VANCOUVER, April 18 /CNW/ - Magma Energy Corp. (TSX: MXY) announces that its wholly-owned subsidiary, Magma Energy
Sweden AB has signed a term sheet to sell a 25% interest in its
98.5%-owned Icelandic geothermal power company HS Orka hf to a group of
Icelandic pension funds. The purchase price of ISK 8.06 billion
(approximately US $71.5 million) is approximately equal to Magma's
original cost of acquisition. The pension funds will also hold an
option until February 10, 2012 to purchase new shares from HS Orka
treasury that, if exercised, would increase their stake in HS Orka to
33.4% at a cost of ISK 4.7 billion (approximately US $41.7 million).
Magma has also agreed to provide the pension funds with significant
minority shareholder rights to appoint Board members and participate in
the major decisions of HS Orka as long as they continue to hold at
least a 22.5% interest. The transaction is subject to a number of
conditions, including further due diligence, and is expected to close
About Magma Energy Corp.
Magma Energy Corp. is a global geothermal power company which operates,
develops, explores and acquires geothermal energy projects. We have an
extensive portfolio of properties throughout the western United States,
Iceland and Latin America, including one operating power plant in
Nevada and two in Iceland.
About HS Orka
HS Orka is the largest privately owned energy company in Iceland
producing 9% of the country's power needs and 10% of the country's
heating needs. Installed geothermal power capacity is 175 MW from the
Svartsengi and Reykjanes power plants. In addition, HS Orka generates
150 MW of thermal energy for district heating. Expansions are planned
that could increase HS Orka's geothermal power production to 405 MW by
2016. HS Orka's 75 MW Svartsengi plant began production in 1977 and
its 100 MW Reykjanes plant began production in 2006. The electrical
supply is partly sold in US dollars to industrial users under long-term
power purchase agreements.
Cautionary Note regarding Forward-Looking Statements and Information
This news release contains certain "forward-looking information" within
the meaning of Canadian securities laws, which may include, but is not
limited to, statements with respect to future events or future
performance, prospects for closing of the sale described in the term
sheet including the agreement on the final form of all required
documentation, the fulfillment of all conditions precedent to the
obligation of the parties under any final agreements, required consents
and third party approvals. This news release also contains statements
with respect to our plans to expand our operations and HS Orka's plans
to expand their geothermal power production, management's expectations
regarding our growth, business prospects and opportunities and
geothermal energy generation capacities. Such forward-looking
information reflects management's current beliefs and is based on
information currently available to management.
There can be no assurance that the forward-looking information will
prove to be accurate, as actual results and future events could differ
materially from those anticipated in such information. Accordingly,
prospective investors should not place undue reliance on
forward-looking information. Other than as required by applicable
securities laws, we assume no obligation to update or revise such
forward-looking information to reflect new events or circumstances.
SOURCE Magma Energy Corp.
For further information:
Anders Kruus, Vice President, Corporate Relations
Magma Energy Corp.