securities Inc. at (i) 1625 Tech Avenue, Mississauga, Ontario L4W 5P5 Attention: Symcor, NPM; (ii) by telephone at (289) 360-2009; or (iii) by email at sdcconfirms@td.com or from CIBC Capital Markets at (i) 161 Bay Street, 5^th Floor, Toronto, ON M5J 2S8; (ii) by telephone at (416) 956-6378; or (iii) by email at mailbox.canadianprospectus@cibc.com, by providing the contact with an email address or address, as applicable. The Base Shelf Prospectus and Prospectus Supplement contain important, detailed information about the Company and the proposed Public Offering. Prospective investors should read the Base Shelf Prospectus and Prospectus Supplement (when filed) before making an investment decision.

Acquisition Term Loan Facilities

For purposes of financing the Acquisition, the Company has entered into a Commitment Letter dated April 14, 2025 with a Canadian chartered bank affiliate of TD Securities Inc. Pursuant to the Commitment Letter, the lender has agreed to provide, on a fully underwritten basis, senior unsecured term loan facilities in an aggregate principal amount of up to $2 billion (the “Acquisition Term Loan Facilities”). The Acquisition Term Loan Facilities are comprised of two tranches, with the first tranche, a non-extendible, non-revolving, syndicated term credit facility, in the aggregate principal amount of $1 billion and maturing in 2028, and the second tranche, a non-extendible, non-revolving, syndicated term credit facility, in the aggregate principal amount of $1 billion and maturing in 2027. If drawn, repayment or refinancing of the Acquisition Term Loan Facilities is expected through the issuance of senior notes and/or hybrid notes or other sources, subject to market conditions and other factors.

First Quarter Update

Based on preliminary information, Capital Power’s business and financial performance for the quarter ended March 31, 2025, as measured by Adjusted EBITDA⁶ and AFFO⁶, has been modestly better than management’s expectations for the first quarter and confirms expectations underlying the 2025 guidance released in January. Updated guidance for full year 2025 will be provided closer to the time of closing of the Acquisition.

U.S. Securities Law Disclosures

The distribution of this announcement may be restricted by law in certain jurisdictions, and persons into whose possession any document or other information referred to herein should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

No securities regulatory authority has either approved or disapproved of the contents of this news release. This announcement does not constitute an offer of securities for sale in the United States, nor may any securities referred to herein be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act, and the rules and regulations thereunder. The securities referred to herein have not and will not be registered under the U.S. Securities Act or any state securities law, and except pursuant to exemptions from registration requirements of the U.S. Securities Act and any applicable state securities laws, may not be offered or sold in the United States.

Teleconference Call

Analysts, investors and members of the media are invited to take part in a pre-recorded webcast which can be accessed on Capital Power’s website at www.capitalpower.com.

Advisors

Evercore is acting as sole M&A financial advisor to Capital Power, TD Securities Inc. is advising Capital Power on financial matters, and Simpson Thacher & Bartlett LLP is acting as legal advisor to Capital Power with respect to the Acquisition.

Facilities Overview

	Hummel	Rolling Hills
Nameplate Capacity:	1,124 MW	1,023 MW
Location:	Shamokin Dam, Pennsylvania	Wilkesville, Ohio
Commercial Operation Date:	2018	2003
Equipment:	3x3x1 Combined Cycle -3x Siemens SGT6-5000F5ee CTs -3x NEM HRSGs -1x Siemens SST6-5000 ST	5x0x0 Peaker -5x Siemens 501FD2 CTs
Capacity Factor7:	~80%	~25%
Heat Rate8:	6.8	10.6
Natural Gas Source:	UGI Sunbury Pipeline	TETCO (East LA)
Interconnection:	PPL Electric Utilities Corporation (Sunbury 500 kV)	AEP Ohio (Flatlick 765 kV)

All references to dollar amounts contained herein, including the symbol “$”, are to Canadian dollars unless otherwise indicated. Where applicable, amounts were converted from US dollars to Canadian dollars using a 1.3890 exchange rate, as reported by the Bank of Canada on April 11, 2025.

Non-GAAP Financial Measures and Ratios

The Company uses (i) earnings before net finance expense, income tax expense, depreciation and amortization, impairments, foreign exchange gains or losses, finance expense and depreciation expense from the Company’s joint venture interests, gains or losses on disposals and other transactions, unrealized changes in fair value of commodity derivatives and emission credits, and other items not reflective of its underlying business (“Adjusted EBITDA”) and (ii) Adjusted Funds from Operations (“AFFO”) as specified financial measures. Adjusted EBITDA and AFFO are both non-GAAP financial measures.

The Company also uses AFFO per share as a specified performance measure. This measure is a non-GAAP ratio determined by applying AFFO to the weighted average number of common shares used in the calculation of basic and diluted earnings per share.

These terms are not defined financial measures according to GAAP and do not have standardized meanings prescribed by GAAP and, therefore, are unlikely to be comparable to similar measures used by other enterprises. These measures should not be considered alternatives to net income, net cash flows from operating activities or other measures of financial performance calculated in accordance with GAAP. Rather, these measures are provided to complement the nearest GAAP measures in the analysis of the Company’s results of operations from management’s perspective.

For more information regarding the non-GAAP financial measures used by the Company, including the composition of these measures, how management utilizes each non-GAAP financial measure and, where applicable, a reconciliation of the Company’s historical non-GAAP financial measures to the most directly comparable measure calculated in accordance with GAAP for the applicable period then ended, please see “Non-GAAP Financial Measures and Ratios” in the Company’s management’s discussion and analysis for the year ended December 31, 2024 prepared as of February 25, 2025, which is available under the Company’s profile on SEDAR+ at www.sedarplus.ca and incorporated by reference herein.

A reconciliation of net cash flows from operating activities to AFFO resulting from the Acquisition is as follows:

(unaudited, $ millions)(1)	2026E
Increase in net cash flows from operating activities resulting from the Acquisition	322
Add items included in calculation of net cash flows from operating activities:
Interest paid	131
Income taxes paid / (recovered)	(25	)
	428
Net finance expense	(131	)
Current income tax (expense) / benefit	25
Sustaining capital expenditures	(54	)
Increase in AFFO resulting from the Acquisition	268

Note:
(1) Converted from US dollars to Canadian dollars using a 1.3890 exchange rate, as reported by the Bank of Canada on April 11, 2025.

A reconciliation of Adjusted EBITDA to net income resulting from the Acquisition is as follows:

(unaudited, $ millions)(1)	2026E
Increase in Adjusted EBITDA resulting from the Acquisition	428
Depreciation and amortization(2)	(130	)
Net finance expense	(131	)
Income tax expense	25
Increase in net income resulting from the Acquisition	192

Notes:
(1) Converted from US dollars to Canadian dollars using a 1.3890 exchange rate, as reported by the Bank of Canada on April 11, 2025.
(2) Depreciation and amortization is subject to change on finalization of purchase price allocation and closing adjustments.

Forward-looking Information

This news release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. Such forward-looking information is provided to inform the Company’s shareholders and potential investors about management’s current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Any such forward-looking information may be identified by words such as “anticipate”, “proposed”, “estimated”, “estimates”, “would”, “expects”, “intends”, “plans”, “may”, “will”, and similar expressions, although not all forward-looking information contain these identifying words.

More particularly and without limitation, the forward-looking information in this news release includes (i) expectations regarding the Acquisition and the characteristics, value drivers, anticipated benefits (including expected Adjusted EBITDA contribution, AFFO and AFFO per share accretion), operational impacts (including to the Company’s net gas-fired operating capacity, geographic diversification and increase in scale) and credit impacts thereof, on a standalone and pro forma basis; (ii) expectations regarding future growth and emerging opportunities in, and characteristics of, relevant markets; (iii) expectations regarding the Company’s business plans and operations; (iv) expectations regarding the Company’s priorities and long-term strategies, including advancing its position as a leading North American power producer, enhancing its positioning to capture load growth opportunities, integrating assets to optimize performance, enhancing returns through robust trading platforms and providing long-term value for its shareholders, and diversifying and expanding its Flexible Generation fleet across North America; (v) expectations regarding the Company’s financing plans, transaction closing time, receipt of required regulatory approvals, and future development opportunities with respect to the Acquisition; (vi) expectations regarding the Company’s sources of funding, adequacy and availability of committed bank facilities and future borrowings, including the Acquisition Term Loan Facilities; (vii) expectations regarding Acquisition and transaction expenses and the Company’s ability to maintain its investment grade credit rating and balance sheet strength; (viii) the expected potential for the Acquisition to serve as a foundation for the Company’s future growth in a key U.S. power market and to further diversify its portfolio; (ix) expectations regarding the Public Offering and the Private Placement and the timing of the closings thereof; (x) expectations regarding the use of proceeds of the Public Offering and the Private Placement; (xi) expectations regarding the exercise of the Underwriters’ over-allotment option; and the receipt of all regulatory approvals for the Public Offering and the Private Placement; (xii) expectations regarding anticipated pricing trends, growth opportunities, and market conditions in PJM; and (xiii) expectations regarding guidance for full year 2025.

Such forward-looking statements are based on certain assumptions and analyses made by Capital Power concerning its experience and perception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate, including its review of the Acquisition and re-contracting opportunities. The material factors and assumptions used to develop these forward-looking statements relate to: (i) electricity and other energy (including natural gas) and carbon prices; (ii) the Company’s performance; (iii) business prospects and opportunities including expected growth and capital projects; (iv) the energy needs of certain jurisdictions; (v) the status and impact of policy, legislation and regulations; (vi) effective tax rates; (vii) the development and performance of technology; (viii) the anticipated growth in data center energy consumption in North America; (ix) foreign exchange rates; (x) anticipated facility performance and natural gas prices for the Hummel and Rolling Hills facilities; (xi) financing assumptions, including indebtedness and anticipated interest rates; (xii) the replacement, refinancing or repayment of the facilities, including the Acquisition Term Loan Facilities, through the issuance of senior notes and/or hybrid notes and the net proceeds therefrom; (xiii) anticipated sustaining capital expenditures at the Hummel and Rolling Hills facilities; and (xiv) timing and completion of the Acquisition.

Whether actual results, performance or achievements will conform to the Company’s expectations and predictions are subject to a number of known and unknown risks and uncertainties which could cause actual results and experience to differ materially from the Company’s expectations. Such material risks and uncertainties are: (i) changes in electricity, natural gas and carbon prices in markets in which Capital Power operates and the use of derivatives; (ii) regulatory and political environments, including changes to environmental, climate, financial reporting, market structure and tax legislation; (iii) disruptions, or price volatility within the Company’s supply chains; (iv) generation facility availability, wind capacity factor and performance including maintenance expenditures; (v) ability to fund current and future capital and working capital needs; (vi) acquisitions (including the Acquisition) and developments including timing and costs of regulatory approvals and construction; (vii) changes in market prices and the availability of fuel; (viii) ability to realize the anticipated benefits of acquisitions (including the Acquisition) and dispositions; (ix) limitations inherent in the Company’s review of acquired assets; (x) changes in general economic and competitive conditions, including inflation; and (xi) changes in the performance and cost of technologies and the development of new technologies, new energy efficient products, services and programs. See Risks and Risk Management in Capital Power’s Integrated Annual Report for the year ended December 31, 2024, prepared as of February 25, 2025, and other reports filed by Capital Power with Canadian securities regulators.

The forward-looking information in this news release reflects the Company’s current expectations, assumptions and/or beliefs based on information currently available to the Company. Any forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or expressly qualified by this cautionary statement.

Territorial Acknowledgement

In the spirit of reconciliation, Capital Power respectfully acknowledges that we operate within the ancestral homelands, traditional and treaty territories of the Indigenous Peoples of Turtle Island, or North America. Capital Power’s head office is located within the traditional and contemporary home of many Indigenous Peoples of the Treaty 6 Territory and Métis Nation of Alberta Region 4. We acknowledge the diverse Indigenous communities that are located in these areas and whose presence continues to enrich the community.

About Capital Power

Capital Power is a growth-oriented power producer with approximately 10 GW of power generation at 30 facilities across North America. We prioritize safely delivering reliable and affordable power communities can depend on, building clean power systems, and creating balanced solutions for our energy future. We are Powering Change by Changing Power^TM.

For more information, please contact:
Media Relations: Katherine Perron (780) 392-5335 kperron@capitalpower.com	Investor Relations: Noreen Farrell (403) 461-5236 investor@capitalpower.com

^{_________________________
1} Converted from US dollars to Canadian dollars using a 1.3890 exchange rate, as reported by the Bank of Canada on April 11, 2025.
² Pennsylvania-New Jersey-Maryland Interconnection.
³ Flexible Generation is defined as natural gas generation assets and energy storage business.
⁴ Based on net unregulated capacity utilizing S&P Global Market Intelligence database of gas-fired generation operators (February 2025) and referenced against publicly disclosed sources where available.
⁵ Mid-Atlantic Area Council region.
⁶ See Non-GAAP Financial Measures and Ratios.
⁷ Based on 2024 actual capacity factor.
⁸ mmbtu/MWh.