Magma Energy’s bid for HS Orka shares by Reykjavik Energy accepted

Alexander Richter 31 Aug 2009

The board of directors of Reykjavik Energy accepted the purchase offer for a 32% stake in HS Orka by Magma Energy today.

As released by Reykjavik Energy (RE), the board of directors of the main utility in Reykjavik accepted today the purchase offer for a 32% stake in HS Orka by Magma Energy. The company will take over the 16.58% share of RE and the share of about 15% by the municipality of Hafnafjördur.

The decision was made today after the utility and Magma Energy gave the government of Iceland an extension to the previously given deadline for a possible other solution. This now has not happen.

The board accepts this acquisition as a good result for the utility and the owners.

The share value of the agreement between RE and Magma Energy is 6.31 and the business is valued at ISK 12 billion (US$ 99 million). About 30% of the purchase is paid in cash and about 70% in US$-nominated bonds.

This agreements ends a two-year long legal battle about the ownership of Reykjavik Energy in Hitaveita Sudurnesja (now HS Orka and HS Veita). The competition authorities required the utility to sell the shares it had purchased from Hafnafjordur. So in short Magma Energy technically buys two shares in the company, which represent a stake of around 32% in HS Orka.

At the same time there is still an ongoing debate in Iceland about the possibility to keep the majority in HS Orka in Icelandic hands.

Source: Release by Reykjavik Energy (Orkuveita Reykjavikur) in Icelandic