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Algonquin Energy & Utilities (NYSE: AQN) will profit from the sale of all or a good portion of its unregulated renewables enterprise, offering decrease leverage, safer dividends, a greener asset base and better base price development than friends and thus affording a better valuation, Starboard Worth mentioned Thursday in a letter to the corporate’s board.
The corporate’s largest shareholder, with a 7.5% stake, mentioned Algonquin’s ( AQN ) valuation was damage by a number of components, primarily extreme leverage and a excessive dividend payout ratio, however Starboard mentioned the issues might be resolved by promoting all or many of the group renewable power sources.
Starboard mentioned the easiest way to realize these targets can be to promote a major majority of Algonquin’s ( AQN ) renewable property, together with a 42% stake in Atlantica Sustainable Infrastructure.
The sale will generate vital money inflows to pay down debt and inventory buybacks, and make Algonquin (AQN) “a best-in-class mid-sized utility firm with a really enticing monetary profile, with a major majority of earnings coming from steady, regulated companies,” Starboard mentioned.
A “shut second” in creating substantial worth for Algonquin’s ( AQN ) shareholders will embody the sale of the corporate’s “extraordinarily useful” water enterprise, Starboard mentioned.
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