Commitments and contingencies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and contingencies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and contingencies | 23. Commitments and contingencies
Commitments
Operating Lease Commitments
We lease our office properties and equipment under operating leases expiring on various dates through 2021. Certain operating lease agreements over their lease term include provisions for scheduled rent increases. We recognize the effects of these scheduled rent increases on a straight‑line basis over the lease term. Lease expense under operating leases was $1.5 million, $1.0 million and $1.0 million for the years ended December 31, 2015, 2014, and 2013, respectively. Future minimum lease commitments under operating leases for the years ending after December 31, 2015, are as follows:
Long‑Term Service Commitments
Our projects have entered into long‑term contractual arrangements to obtain maintenance services for turbine equipment expiring on various dates through 2022. As of December 31, 2015, our commitments under such outstanding agreements are estimated as follows:
Fuel Supply and Transportation Commitments
We have entered into long‑term contractual arrangements to procure fuel and transportation services for our projects. As of December 31, 2015, our commitments under such outstanding agreements are estimated as follows:
Contingencies
Shareholder class action lawsuits
Massachusetts District Court Actions
On March 8, 14, 15 and 25, 2013 and April 23, 2013, five purported securities fraud class action complaints were filed by alleged investors in Atlantic Power common shares in the United States District Court for the District of Massachusetts (the “District Court”) against Atlantic Power and Barry E. Welch, our former President and Chief Executive Officer and a former Director of Atlantic Power, in each of the actions, and, in addition to Mr. Welch, some or all of Patrick J. Welch, our former Chief Financial Officer, Lisa Donahue, our former interim Chief Financial Officer, and Terrence Ronan, our current Chief Financial Officer, in certain of the actions (the “Proposed Individual Defendants,” and together with Atlantic Power, the “Proposed Defendants”) (the “U.S. Actions”).
The District Court complaints differed in terms of the identities of the Proposed Individual Defendants they named, as noted above, the named plaintiffs, and the purported class period they alleged (July 23, 2010 to March 4, 2013 in three of the District Court actions and August 8, 2012 to February 28, 2013 in the other two District Court actions), but in general each alleged, among other things, that in Atlantic Power’s press releases, quarterly and year end filings and conference calls with analysts and investors, Atlantic Power and the Proposed Individual Defendants made materially false and misleading statements and omissions regarding the sustainability of Atlantic Power’s common share dividend that artificially inflated the price of Atlantic Power’s common shares. The District Court complaints assert claims under Section 10(b) and, against the Proposed Individual Defendants, under Section 20(a) of the Securities Exchange Act of 1934, as amended.
The parties to each District Court action filed joint motions requesting that the District Court set a schedule in the District Court actions, including: (i) setting a deadline for the lead plaintiff to file a consolidated amended class action complaint (the “Amended Complaint”), after the appointment of lead plaintiff and counsel; (ii) setting a deadline for Proposed Defendants to answer, file a motion to dismiss or otherwise respond to the Amended Complaint (and for subsequent briefing regarding any such motion to dismiss); and (iii) confirming that the Proposed Defendants need not answer, move to dismiss or otherwise respond to any of the five District Court complaints prior to the filing of the Amended Complaint. On May 7, 2013, each of six groups of investors (the “U.S. Lead Plaintiff Applicants”) filed a motion (collectively, the “U.S. Lead Plaintiff Motions”) with the District Court seeking: (i) to consolidate the five U.S. Actions (the “Consolidated U.S. Action”); (ii) to be appointed lead plaintiff in the Consolidated U.S. Action; and (iii) to have its choice of lead counsel confirmed. On May 22, 2013, three of the U.S. Lead Plaintiff Applicants filed oppositions to the other U.S. Lead Plaintiff Motions, and on June 6, 2013, those three Lead Plaintiff Applicants filed replies in support of their respective motions. On August 19, 2013, the District Court held a status conference to address certain issues raised by the U.S. Lead Plaintiff Motions, entered an order consolidating the five U.S. Actions, and directed two of the six U.S. Lead Plaintiff Applicants to file supplemental submissions by September 9, 2013. Both of those U.S. Lead Plaintiff Applicants filed the requested supplemental submissions, and then sought leave to file additional briefing. The Court granted those requests for leave and additional submissions were filed on September 13 and September 18, 2013.
On March 31, 2014, the Court entered an order consolidating the five individual U.S. Actions, appointing the Feldman, Shapero, Carter and Smith investor group (one of the six U.S. Lead Plaintiffs Applicants) as Lead Plaintiff and approving Lead Plaintiff’s selection of counsel. The Court also granted the parties’ joint motion regarding initial case scheduling and directed the parties to resubmit a proposed schedule that contains specific dates. In response to that directive, on April 7, 2014, Lead Plaintiff filed an application and proposed order, which sought an extension of the schedule contained in the joint motion. The application and proposed order requested that: (i) Lead Plaintiff be permitted to file an amended complaint on or before May 30, 2014, (ii) the Proposed Defendants be permitted to move to dismiss or otherwise respond to the amended complaint on or before July 29, 2014, (iii) Lead Plaintiff be permitted to file an opposition, if any, on or before September 24, 2014, and (iv) the Proposed Defendants be permitted to file a reply to Lead Plaintiff’s opposition on or before November 13, 2014. Proposed Defendants did not object to the schedule proposed by Lead Plaintiff. On May 29, 2014, Lead Plaintiff filed a renewed application and proposed order, which sought another extension of the schedule, and on June 3, 2014, Lead Plaintiff and the Proposed Defendants jointly filed a stipulation and proposed order requesting the following revised schedule: (i) Lead Plaintiff be permitted to file an amended complaint on or before June 6, 2014, (ii) the Proposed Defendants be permitted to move to dismiss or otherwise respond to the amended complaint on or before August 5, 2014, (iii) Lead Plaintiff be permitted to file an opposition, if any, on or before October 6, 2014, and (iv) the Proposed Defendants be permitted to file a reply to Lead Plaintiff’s opposition on or before November 20, 2014. On June 3, 2014, the Court entered an order setting this requested schedule.
On June 6, 2014, Lead Plaintiff filed the amended complaint (the “Amended Complaint”). The Amended Complaint names as defendants Barry E. Welch and Terrence Ronan (the “Individual Defendants”) and Atlantic Power (together with the Individual Defendants, the “Defendants”) and alleges a class period of June 20, 2011 to March 4, 2013 (the “Class Period”). The Amended Complaint makes allegations that are substantially similar to those asserted in the five initial complaints. Specifically, the Amended Complaint alleges, among other things, that in Atlantic Power’s press releases, quarterly and year end filings and conference calls with analysts and investors, Defendants made materially false and misleading statements and omissions regarding the sustainability of Atlantic Power’s common share dividend, which artificially inflated the price of Atlantic Power’s common shares during the class period. The Amended Complaint continues to assert claims under Section 10(b) and, against the Individual Defendants, under Section 20(a) of the Securities Exchange Act of 1934, as amended. It also asserts a claim for unjust enrichment against the Individual Defendants. In accordance with the schedule referenced above, Defendants filed their motion to dismiss the consolidated (the “Motion to Dismiss”) U.S. Action on August 5, 2014.
On September 30, 2014, citing Atlantic Power’s September 16, 2014 announcement of changes to its dividend and its President and CEO transition, Lead Plaintiff filed a motion (the “Extension Motion”) requesting a thirty day extension of its October 6, 2014 deadline for filing its brief in opposition to the Motion to Dismiss, in which to determine whether to file a second amended complaint. On October 2, 2014, the Court entered an order (i) extending Lead Plaintiff’s deadline to file its opposition to the Motion to Dismiss to October 10, 2014 and (ii) requiring Defendants to file their opposition to the Extension Motion by October 2, 2014. In accordance with this order, on October 2, 2014, Defendants filed their opposition to the Extension Motion. On October 10, 2014, Lead Plaintiff filed its opposition to the Motion to Dismiss (the “Opposition”) and also filed a motion for leave to amend the Amended Complaint, attaching a proposed second amended complaint. On October 21, 2014, Lead Plaintiff and Defendants filed a joint scheduling motion requesting (i) November 7, 2014 as the deadline for Defendants to file their opposition to Lead Plaintiff’s motion for leave to amend the Amended Complaint; (ii) November 24, 2014 as the deadline for Defendants to file their reply in further support of the Motion to Dismiss; and (iii) November 24, 2014 as the deadline for Lead Plaintiff to file its reply in further support of its motion for leave to amend the Amended Complaint. On October 22, 2014, the Court entered an order setting this requested schedule. Pursuant to that order, the Motion to Dismiss and Extension Motion were fully briefed on November 24, 2014. On January 22, 2015, the Court held oral argument on the Motion to Dismiss and Extension Motion.
On January 30, 2015, Lead Plaintiff filed a motion for leave to file a supplemental submission in opposition to Defendants’ motion to dismiss (the “Motion for Leave”). The Court denied the Motion for Leave in an order entered on February 5, 2015, but permitted Lead Plaintiff to submit a brief letter identifying supplemental authorities. Lead Plaintiff filed that letter on February 9, 2015, and Defendants filed a response on February 10, 2015.
On March 13, 2015, the District Court entered an order granting Defendants’ motion to dismiss and denying Lead Plaintiff’s motion to amend the Amended Complaint, and on March 18, 2015, the District Court entered an order dismissing the Amended Complaint with prejudice.
On April 16, 2015, Lead Plaintiff filed a notice of appeal to the United States Court of Appeals for the First Circuit (the “First Circuit”). On August 19, 2015, Lead Plaintiff filed with the First Circuit its brief appealing the dismissal of its securities fraud claims.
On September 4, 2015, while appellate proceedings were still on-going, Lead Plaintiff filed with the District Court a Rule 60(b)(2) motion to vacate the judgment based on evidence cited in the Ontario Superior Court’s decision dismissing the Canadian action (for more information on that litigation, see below under “Canadian Actions”). On September 17, 2015, Atlantic Power opposed Lead Plaintiff’s motion.
On September 18, 2015, Lead Plaintiff requested a stay of the appellate proceedings in the First Circuit pending resolution of the District Court’s decision on its Rule 60(b)(2) motion. On September 21, 2015, Atlantic Power opposed Lead Plaintiff’s request for a stay and tendered to the First Circuit its opposition brief to Lead Plaintiff’s appeal. On October 5, 2015, the First Circuit granted Lead Plaintiff’s request for a stay in the appellate proceeding pending the District Court’s decision on the Rule 60(b)(2) motion.
On October 21, 2015, the District Court entered an order denying Lead Plaintiff’s Rule 60(b)(2) motion to vacate the judgment.
On October 29, 2015, pursuant to Federal Rule of Appellate Procedure 42(b), the parties jointly stipulated to the voluntary dismissal of the appeal before the First Circuit with prejudice. On November 30, 2015, the First Circuit ordered that the case be voluntarily dismissed.
Canadian Actions
On March 19, 2013, April 2, 2013 and May 10, 2013, three notices of action relating to Canadian securities class action claims against the Proposed Defendants were also issued by alleged investors in Atlantic Power common shares, and in one of the actions, holders of Atlantic Power convertible debentures, with the Ontario Superior Court of Justice in the Province of Ontario. On April 8, 2013, a similar claim issued by alleged investors in Atlantic Power common shares seeking to initiate a class action against the Proposed Defendants was filed with the Superior Court of Quebec in the Province of Quebec (the “Canadian Actions”).
On April 17, May 22, and June 7, 2013 statements of claim relating to the notices of action were filed with the Ontario Superior Court of Justice in the Province of Ontario.
On August 30, 2013, the three Ontario actions were succeeded by one action with an amended claim being issued on behalf of Jacqeline Coffin and Sandra Lowry. As in the U.S. Action, this claim named the Company, Barry E. Welch and Terrence Ronan as Defendants. The Plaintiffs sought leave to commence an action for statutory misrepresentation under the Ontario Securities Act and asserted common law claims for misrepresentation.
The Plaintiffs’ motions for leave and certification were heard on May 20-21, 2015.
On July 24, 2015, the Ontario Superior Court of Justice issued a decision denying the Plaintiffs’ motion for leave and certification. The Superior Court granted leave to reconstitute a claim for debenture holders but required that there be a debenture holder as plaintiff, that the claim be amended and that the Plaintiffs pay the Defendants partial indemnity costs of responding to the Plaintiffs’ motion.
The Plaintiffs appealed the July 24 decision on leave and certification to the Ontario Court of Appeal.
The appeal was subsequently abandoned by the Plaintiffs, and the Ontario action was dismissed by Order dated December 2, 2015, the Defendants agreeing not to claim costs from the Plaintiffs.
The proposed Quebec class action was suspended by the Superior Court of Quebec pending the outcome of the motions for leave and certification of the Ontario action as a class proceeding. Following the result in Ontario, the petitioner in the Quebec proceedings has agreed in principle with the Defendants to discontinue the Quebec proceedings without costs. The discontinuance will require the authorization of the Superior Court of Quebec. The parties are preparing materials to obtain this authorization.
The petitioner in the Quebec proceedings did not estimate the alleged damages of the proposed class. Because the Quebec proceedings were suspended and then an agreement to discontinue was made in its early stages, Atlantic Power is unable to reasonably estimate the possible loss or range of losses, if any, arising from this litigation, if it were to continue. If the action were to continue, Atlantic Power intends to defend against it vigorously.
Other
In addition to the other matters listed, from time to time, Atlantic Power, its subsidiaries and the projects are parties to disputes and litigation that arise in the normal course of business. We assess our exposure to these matters and record estimated loss contingencies when a loss is likely and can be reasonably estimated. There are no matters pending which are expected to have a material adverse impact on our financial position or results of operations or have been reserved for as of December 31, 2015.
|