VANCOUVER, Feb. 10, 2012 /CNW/ - Run of River Power Inc. together with its wholly-owned subsidiary, Sea to Sky Power Corporation (collectively "ROR Power" or "the Company") (TSX-V:ROR) announced today that it has entered into agreements with certain subsidiaries in the Concord Pacific group of companies (collectively, "Concord") to provide equity financing for ROR Power's 25 MW Skookum Power Project (the "Project"). Until the Project obtains third-party project financing, the Concord financing will be provided by a convertible debenture of up to $3.0 million, which will be converted into equity in the Project upon closing of the third-party project financing transaction and satisfaction of other closing conditions ("Closing").
Under the terms of the agreements, upon Closing, Concord will acquire a 100% interest in the Project in consideration of providing additional equity capital required to complete the construction of the Project. Total project costs are estimated at $92 million. In addition, Concord will pay to ROR Power a development fee of approximately $5.0 million at the time of Closing which is anticipated to occur during Q2 2012. The final development fee payment amount will vary with the final construction cost and financing terms. In addition, ROR Power has retained a royalty interest in the Project for 10% of the Project's gross revenues.
Upon Concord acquiring a 100% interest in the Project, ROR Power will be responsible for development, engineering and construction of the Project pursuant to a construction agreement as well as ongoing operations thereafter. ROR Power will provide management services for the Project for a fee based on the Project's post-debt service cash flows. In addition, ROR Power will also have an option to convert its royalty interest into a 50% equity interest in the Project after the 5th anniversary of the Project's commercial operation date.
"We are delighted to partner with a company of this caliber," said Rick Hopp, President and CEO of Run of River Power. "This long-term strategic agreement with Concord provides ROR Power with a solid financial base from which to continue development of the Skookum Power Project. The agreement will also help to facilitate the required debt for construction financing of the project," he added.
"The Run of River Power Project in BC is a continuation of our Canadian investments of scale in the clean energy sector. We firmly believe the demand for clean and sustainable green energy will continue to increase with growing demand for electric powered vehicles. Together with the shift to eco-density, green energy and energy efficiency technologies are probably the most measurable and certain in terms of environmental benefits," remarked Terry Hui, President and CEO of Concord Pacific.
The Company formally signed a 40-year electricity purchase agreement for the Skookum Power Project with BC Hydro in May 2010. Construction is scheduled to begin in the second quarter of 2012, with commercial operation set for January 2014. The Company is in discussions with lenders regarding long term project financing. When completed, it will be the Company's second operating hydroelectric power plant in BC.
BowMont Capital and Advisory Ltd. served as exclusive financial advisor to ROR Power in connection with this transaction.
About Run of River Power Inc.
ROR Power develops renewable, sustainable energy through its portfolio of clean energy projects. The company helps diversify BC's energy mix by providing a cleaner way to generate power and increasing the security of BC's energy supply. ROR Power operates an Eco Logo© certified hydroelectric power generation station at Brandywine Creek, near Whistler, BC that provides green power for about 4,000 homes. The company is well positioned for profitable growth through power generation initiatives that include its 25 MW Skookum Power Project, awarded an Electricity Purchase Agreement by BC Hydro in 2010. ROR Power's total development potential is approximately 600 MW.
About Concord Green Energy
Participating in the future of infrastructure needs of Canadians has always been a cornerstone to Canada's first urban community builder. Concord Pacific created Concord Green Energy to explore and support a variety of zero carbon energy producing projects of scale. Green energy solutions will be a key component to the success of sustainable communities in the future. Creating sustainable and clean energy at the source to power the communities of the future is the vision of Concord Green Energy. Concord Green Energy's first power project, Red Lily I in Saskatchewan, is complete and is successfully generating renewable energy.
Statements in this release which describe Run of River Power Inc.'s intentions, expectations or predictions, or which relate to matters that are not historical facts are forward-looking statements. These forward-looking statements involve unknown risks and uncertainties which may cause the actual results, performances or achievements of Run of River Power Inc. to be materially different from any future results, performances or achievements expressed in or implied by such forward-looking statements. Run of River Power Inc. may update or revise any forward-looking statements, whether as a result of new information, future events or changing market and business conditions and will update such forward-looking statements as required pursuant to applicable securities laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For further information:
Richard W. Hopp
President and CEO