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TransAlta Corporation Application for Approval to Issue Shares, AUC Decision 28331-D01-2023

Link to Decision Summarized

Markets – Reporting

Application

TransAlta Corporation (“TransAlta”) entered into an arrangement agreement (“Agreement”) with TransAlta Renewables Inc. (“TransAlta Renewables”), which provided for the acquisition of TransAlta Renewables by TransAlta. Following the Agreement, TransAlta applied for an order authorizing it to issue $46,441,779 TransAlta Common Shares together with such number of TransAlta Common Shares issuable to holders of a deferred share unit of TransAlta Renewables (“Renewables DSUs”) before or on the closing date of the acquisition. TransAlta also requested that the AUC issue orders authorizing the issuance of TransAlta Common Shares as being made in accordance with law, including approving the purposes of the issuance of TransAlta Common Shares.

Decision

The AUC approved the application from TransAlta to issue the applied-for shares.

Pertinent Issues

According to the Agreement, TransAlta will acquire all of the issued and outstanding common shares of TransAlta Renewables not already owned, directly or indirectly, by TransAlta (the “Renewables Shares”). The maximum aggregate amount of cash to be paid to TransAlta Renewables shareholders is CAD$800 million and the maximum aggregate number of common shares in the capital of TransAlta that may be issued to the TransAlta Renewables shareholders in exchange for the Renewables Shares is $46,441,779.

Section 101(2)(a)(i) of the Public Utilities Act requires that the AUC determine: (a) whether the proposed issuance is to be made in accordance with law; and (b) whether the AUC is satisfied regarding the purposes of the proposed share issuance described in the application.

In ascertaining whether a proposed issuance of shares will be made in accordance with applicable law, the AUC typically requests, and relies upon, the opinion of the applicant’s legal counsel to confirm that the owner of the public utility is duly authorized by its directors to undertake the issuance of the proposed shares, and that the form and content of the issuance is in compliance with applicable laws. After reviewing the legal opinion provided by TransAlta’s counsel, the AUC was satisfied that due diligence was being exercised and steps have been taken to ensure that the common shares issuance will be made in accordance with law.

The AUC also accepted TransAlta’s submitted purpose of the common shares issuance and was satisfied that no part of the issuance will impact TransAlta’s transmission assets, the approved or future transmission rates or the provision of utility services.

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