MAGMA ENERGY to sell 25% of Iceland subsidiary HS Orka to Icelandic pension funds
Vancouver, B.C., Canada, April , 2011 – Magma Energy Corp. (TSX: MXY) announces that its wholly-owned Swedish subsidiary has signed a term sheet to sell a 25% interest in its 98.5%-owned Icelandic geothermal power company HS Orka hf to a group of Icelandic pension funds. The purchase price of 8.06 billion Icelandic Krona (US$68 million) is approximately equal to Magma’s original cost of acquisition. The pension funds will also hold an option until February 10, 2012 to purchase new shares from treasury that, if exercised, would increase their stake in HS Orka to 33.4% at a cost of 4.7 billion Icelandic Krona (US$40.5 million). Magma has also agreed to provide the pension funds with significant minority shareholder rights to appoint Board members and participate in the major decisions of HS Orka as long as they continue to hold at least a 25% interest. The transaction is subject to a number of conditions, including further due diligence, and is expected to close in early May.
About Magma Energy Corp.
Magma Energy Corp. is a global geothermal power company which operates, develops, explores and acquires geothermal energy projects. We have an extensive portfolio of properties throughout the western United States, Iceland and Latin America, including one operating power plant in Nevada and two in Iceland.
About HS Orka
HS Orka is the largest privately owned energy company in Iceland producing 9% of the country's power needs and 10% of the country’s heating needs. Installed geothermal power capacity is 175 MW from the Svartsengi and Reykjanes power plants. In addition, HS Orka generates 150 MW of thermal energy for district heating. Expansions are planned that could increase HS Orka's geothermal power production to 405 MW by 2016. HS Orka's 75 MW Svartsengi plant began production in 1977 and its 100 MW Reykjanes plant began production in 2006. The electrical supply is partly sold in US dollars to industrial users under long-term power purchase agreements.
For further information please contact:
Anders Kruus, Vice President, Corporate Relations
Magma Energy Corp.
Phone: 604.646.1882
Email: akruus@magmaenergycorp.com
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