Under the terms of the deal, Magma will aquire Plutonic, with each Plutonic shareholder to receive 2.38 shares of Magma for each Plutonic share held. Magma will then change its name to Alterra.
The combined company will have a solid base of producing assets in three key renewable energy sectors – geothermal, hydro and wind – with options in the solar industry. Magma’s current focus is in the area of geothermal, and it has two operating geothermal plants in Iceland and one in Nevada. Plutonic is involved in the hydro and wind areas. Its principal assets are the Toba Montrose hydroelectric project and the Dokie wind farm in British Columbia, Canada, which are held in partnership with GE Energy Financial Services.
“This merger will strengthen both companies and will create a larger, more diversified renewable energy company with assets across a broader spectrum of the clean energy industry,” said Ross Beaty, Magma’s Chairman and CEO. “It has the potential to lower the cost of capital to develop each company’s existing growth assets, to enable those assets to be developed more quickly, and to better attract new opportunities for future development. Geothermal will remain a core focus of the new company, but hydro, wind and solar assets will be solid business platforms for future growth. In the renewable energy business, bigger is better and this combination will achieve that while enhancing returns to each company’s shareholders.”
Donald McInnes, Plutonic’s Vice-Chairman and CEO added: “2010 was a breakout year for Plutonic having completed the transition into an operating company. To continue to build on the success of our history as a project developer, a merger with Magma will provide our shareholders with the best path to further value creation achieved through a larger market size, greater liquidity, better access to capital, and diversity of geography and technology with a healthy development pipeline that provides significant growth opportunities.”
The new company’s management team will be made up of Ross Beaty as the Executive Chairman and CEO and Donald McInnes as Executive Vice-Chairman. Bruce Ripley will be Chief Operating Officer and John Carson will be Executive Vice President.
Completion of the merger is conditional on approval of Magma and Plutonic shareholders at special meetings expected to be held in late April 2011, and satisfaction of other customary approvals, including regulatory, stock exchange and court approvals.
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