Vancouver-based companies Magma Energy Corp (TSX:MXY) and Plutonic Power Corp. (TSX:PCC) today announced that they have entered into an arrangement agreement to merge and create Alterra Power Corp., a leading renewable power producer, with a post-deal market capitalization of approximately $575 million.
Magma’s main focus is geothermal power while Plutonic’s interests are concentrated in hydroelectric and wind energy, along with some solar-energy projects.
The merger will provide Alterra with a solid base of producing assets in three key renewable energy sectors: geothermal, hydro and wind. It will have six operating plants in three locations: two geothermal plants in Iceland and one in Nevada; two hydro plants in British Columbia; one wind farm in British Columbia; and an option on one solar project in Ontario.
The merger will increase production capacity in 2011 to 198 megawatts generating 1,340 gigawatt hours/year from Magma’s geothermal assets and 168 megawatts generating 460 gigawatt hours/year from Plutonic’s hydro and wind assets.
Ross Beaty, Magma’s chairman and CEO, said, “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. 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.”
Donald McInnes, Plutonic’s vice-chairman and CEO, commented, “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.”