Sprott Power Corp., a Canadian renewable energy developer, agreed to buy Shear Wind Inc. for C$33 million ($33.2 million) in cash to gain its portfolio of wind power projects.
Sprott will pay 22 Canadian cents a share to acquire all of Shear Wind’s shares, a price that values it at C$79 million, Sprott said today in a statement. Holders representing 74 percent of Shear Wind shares intend to vote in favor of the acquisition, Sprott said.
Shear Wind owns stakes in two operating wind farms in Nova Scotia with total generating capacity of 63.7 megawatts, including 51 percent of the Glen Dhu project and all of the Fitzpatrick Mountain wind farm, Sprott said. Shear Wind also has other projects in various stages of development that may total 860 megawatts of capacity at completion.
The deal is expected to be completed in mid-October, and Sprott will transfer the operating facilities into a joint venture with Genera Avante SL, which will increase its stake in Glen Dhu to 51 percent from 49 percent currently and buy half of Fitzpatrick Mountain. The development-stage facilities will be transferred to a separate venture with Wind Canada Investments Ltd. that will be equally owned by both companies, Sprott said.
Sprott also said it will sell C$30 million of 6.75 percent convertible unsecured subordinated debentures to a group of underwriters led by Canaccord Genuity Corp. to partially fund the acquisition. Each C$1,000 principle amount of debentures will be convertible into about 796 Sprott shares following the acquisition at a conversion price of C$1.30 a share.
In addition to the purchase price, Sprott will assume about C$51 million of Shear Wind’s debt that will be offset by about C$5 million in cash-on-hand.
Shear Wind fell 11 percent to close at 17 Canadian cents in Toronto. Sprott was unchanged at the close in Toronto at 98 Canadian cents.