News
Sep 01, 2009Magma Energy To Acquire 32.32% Of Iceland Geothermal Energy Producer HS Orka
VANCOUVER, B.C., CANADA, SEPTEMBER 1, 2009 - Magma Energy Corp. (TSX:MXY) announces that it has signed an agreement to acquire 32.32% of Iceland geothermal company HS Orka hf (“HS Orka”) from Reykjavik Energy (“RE”) and two other HS Orka shareholders. As previously announced, Magma was selected as preferred bidder by RE to acquire this significant stake in HS Orka. The agreement provides that Magma’s wholly owned subsidiary will purchase the interest for 3.7 billion Icelandic Króner (“ISK”) (approximately US$29.5 million) and a bond for the US Dollar Equivalent of 8.7 billion ISK (approximately US$68.8 million) repayable in a single installment in seven years with interest at 1.52% per annum. The bond will be secured by the shares acquired by Magma in this transaction.
The agreement is subject to several closing conditions including approval by the TSX, a waiver of pre-emptive rights held by third party shareholders of HS Orka and satisfactory negotiations with third parties in respect of HS Orka’s debt agreements. Closing of the transaction is expected in late September, 2009.
On July 23, 2009, Magma announced that it had signed an agreement to acquire a 10.78% shareholding in HS Orka, which agreement included an option to acquire approximately a 5% additional shareholding in HS Orka. If both transactions conclude, Magma would hold a 43.1% direct interest in HS Orka and an option to invest US$15 million in HS Orka’s expansion plans which would increase Magma’s stake up to 48.1%.
Ross Beaty, Magma’s Chief Executive Officer, said, “We view this as a long term investment in HS Orka. We intend to work closely with all stakeholders to maximize HS Orka’s value for all. The transaction provides HS Orka with a strong financial partner and provides Magma with exposure to Iceland’s substantial geothermal resources and highly skilled domestic workforce”.
Magma was advised on the transaction by Glacier Partners, an investment advisory firm specializing in the geothermal and seafood industries.
About Magma Energy Corp.
Magma Energy Corp. is a geothermal power company which is actively engaged in operating, developing, exploring and acquiring geothermal energy projects. We currently have one operating power generation plant in Nevada known as Soda Lake and an extensive international portfolio of exploration properties throughout the western United States, Chile, Argentina and Peru.
Information
Contact: Andrea Zaradic, Vice President, Corporate Development
Magma Energy Corp.
Phone: 604.646.1874
Email: .(JavaScript must be enabled to view this email address)
