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Canada's Algonquin mulls sale of renewable energy unit, CEO exits

By Tanay Dhumal

(Reuters) -Canada's Algonquin Power & Utilities on Thursday announced the resignation of CEO Arun Banskota and said it was considering a sale of its renewable energy unit, after activist firms urged action to reduce debt and boost earnings.

Company insider Christopher Huskilson has taken over as interim CEO effective immediately and the board has commenced a search for a permanent replacement.

Algonquin shares fell 4% to C$10.02 in morning trade.

The decision to divest comes months after the company initiated a strategic review of the renewable energy division, following a push for changes by activist firms including Corvex Management and Starboard Value.

Algonquin said it had received interest for the renewable energy unit, but did not provide financial details or timelines for any potential deals.

"Continue to believe that it may not be an ideal time to divest the renewables business due to the high interest rate environment," said RBC Capital Markets analyst Nelson Ng.

Algonquin is grappling with a $7.5 billion debt burden following a series of acquisitions in recent years. In January, the company announced plans to raise $1 billion through asset sales and said it would slash its dividend by 40% to bolster its finances.

"We expect to use the proceeds of a renewables transaction to reduce our debt and fund share repurchases," said Huskilson.

The company said on Thursday JPMorgan would act as its financial advisor for the possible sale of the renewable energy unit, which includes all of the company's non-regulated operating and development power generation assets.

Algonquin also posted a wider second-quarter loss of $253.2 million, compared with a loss of $33.4 million a year earlier.

(Reporting by Tanay Dhumal in Bengaluru; Editing by Milla Nissi and Devika Syamnath)