BMO Announces Financial Deal with Boralex

Bank of Montreal (BMO) announced Thursday a financing agreement with Boralex (BLX), a Quebec-based international producer of renewable energy specializing in wind, solar, and hydroelectricity.

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BMO acts as lead co-sustainability structuring agent for a syndicate in eight Canadian and U.S. banks. The bank will transform Boralex’s credit facility into a sustainability-linked five-year, C$525-million loan.

Helping Boralex Go Beyond Renewable Energy

The deal, which constitutes a modification of an existing credit facility, introduces an incentive mechanism for adjusting margins linked to Boralex’s commitment to increase the representation of women in management positions and avoidance of carbon emissions.

As part of this financing, part of Boralex’s borrowing costs will depend on the achievement of ambitious predetermined sustainability objectives.

This new financing is in line with BMO’s commitment to be its clients’ primary partner in the transition to a carbon-neutral world. The bank has committed to deliver C$300 billion in sustainable loans and underwriting by 2025 to companies that aim for sustainable results. (See Analysts’ Top Stocks on TipRanks)

Management Commentary

“Helping clients like Boralex reach their ESG goals is another way BMO is boldly growing the good in business and life. Deals like this are a great example of the way BMO works with clients across industries both to serve their needs and work toward a more sustainable future,” said Jonathan Hackett, Head, Sustainable Finance, BMO Capital Markets.

“Sustainable lending continues to grow rapidly worldwide and in Canada, and BMO is proud to be the leading Canadian bank for SLL structuring. Our experience in the energy sector combined with our proven expertise in sustainable finance positioned us as the ideal lead partner in helping Boralex reach its environmental and social goals.”

Wall Street’s Take

On November 25, Canaccord Genuity analyst Scott Chan maintained a Buy rating on BMO and set a price target of C$152. This implies 12.3% upside potential.

Chan expects BMO to post earnings per share of C$3.42 for the fourth quarter of 2021.

The rest of the Street is cautiously optimistic on BMO with a Moderate Buy consensus rating based on four Buys and two Holds. The average Bank of Montreal price target of C$137.66 implies 1.8% upside potential to current levels.