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Boralex takes a writedown on closed biomass plant

Renewable energy producer Boralex is closing its troubled Dolbeau, Que. wood residue plant and taking a financial writeoff.


November 10, 2011
by CANADIAN PRESS

MONTREAL: Renewable energy producer Boralex Inc. is closing the door on its troubled Dolbeau, Que., wood residue plant by permanently shutting the idled facility and taking a financial writeoff.

The 28-megawatt co-generation facility, which has operated sporadically since 2009, has been indefinitely closed since April, affecting 30 to 40 workers.

The closure of AbitibiBowater’s adjoining mill disrupted the supply of wood and sale of steam, forcing the company to look for alternatives.

“After analyzing a few scenarios, management came to the conclusion that…it made no sense to sporadically run this plant in the wintertime and that the best alternative was simply to permanently shut its operation,” CEO Patrick Lemaire said.

Boralex took a $6.5-million writeoff in the third quarter ($4.3 million after taxes) and has begun negotiations to end its electricity supply deal with Hydro-Quebec.

During the quarter, it accounted for a couple hundred thousand dollars of Hydro-Quebec penalties for the year.

The company’s remaining Canadian biomass asset in Seneterre, Que., is running smoothly and remains part of the company’s core portfolio.

Boralex, which announced the closing of a financing deal with two partners to fund construction of a major wind farm in Quebec, said it lost $7.2 million or 19 cents per share in the three months ended Sept. 30. That compared with a profit of $34.7 million or 92 cents per share in the same 2010 period, which included an extraordinary gain of $43.6 million related to the deemed disposal of investment in the Boralex Power Income Fund and related income tax recovery.

“The significant positive contribution of the new sites that were recently acquired and commissioned by Boralex was not able to offset the adverse impact, in particular, of the impairment charge against the property, plant and equipment at the Dolbeau power station,” the company stated.

The quarterly results were overshadowed by the announcement of full financing for the Seigneurie de Beaupre wind project in Quebec, as well as the sale of the US biomass facilities earlier this week.

Boralex is looking at wind opportunities in Canada and France in which to invest the proceeds from the US biomass sale.

Boralex, Gaz Metro LP and Valener Inc. said they had closed a $725-million financing to fully fund construction of the Seigneurie de Beaupre Wind Farm project northeast of Quebec City.

The power project is expected to house 126 wind turbines by December 2013 and have 20-year purchase agreements with Hydro-Quebec. So far, 41 wind turbine foundations have been laid and 80 per cent of the access roads have been built, the companies said.

The Seigneurie de Beaupre Wind Farm is the largest wind power project in development in Canada, with total contracted capacity of 366 megawatts.

© 2011 The Canadian Press