Atlantic Power & Infrastructure Corp. (AWSL)

[warburg]

Twister,

You asked

“Was there any 'buzz' here locally, via industry, political or other that preceded the last group of contracts? “

Politically, No, it was relatively quiet after the last OPA press release, issued on Feb 24. No headlines, despite billions of contracts being awarded.

Industry wise, there has been lots of Buzz. The serious players are all still here and continue to try to sign up new lease agreements for rooftop. Even some of the LDC’s are doing it now. (tis is a good sign, because it shows its all systems go)
I strongly suggest people call some of the LDC’s and talk to them.
And the real money has surfaced and has come down in price (for project financing). The Cdn dollar has strengthened, making this market very appealing to American/Euro investors/banks.

The jokers and not so serious developers are slowly disappearing, maybe as planned. (I will come back to this theory)


The OPA’s PR on Feb 24th, discussed a number of new large ground mount project approvals, as well as gave us a heads up re when the next round of capacity allocation exempt (CAE 500kw and smaller) projects will be awarded. (AWSL’s category)

Here is a link to the OPA’s PR, so you can see the promise they made for yourself re the next round of CAE contracts , which they said will be here “in the coming weeks”.

http://fit.powerauthority.on.ca/february-24-2011-second-round-large-scale-renewable-energy-projects


Although all the awarded contracts appear to be issued to several different companies, the majority of those large ground mount projects were owned by SkyPower. (they put them in different numbered companies names, because projects over 500kw in size, that are ground mount, cannot be transferred into other names, once awarded by the OPA. So don’t be fooled by names you don’t recognize o any award sheet in the future.) This strategy allows them to sell the asset in the future (i.e. Teachers pension fund, other developers, etc), Rooftop solar has different rules, and can be transferred into other names, This is so building owners who might own the asset (project), can sell it along with their building.

(a little gossip about SkyPower = They were majority owned by Lehman Bros at the time of the credit crunch(lest we forget). If you recall, Merril was in charge of auctioning off all the LB assets, including the SkyPower projects. Apparently AWSL was in there bidding for some of them, but then the offer was taken off the table, so no go ..and then 80% of the SP assets ended up getting supported by another group, and SkyPower was revived as a company *(Carrie Adler - CEO of SkyPower, is a smart cookie and is a pioneer in this Canadian win and solar market.)

More gossip: Trahan is close friends with a very senior exec from Merril out of Monte Carlo/Monaco. This ight have been the connection. (I would tell you the name and position, but I don’t want idiots contacting him in an effort to try to cause damage, as they have attempted to do several times). That particular Merril/Monaco office has since changed over to retail from commercial, since the crunch, so things have changed there quite a bit. Do the research ; )

Btw, Trahan owns a luxury Hotel in Monte Carlo. Technically its in in Monaco . He also owns a very famous hotel in the Bahamas and has taken part in a number of other large construction/development projects there. I heard he was partnered with Chris Blackwell, (the record producer) in Bahamas too. He owns Island Records I believe.(just a small label)

My point here is, the rumors that Trahan does multiple P&D’s like some are trying to insinuate here is total misinformation.

Trahan’s associates, “might” use awareness programs to try to kick start deals, but so what. That’s their proper use, as long as the business is real and as long as there is no dumping into the market.

Trahan’s Symphony Telecom was also a big success, “before” the the tech bubble burst. I can name 100’s of other companies that suffered the same demise at that time and most of the weren’t run by a 25 year old kid at the time. Symphony went bankrupt, but despite this, Trahan paid the employees out of his own pocket out of integrity. He was only in his 20’s at that time and was CEO of that company when it had a 800 mil market cap, and 200 employees. It was located in the building directly across the street (Bay Street) from AWSL’s office. He’s come a long way (in the business sense, obviously not geographically -lol) since then.

I’ve spent some time getting to know these guys, and have taken issues raised here on this board to them directly, and have sat down with them and asked them straight out. Frankly im embarrassed to have even asked.


AWSL is alive and well and is about to make its big move up, the moment those contracts get released,- this will change things quickly. The S-1 will be fantastic for this stock too.

If the OPA decided to abolish the program, or if there was a nuclear attack on Canada for being too damn politically correct, or if someone invented cold fushion, this stock will be a dog.

Back on to your questions, and back on subject..

You also asked

“Anything you noticed, by being there and involved with the industry, that we might look for happening in advance of the next batch of contracts?

”

YES, I think the Federal election being over is a big hurdle. Someone else nailed this too. I expect to see lots of news soon.

Its really easy for the Conservatives to say in a 30 second TV commercial that the Liberal’s are paying many times the price for the same energy they are selling it back to the end user for, and is easy to say “it doesn’t make sense”

But its not that simple..

It would take approx 5 minutes for the liberals to explain in the long run its way cheaper than nuclear, due to no rising uranium costs, no nuclear waste disposal, it doesn’t contaminate water they use for free by the millions of barrels a day, it creates jobs, they don’t need to pay $25 billion pe reactor –up front, etc etc. But you cant say all this in a 30 second commercial, so people don’t get the big picture. The truth, the real picture is more complicated and takes longer to explain.

This is why they lose all the peons who don’t take the time to understand it. Luckily the Bill was passed and the FIT is law right now and the liberal are still in poer for at least 5 months, and what ever they approve from now until then, remains law.

The contracts will get approved soon. They will pull it off and deliver the 15,000 MW and the 50,000 jobs they set out to achieve. And they still have tike to achieve this. And once they do, the conservative will implement another program, but will be forced to honor the existing contracts. The Canadian gov’t does not go back on contracts. They are honest here.

Once they start releasing them, there “will be” a ton of projects for sale by other developers, who could not secure funding, or who got into this business just to apply then flip projects upon approval (just like the Real Estate boom, without the bubble). I now this because I know of a bunch of them who are trying to sell theirs already. They are already lining up the buyers, trying to get the highest bid.

This applies to wind , ground mount, and rooftop solar. The better funded companies, like AWSL, will be there to swoop them up, and own the asset for the next twenty years.

This will allow for very rapid growth, for a few well positioned companies.

Watch how fast some companies become billion dollar companies overnight, just because they had their funding in place and positioned themselves properly.

But rapid growth can cause problems.

There are rumors “here” that the current delay in the OPA is part of the Liberal’s strategy.
Prolong the release of contracts, and force the smaller companies to buckle, leaving only the strong, better funded companies to pick up slack. This way only quality, capable companies are doing the installs and servicing, which wil help preserve the reputation/integrity of the program.

They leaned a big lesson from what happened with the first and last round of CAE projects.

If you recall, Ozz took 60% of the market, but look what happened there. BIG lesson learned re how important it is to have quality developers with “proven” concepts in place to capture the market, before you go awarding contracts .(see below)


You also asked

“Who are the top 3 companies here competing in our space?”

Canadian Solar: But they are mostly focused on ground mount, because it uses far more panels, and they are a manufacturer, so it creates a larger demand for their product. They “were” focusing on rooftop, but steered away from it, because it makes them a competitor for rooftops, when they are suppose to be a supplier, resulting in total conflict of interest.

Ozz Solar: They have secured lots of rooftops and had many fit contracts approved in the first round. They also happen to have the daughter of the CEO of the OPA working for them .
The owners of Ozz, (the Muzo family) are huge into Real Estate. (big advantage)
Ozz were using a tupperware/rubbermade container type of mounting/racking system which rests on the rooftop membrane. It did not end up getting CSA approved due to heat issues and no drainage.(ooops, big boo boo)
Then their financing partners (Morgan Stanley) backed out as a result. All this happened “afte”r their FIT contracts were approved in the first round, meaning can’t deliver, making the OPA look bad.

They can deliver on a lot of them, but not most, because those tupperware mounting systems were cheaper, which enabled Ozz to promise landlords very high lease rates. Possibly too high, because when other more costly systems needed to be applied, instead of the system that was not appoved by the CSA, the numbers they promised to landlords, no longer made sense to build the project.(is this making sense.) Read the old article about AWSL titled “getting your solar ducks in a row”

(excellent article about the strategy and the importance of having your ducks in a row)

http://www.energymanagementcanada.com/Renewable-Power/Features/getting-your-solar-project-ducks-in-a-row-an-ontario-financiers-perspective.html

Now that Ozz’s original system has been rejected, it leaves them in a bad spot with some landlords/projects.
Some landlords have resigned with other companies, even though Ozz holds approved contracts for their rooftops.
Lots are in court over it. In these cases, the contract with landlord usually only last a year to 2 years, meaning the landlord cant resign with anyone else during that period. Lots of angry landlords. Ozz is getting a bad name over it .

Ozz have completed a couple of their projects and have sold off many others (mostly the ones that cant be built), but like I said, they were based on bad numbers, therefore are not being built.

Their big Home Depot project cost them a lot of money, but should pay off in long run. Great publicity for them.

Many of Ozz’s fit approved projects have been taken off the OPA’s roster, because they were never what is called “executed” due to the above reasons. IMHO . Also, a lot of them could not be buolt because they never conducted engineering reports on the buildings first.

Ozz has entered into partnership on ground mount projects with SkyOzz I’m told, but there has been some issues between the two companies.

I don’t think AWSL would even want to try to buy any of the Ozz contracts, based on the numbers. But its likley thye may have scooped up some old Ozz landlords.


Amp Solar: Amp is another company focused on rooftops. According to an Amp rep I spoke to, AWSL was in the process of acquiring them, but Amp ended up winning the “Board of Education” tenure, winning the EPC for solar on 430 schools - therefore no need to be acquired by anyone. Hell, no need to work another day in their life either (good for them).. Amp has John Turner’s (the ex Prime Minister of Canada) son working for them. He is a full time employee. (nice guy. I met him at the solar show at metro convention center) Amp is not an energy developer, in the sense, they do not want to own the projects, they only want to be the install company, but they do have a few fit contracts applied for, and are still waiting for them too.. They started as a developer, but changed to an EPC when they got the Board of Ed contract (wouldn’t you too?)

Amp has likely received a very fat deposit to order materials from Board of Ed.

Amp did the Ikea install at 401 and Kipling. There were a lot of issues there. Ikea kicked the contractors off of the roof I heard. Apparently Sanyo delivered the wrong panels, which were all installed, and had to all be removed, and the right ones installed. Ikea was pis$ed because they were on the rooftop for twice the time agreed upon. Aecon was hired to do the installs on that project.(a big, bankable epc/construction company here. Aecon also did Ozz’s Home Depot project)

Note: The school board deal went through “after” AWSL’s press releases were released, announcing several of their projects.
This tells me that the school board submitted their applications after AWSL, meaning this program is still moving forward.
If it wasn’t , the school board, which is also provincially run, would not have moved forward. Also, seeing how Turner’s son is similar to a lobbyist, I’m glad to hear Amp is still waiting for their approvals. Tells me the playing field is level.


Another one to watch out for is German Solar. They are partners with a German inverter company named kaikos (billion dollar company). They have Eastern Ontario locked up and have an exclusive deal with the City of London re an entire industrial park, and are involved in many ground mount projects. I heard they completed their first 100kw rooftop system for a paid client this week. They are an EPC (engineering procurement & construction) too, and don’t want to own projects.
The contracts in the industrial park in the city of london “all” await approval I was told by the city of london’s city hall.

Strangely, they are all designed to use ballasted systems, which exert pressure on the rooftop membrane, which im told to stay away from. But the buildings were all built specifically for solar, so its probably going to be fine. The owner of German solar’s last name is German. He used to work for Hydro One and knows what he is doing.

I have contacted all of the above companies and have discussed their systems, as well have discussed with them AWSL’s system. For the record, they all know our guys at AWSL, and from what they told me, Atlantic is a major player, and well funded, and from the sounds of things, has an interesting, unique product.. Some of them commented about the Cushman relationship, and said Atlantic were lucky to have it. (envy maybe ! )


I know lobbyists here in Ontario. They work for the major players like Cdn Solar, SkyPower, Silfab, SunEdison, etc. They tell me the program is full steam ahead, and that projects will be released soon -- likely “any day.” (btw, any day will apply for as long as it takes until they are released)

I had asked them their advice about my family’s project’s, and if we should hire “them” (the lobbyists) to help push them through, but they were honest, and told me not to worry, that they would be released any way, without us having to spend any more $. I believe them because they would normally take our money.


I hope this helps you in some small way to get an idea of what is happening here.

Im not pumping, and im not an insider, but im around it all and im a little obsessive about due diligence, and am only trying to share my facts (and a little gossip) that most might not have access to.


Any other questions, please don’t hesitate to ask.


Red Hackle, if you have any questions re my family (who are in the business), please don’t hesitate to ask too ; )


Best of luck to everyone.

Att Bnfdb4-

(It would be nice if the moderator “bnfdb4” could please update the information at the top of this board. I’ve noticed a few people have been asking you. I support this request too please.

The info is all strangely inacacurrate. Its strange because it appears that someone was careful about the info they chose to post there, but its all dated and incorrect.

The company has come a long way since three years ago, when it was concept. It has taken many more turns since then.

Why don’t you put something current up ?

Please change the info or remove it. As a “serious” investor, as you claim to be on your profile, No information is better than misinformation.

If you'e not the person who is in charge of this, pls forgive my request. We will all just ask Ihub next time.

Thanks.


(i will share some great links net time - bed time now)