Alter NRG Corp. announces the acquisition of an equity interest in Groundheat International Inc., strategic alliance with major real estate developer and geoexchange operational update
TSX - NRG OTCQX - ANRGF
CALGARY, April 22 /CNW/ - (TSX: NRG; OTCQX: ANRGF) Alter NRG Corp. ("Alter NRG" or the "Company") is pleased to announce the acquisition of 35% of Groundheat International Inc. ("Groundheat") for $2.3 million by its wholly owned subsidiary Clean Energy Developments Corp. ("CleanEnergy"). The acquisition of Groundheat provides additional geoexchange drilling execution capability in the southern Ontario market, provides CleanEnergy a right of first refusal on geoexchange equipment sales and related product and strategic relationships with commercial developers and customers focused on widespread usage of geoexchange. The current anticipated orders and backlog in geoexchange installations for CleanEnergy and Groundheat combined through September 2010 is over $9.0 million for the Greater Toronto Area. This illustrates the strong market demand for commercial geoexchange in the Ontario market.
CleanEnergy has purchased 35% of the equity in Groundheat for total consideration of $2.3 million comprised of $1.85 million in cash and the contribution of its current drilling rig assets with a deemed value of $0.45 million. Groundheat will be CleanEnergy's preferred but not exclusive geoexchange drilling services in the Ontario market. Groundheat will have an expanded drilling execution capability of six rigs compared to CleanEnergy's current one drilling rig which will provide a broader range of drilling capabilities to CleanEnergy's customers. Groundheat, and its principal Gino Di Rezze, have been a leading provider of geoexchange services in the commercial market segment for over 30 years and have done such high profile projects as Walmart, Ikea and Greenpeace offices.
Groundheat focuses on geoexchange drilling and installation services and will continue to provide this scope of service focused in the Ontario market. CleanEnergy offers a turnkey product offering which includes engineering and design, residential and commercial equipment, monitoring equipment, cogeneration and solar options, and an overall turnkey product warranty which is a leading product in the industry. CleanEnergy will use Groundheat drilling services in the Ontario market to expand its ability to offer a turnkey product for larger commercial installations and under the terms of the acquisition agreement will jointly schedule the usage of the installation assets.
Mark Montemurro, President and Chief Executive Officer of Alter NRG, believes "the acquisition of Groundheat will further accelerate the already rapid growth of geoexchange in the Ontario market which is attractive both financially and environmentally. Drilling and installation consolidation strengthens our drilling operations, increases flexibility and operational reliability, reduces costs by having a larger operational base and is in alignment with CleanEnergy's strategy to subcontract the management of drilling operations and not directly own drilling equipment."
The acquisition agreement also provides CleanEnergy a right of first refusal to provide heatpump equipment for all Groundheat projects and CleanEnergy will act as the preferred supplier of a turnkey product for installations done by Groundheat in the Ontario market. The current Groundheat backlog of installation revenues is over $5.0 million in the next year which provides CleanEnergy opportunities to provide their turnkey offering and equipment for these projects. A couple of the notable projects are the Toronto Detention Centre and the 8 Chichester Place, a 210 unit 20 storey building in the City of Toronto.
After the acquisition, a wholly owned subsidiary of the Remington Group will own 50% of Groundheat and will work closely with CleanEnergy on effectively penetrating the geoexchange market. The Remington Group is a leading commercial developer in the Ontario market and is currently intending on installing. geoexchange in numerous developments totaling approximately $15 million over the next 2 years.
Tom Davies, Vice President of The Remington Group and Director of Groundheat, states "that the construction of green condominiums has numerous strategic benefits for our company and is the right thing to do for our planet. We are pleased to have CleanEnergy as a strategic shareholder in Groundheat to provide a broader product offering and industry acumen to allow us to better execute on our aggressive use of geoexchange on many of our upcoming developments."
After recently announcing the largest geoexchange project sale for CleanEnergy on March 30, 2010, CleanEnergy has now signed an agreement for a further geoexchange installation of approximately $640,000 in the Toronto area that has several follow-on opportunities. CleanEnergy is currently bidding on multiple larger projects from $500,000 to over $3,000,000 across Canada.
Bruce Buchholz, Chief Operating Officer of CleanEnergy, states that "the market demand for geoexchange services in the Ontario market has been strong and we expect to continue to have strong revenue growth in the market. The stake in Groundheat provides access to strategic customers and the ability to execute more broadly in this market. The market response is so significant that, in addition to the Groundheat assets, we are currently utilizing drilling assets brought from Alberta and drilling solely for CleanEnergy installations. We are excited about continued growth in the Ontario market which has strong economic fundamentals and a desire to reduce their carbon footprint by both government and commercial industry."
The geoexchange market has only a few large scale competitors and CleanEnergy's strategy is alignment and collaboration with key service providers in the industry. The market potential is so large, that collaboration will improve quality, lower the cost structure and provide our customers the maximum financial value which will potentially increase adoption of geoexchange technology.
ABOUT ALTER NRG
Alter NRG is pursuing alternative energy solutions to meet the growing demand for environmentally responsible energy in world markets. The Company's vision is to commercialize growth technologies through environmentally sustainable and economically viable alternative energy projects. The Company's objectives are twofold: first, is to further commercialize the Westinghouse Plasma Gasification Technology, a wholly owned subsidiary, to provide renewable and clean energy solutions from a wide variety of feedstocks, and a wide variety of energy outputs - including liquid fuels like ethanol and diesel, electrical power, and syngas; second, to capitalize on the rapidly growing geoexchange residential and commercial heating and cooling market through a wholly owned subsidiary CleanEnergy that enables consumers to reduce their carbon footprint and reduce the cost and volatility of energy bills using the energy from the earth.
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Advisory Respecting Forward-Looking Statements:
This news release contains certain "forward-looking information and statements" within the meaning of specific securities laws. In particular, this new release contains forward-looking statements pertaining to capital expenditures, schedules and commencement of operations of existing projects and projects under development; availability of project financing; timing of sales; industry trends; factors influencing capital investments and development activities; the Corporation's reputation and market position within the industries in which it operates and the Corporation's strategy and competitive advantages.
Forward-looking statements require management to make estimates and assumptions with respect to the outcome of future events. These estimates and assumptions could, in the future, turn out to be inaccurate and materially affect the final outcome. The significant estimates and assumptions within the Corporation's forward-looking statements include: availability and cost of key materials and labour and availability of funds with respect to the amount of capital expenditures and scheduled commencement of operations; timing of regulatory approval including various permits from federal, provincial, and local authorities; the assessment of capital markets including the availability of debt and equity in current market conditions; commodity prices for electricity, natural gas, coal and other resources that impact the Corporation's operations directly and indirectly; extent of investment by government authorities in infrastructure projects; the financial and operational health of key partners in various projects; the continued development of the Corporation's technology and its use in various applications, and consumer demand for geoexchange solutions.
Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "propose", "target", "intend", "believe", "should", "anticipate", "estimate" or other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are not based on historical facts but rather on the expectations of management of the Corporation regarding, among other things, the Corporation's future plans and intentions, results of operations, levels of activity, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities.
Forward-looking statements reflect management's current beliefs and assumptions, based on information currently available to management. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, many of which are beyond the control of the Corporation. Among the material factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: that the information is of a preliminary nature and may be subject to further adjustment; the completion of strategic partner's projects; arrangements with key suppliers; potential product liability and other claims; other business risks outlined in this news release, including risks associated with the proprietary technology; the possible unavailability of financing at competitive rates and the related effect on development activities; the effect of energy price fluctuations; changes in government regulation, including changes to environmental regulations; the effects of competition; the dependence on senior management and key personnel, and fluctuations in currency exchange rates and interest rates.
The Company cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information and statements contained in this news release speak only as of the date of this news release, and the Company assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.For further information: Mark Montemurro, President and Chief Executive Officer, (403) 806-3877, firstname.lastname@example.org; Daniel Hay, Chief Financial Officer, (403) 214-4235, email@example.com