Magma Energy is selling a 25% interest in its recently purchased Icelandic geothermal power company HS Orka to a group of the country's pension funds for about US $71.5 million.
VANCOUVER: Magma Energy Corp. is selling a 25% interest in HS Orka hf, its recently purchased Icelandic geothermal power company, to a group of the country’s pension funds for about US $71.5 million, and amount roughly equal to the share’s cost of acquisition.
Magma, a Vancouver-based geothermal power company, had acquired through its wholly owned Swedish subsidiary 98.53% of the Icelandic company through 2010 for about US$250 million. HS Orka produces 9% of the country’s power needs and 10% of its heating needs.
The purchase sparked a public campaign, helped along by Icelandic pop singer Bjork, (who very vocally opposed the sale), that demanded the country maintain control over its natural resources.
The acquisition was reviewed by the government, which announced in September that Magma had acted in full compliance with the law.
Magma said the pension funds will also have an option (until February 10, 2012) to up their share to 33.4% at a cost of $41.7 million. And they will get “significant minority shareholder rights” to appoint board members and participate in the major decisions of the company, as long as they continue to hold at least a 22.5% interest.
HS Orka has an installed geothermal power capacity of 175 megawatts from the Svartsengi and Reykjanes power plants. Magma said expansions are planned that could increase the utility’s geothermal power production to 405 megawatts by 2016.