Jeff Ciachurski, centre, with his team from Western Wind at one of their wind farm projects in the United States.
October 1, 2013: Vancouver, BC
Special to Financial Post
Jeffrey Ciachurski is riding the wind, again.
"You can call this Western Wind 2.0," said the B.C. entrepreneur, who has shifted his base to California after orchestrating one of the most profitable stories in the North American renewable energy sector.
Armed with judicious imitation, a band of loyal investors, both individual and institutional and lessons learnt from hostile takeover bids for his homegrown Western Wind, Ciachurski is back with his new venture called Greenbriar Capital Corp (GRB:TSXV)
"I learned a lot of lessons while building and eventually selling Western Wind in Vancouver and I use them today," said Ciachurski, 53, from his new base in Newport, California.
With the support of a trusted circle, Ciachurski, a father of seven, created Western Wind in Vancouver about 14 years ago, to reap profits from the wind and the sun.
At its height, Western Wind boasted $430 million of wind and solar assets and a revenue stream in 2012 of $48 million that came from three wind-energy generation facilities in California, and one fully integrated combined wind and solar energy generation facility in Arizona.
Western Wind's success did not go unnoticed.
In November 2011, Western Wind Energy was the target of a takeover letter by Ontario-based Algonquin Power and Utilities Corp.
"I beat back that one," Ciachurski recounted, not too fondly.
Then came a pitched battle with hedge fund and investment manager Savitr Capital, which was a dissident shareholder of Western Wind. Ciachurski and his team won the proxy fight and the ugly battles that ensued, which eventually saw Brookfield Renewable Energy Partners L.P. putting up $2.60 a share to acquire Western Wind for an equity buyout totaling $195 million.
Renewable energy analysts in the US and Canada hailed the deal saying "Ciachurski did a good job for shareholders" because Brookfield had to pay more for the shares.
"It was hard to leave Western Wind but I was happy for my investors who stuck with me…we started with a few hundred thousand dollars and with intellectual capital were able to power over 48,000 homes with clean energy," said Ciachurski.
As part of the deal with Brookfield, Ciachurski took with him three projects that were then being contemplated by Western Wind – the Blue Mountain wind energy project in Utah, the AG One solar project in Puerto Rico and the Na Pua Makani wind project in Hawaii.
"My 14 years of banking, energy and relationships will be mobilized for these projects under Greenbriar," he said.
Coming out of his summer sojourn two weeks ago, Ciachurski announced that his Greenbriar Capital Corp had completed a formal acquisition agreement for Utah's 80-MW Blue Mountain Wind Energy Project with a 20-year power purchase agreement (PPA) to sell electricity to MidAmerican Energy Holdings Co. utility unit, PacifiCorp.
Rabobank Group, one of the largest banks in the world, with nearly $1 trillion in assets and operations in more than 40 countries will arrange financing for the Blue Mountain wind farm whose total cost will be $135 Million. Construction will begin by end of the year and completion is set for as early as the third quarter of 2014.
Thomas Emmons, head of project finance for Rabobank in the Americas described Ciachurski as a "smart renewable energy developer who knows how to create value".
"Jeff has the ability to focus on a few high potential projects, and efficiently advance their development without building lots of costly overheads…he has formed a lean and loyal team of staff and advisors with whom he can get things done efficiently"
Rabobank's confidence in Ciachurski-led projects stems from the bank's key role in financing Western Wind's flagship project, Windstar in California in 2011.
"Windstar was one of the most efficient wind financings done, with innovative structuring coordinated across several funding sources," said Emmons, adding "the market recognized the value created by Jeff's team in Western Wind, which Brookfield eventually paid for" Jim Taylor, investment advisor at Macquarie Private Wealth described Ciachurski as the "Friedland of the renewable energy business", referring to the billionaire mining legend Robert Freidland.
"Jeff has gained superior knowledge by putting together great projects. He has a blueprint for success," he said. William Sutherland of Manulife said Manulife had arranged and led debt financing for about $ 210 million for Ciachurski, as the lead lender while syndicating the balance to other institutional lenders because "we believe in him" Ciachurski said his other projects in Puerto Rico and Hawaii have completion dates in 2014 and 2015 while Greenbriar is looking at renewable energy locations in the United States.
These projects are being announced just as the U.S. National Renewable Energy Laboratory (NREL) released a study saying that by the middle of the next decade, the wind farms that dot the landscapes along the highways in Rocky Mountain States could become major regional sources of electricity.
Western renewables, primarily wind, could begin to compete on their own with electricity generated at natural gas power plants by 2025, the study said.
For Ciachurski and his shareholders, this is good news as is the U.S. Federal Wind Energy Production Tax Credit, which gives wind energy producers a tax break of up to 30 percent.
Clean energy advocates in the United States are now pushing for this tax credit to be extended for another 5 to 10 years.
Greenbriar's story thus far replicates the Western Wind saga. One big difference is that Greenbriar is doing it quicker with fewer shares outstanding.
According to Ciachurski, Greenbriar currently has 180 megawatts of Power Purchase Agreements under contract that represent obligations by utilities to buy $1.5 billion of power over 25 years.
Western Wind has 195 MW under contract with obligations to purchase $1.3 billion over the same period.
With slightly better economic metrics Greenbriar is accomplishing the same feat as Western Wind, but with only 11 million shares outstanding. Western Wind had 75 million shares outstanding at the time of its $195 Million equity share buyout from Brookfield.
So why are Greenbriar shares trading only around the $3 mark?
"My company is still in the purview of the penny stock traders who are limited by price point rather than looking at long term shareholder value," said Ciachurski. "If you use the $195 million Western Wind benchmark and divide that amount by 11 million shares, Greenbriar's equivalent is about $17.80 per share whole value under the same market analysis.," said Ciachurski.
"I am not at all concerned with the current share price because after the new projects commence construction the value will be dominated by long term retail and institutional investors who look at the whole value per share price rather than share price alone," said Ciachurski, who together with his family are the single largest shareholders of Greenbriar.
William Sutherland, senior managing director of project finance at Manulife Financial, which is once again considering financing Ciachurski's projects, said "one of Jeff's great accomplishments is his unique ability to finance multi hundred million dollar projects without issuing shares for project financing".
"We have done quite well by him," he said.
Max Meier, chairman and chief executive officer of Pacific International Financial Corp. (PI), believes in Ciachurski's numbers and the market equivalent value extrapolation of $17.80 per Greenbriar share.
"I have been a shareholder of both Western Wind and Greenbriar since day one and all of my clients have been involved in both deals and they have been very happy with the returns," said Meier, whose 260 employees provide investment advice to over 39,000 clients.
"He has a great following as a result of his success….I continue to be a large shareholder because of Jeff and his success in Western Wind," said Meier.
"Jeff's secret to success is locating great renewable energy sites and negotiating contracts with the utilities," added Meier.
For Ciachurski that does not only mean finding the wind, but adjusting the sails to harness its bounty for shareholders.
Link to article: http://business.financialpost.com/2013/10/01/a-joint-venture-with-media-one-he-rides-the-wind-again/
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