DBRS Morningstar Comments on the Termination of the Acquisition Agreement Between Algonquin Power & Utilities Corp. and American Electric Power

DBRS Limited (DBRS Morningstar) notes Algonquin Power & Utilities Corp. (APUC or the Company, rated BBB with a Stable trend by DBRS Morningstar) and American Electric Power (AEP) have mutually agreed to terminate the proposed acquisition of Kentucky Power Company and AEP Kentucky Transmission Company, Inc. (collectively, the KPC Acquisition). As DBRS Morningstar noted in its recent press release on February 14, 2023, in the event the KPC Acquisition was terminated (Termination), it would have no materially negative impact on APUC's credit profile.

DBRS Morningstar notes that, as a result of the mutual termination, APUC is relieved from the obligation to pay a termination fee of $65 million. The Termination will eliminate the potential benefits of APUC in terms of increases in size and diversification with the KPC Acquisition but would not affect DBRS Morningstar’s view of its current business risk profile that was reflected in the current BBB rating. Furthermore, the Termination will allow APUC to maintain strong liquidity and good financial flexibility, supported by common equity issuances and hybrid securities (issued for the KPC Acquisition) that were used to reduce the debt at its subsidiaries. DBRS Morningstar will review any further details that may arise in relation to potential changes in APUC's financial arrangements and capital plan as they become available.

Notes:
All figures are in U.S. dollars unless otherwise noted.

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