Ram Power & Sierra Geothermal Power announce merger
Ram Power, Corp. and Sierra Geothermal Power announce merger, in which Ram Power acquires all issued and outstanding shares of Sierra. This is a further consolidation of the geothermal market with implications for the North American geothermal development.
Canadian geothermal development firms Sierra Geothermal Power Corp. [TSX-V: SRA] and Ram Power, Corp. [TSX: RPG] just announced that “in accordance with the letter of intent previously announced on June 1, 2010, they have entered into a definitive arrangement agreement whereby Ram Power will acquire all the issued and outstanding common shares of Sierra.”
In the joint release it is said that, “under the terms of the transaction, which is structured as a plan of arrangement pursuant to the Business Corporations Act (British Columbia), each common share of Sierra will be exchanged for 0.0833333 of a common share of Ram Power, and all options and warrants of Sierra will become exercisable for options and warrants of Ram Power on a basis equivalent to the exchange ratio. Upon closing of the transaction, Ram Power is expected to issue approximately 11.13 million common shares to the current shareholders of Sierra. The transaction is expected to close during the third quarter of 2010 and is subject to there being at least $2.9 million of working capital of Sierra at closing, receipt of TSX and TSXV approval, the approval of the common shareholders of Sierra at a shareholders meeting to be scheduled for late August 2010, and court approval.
Ram Power has also received voting agreements from Skyberry Holdings Ltd., Exploration Capital Partners 2005 Limited Partnership in which each of those shareholders have agreed to vote their shares of Sierra in favour of the transaction at the upcoming special meeting of Sierra shareholders which will be called to approve the transaction. In the aggregate, those shareholders hold approximately 23.7 million common shares of Sierra representing approximately 17.8% of the issued and outstanding shares of Sierra.
Gary Thompson, Sierra’s President, Chief Executive Officer and Executive Director, stated, “We are pleased to have formalized an arrangement agreement between Ram Power and Sierra. We believe that Sierra shareholders will benefit from this transaction by owning shares of a well capitalized company, a solid pipeline of properties, excellent growth potential and increased liquidity. We also see this deal as a positive for the geothermal sector in general. This deal has full support of the Sierra’s Board of Directors, Special Committee and Management. The next business item for us is to provide shareholders with an information circular.”
“Raymond James Ltd. has rendered a fairness opinion to the Board of Directors of Sierra dated July 6, 2010 that the consideration to be received by shareholders of Sierra pursuant to the transaction is fair, from a financial point of view, to such shareholders.”
Hezy Ram, Chief Executive Officer, stated, “The arrangement agreement represents an important milestone in the growth of Ram Power as well as the consolidation of the geothermal power industry. From the beginning, Ram Power set out to be the market leader in geothermal power, and the Sierra acquisition is expected to contribute to the synergistic advantages we are seeking in our portfolio of properties.”
The definitive agreement includes a commitment by Sierra not to solicit alternative transactions. Each company has agreed to pay a termination fee of $1.5 million to the other party under certain circumstances. In addition, Ram Power has the right to match any unsolicited competing offer which may be made. A full copy of the definitive agreement will be filed by each of Ram Power and Sierra with the Canadian securities regulatory authorities and will be available at www.sedar.com. In addition, a detailed description of the agreement will be included in the management information circular which will be mailed to Sierra shareholders later this month.