By Denny Jacob and Katherine Hamilton

XPLR Infrastructure lost more than a quarter its market value after the renewable-energy company said it would indefinitely stop distributions to unitholders and named a new chief executive as it overhauls its business model.

Shares of XPLR, known as NextEra Energy Partners until it was renamed last week, were recently down 29% at $11.15, after hitting an all-time low of $10.69. The stock price has fallen 63% over the past year.

The Juno Beach, Fla., limited partnership, which is majority owned by NextEra Energy, on Tuesday said it plans to stop spending cash on distributions and asset acquisition so it can buy out equity obligations and reinvest in its renewable-energy projects.

"We believe using our excess cash flow to buy out selected convertible equity portfolio financings and invest in our existing portfolio of high-quality assets are our best and most immediate value-enhancing opportunities for unitholders," XPLR Chairman John Ketchum said.

XPLR was formed in 2014 by NextEra Energy to acquire, manage and own contracted clean-energy projects. XPLR said it will retain a close relationship with NextEra.

As XPLR made more acquisitions, the company used private capital in the form of convertible equity portfolio financing to fund its equity needs, it said. In 2021, it began to buy out the CEPFs by issuing equity and the unit price fell, outgoing Chief Financial Officer Brian Bolster said on a call with analysts.

Now, XPLR said it aims to use the money it was giving unitholders to get out of three of its five convertible equity obligations by 2027. Over the next two to three years, the company plans to use cash flow and some balance sheet capacity to buy out the convertible equity obligations.

XPLR is "trying to go on the defensive" after the equity it relies on for financing became more expensive due to high interest rates, Guggenheim Partners analyst Shahriar Pourreza said.

The buyouts and investments in its existing assets are expected to require $4.4 billion of debt refinancing, including about $1.5 billion in new debt, said Chief Executive Alan Liu, who was named Tuesday. The company plans to spend $945 million in buyouts during 2025, and doesn't expect to need to issue new equity for the buyouts.

Liu is stepping in as CEO after working at NextEra Energy Investments starting in 2021. Before that, he was a managing director at Goldman Sachs where he advised public and private power, power, utility and renewable-energy firms.

Jessica Geoffroy, who has worked in executive roles at XPLR, is succeeding Bolster as chief financial officer.

XPLR said it could at some point either restart distributions, engage in buybacks, or do both, Bolster said. It doesn't expect to return to distributing a payout of 90% or more of available cash flows.

The complete suspension of distributions was more extreme than many analysts expected, said Pourreza, who anticipated the company would cut them by 70%.

"To fully eliminate the dividend was a bit of a surprise," said Pourreza, adding that the lack of visibility beyond 2027 is giving many investors pause.

Write to Denny Jacob at denny.jacob@wsj.com and Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

January 28, 2025 13:37 ET (18:37 GMT)

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