Magma Energy offering US$50 million for additional stake in HS Orka
Magma Energy Corp. has offered ISK 6.3 billion (US$ 49.8 million) for the 32.2% stake of Reykjavik Energy in Icelandic HS Orka.
As reported by Icelandic media today and in a news release by the company, Magma Energy Corp. has offered ISK 6.3 billion (US$ 49.8 million) for the 32.2% stake of Reykjavik Energy in Icelandic HS Orka.
As part of a complicated privatization story, the amount now offered is below the amount initially paid by Reykjavik Energy, when it bought half of it from the municipality from Hafnarfjordur.
It seems like Magma is using a subsidiary called Magma Energy Sweden AB to offer for the shares. If this offer will be taken, then the company could hold a 48.1% share in HS Orka, including the 10.78% share it bought from Geysir Green Energy in July this year and the 5% for which it has preemptive rights.
In the actual release of the company it is said that Magma Energy “has been selected as the preferred bidder to acquire up to 32.32% of Iceland geothermal company HS Orka through an auction process carried out by Reykjavik Energy (“RE”) on behalf of itself and two other HS Orka shareholders. Magma and RE are now negotiating detailed terms of Magma’s acquisition and expect to conclude negotiations during August with a closing anticipated in September. On July 23, 2009, Magma announced that it had signed an agreement to acquire a 10.78% shareholding in HS Orka, which agreement included an option to acquire approximately a 5% additional shareholding in HS Orka. The previously announced agreement remains scheduled to close in September. If both transactions conclude, Magma would hold a 43.1% direct interest in HS Orka and an option to acquire a further 5% stake for a total of 48.1%.
HS Orka is the largest privately owned energy company in Iceland with installed geothermal power capacity of 175 megawatts (“MW”). In addition, HS Orka generates 150 MW of thermal energy for district heating. Expansions are planned that will increase HS Orka’s geothermal power production to 425 MW by 2015.