TransAlta (TRP) Gets Favorable Ruling in Sundance Station Shutdown; Sees Net $50M Charge
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TransAlta Corporation (TransAlta) (NYSE: TAC) reported today the independent arbitration panel considering TransAlta's decision in December 2010 to shut down two units at its Sundance generating station has allowed the company's claim of force majeure. This decision validates TransAlta's belief the units failed due to issues beyond its control.
Based on the decision, the estimated total impact of net penalties to TransAlta is approximately $50 million for the period December 2010 until the units are restored to service expected in the fall of 2013.
TransAlta will record a net penalty of approximately $150 million in the second quarter of 2012. This will be partially offset by approximately $100 million in capacity payments that TransAlta will continue to receive from the Balancing Pool starting in the third quarter of 2012 until the units are restored to service. TransAlta has approximately $800 million in available liquidity which is more than sufficient to cover these payments.
TransAlta will immediately start the work to safely restore the units to service. The cost to repair the units is estimated at approximately $190 million. This investment is expected to start generating cash flow in the fall of 2013.
As a result of the panel's decision, under International Financial Reporting Standards, TransAlta will potentially record an impairment of up to $45 million compared to a current book value of $140 million which would be recorded in second quarter results.
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Based on the decision, the estimated total impact of net penalties to TransAlta is approximately $50 million for the period December 2010 until the units are restored to service expected in the fall of 2013.
TransAlta will record a net penalty of approximately $150 million in the second quarter of 2012. This will be partially offset by approximately $100 million in capacity payments that TransAlta will continue to receive from the Balancing Pool starting in the third quarter of 2012 until the units are restored to service. TransAlta has approximately $800 million in available liquidity which is more than sufficient to cover these payments.
TransAlta will immediately start the work to safely restore the units to service. The cost to repair the units is estimated at approximately $190 million. This investment is expected to start generating cash flow in the fall of 2013.
As a result of the panel's decision, under International Financial Reporting Standards, TransAlta will potentially record an impairment of up to $45 million compared to a current book value of $140 million which would be recorded in second quarter results.
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