Ram Power agrees deal to buy Sierra Geothermal Power

July 8, 2010

Geothermal plant developer Ram Power Corporation has signed a definitive agreement to buy Vancouver-based company Sierra Geothermal Power Corporation.

Ram Power said today it will acquire all issued and outstanding common shares of Sierra through an exchange, with existing Sierra shareholders given 11.13 million common shares in Ram Power.

The deal, expected to be worth the equivalent of around $28 million, is expected to close in the third quarter of 2020, subject to Sierra holding at least $2.9 million in working capital.

It is also subject to approval by Sierra shareholders as well as the Toronto stock exchange and TSX Ventures exchange.

Ram Power said it already had a promise to back the deal from Sierra shareholders including Skyberry Holdings Ltd and Exploration Capital Partners 2005 Limited Partnership, which together hold 17.8% of Sierra shares.

Gary Thompson, Sierra’s President, Chief Executive Officer and Executive Director, said Sierra shareholders would benefit from gaining shares in a “well capitalized” company that he said had a “solid pipeline of properties, excellent growth potential and increased liquidity”.

Mr Thompson said: “We also see this deal as a positive for the geothermal sector in general.”

Properties

Ram Power has geothermal interests in the US, Canada and Latin America, and through the Sierra acquisition would lay its hands on a 120,000 acre portfolio of properties, with 17 projects in Nevada, California and British Columbia.

Sierra has 100% control over its property portfolio, developing projects that have a total estimated power generating capacity of nearly 400MW.

Its first projects are expected to start generating electricity in 2013.

Under the agreement with Ram Power, Sierra has pledged not to seek alternative buyers, while if any alternative buyer comes forward, Ram Power would be given the right to match any offer.

Ram Power, which has its head office in Reno, Nevada, said the deal represented an “important milestone” in its growth, and for the consolidation of the geothermal power industry.

Hezy Ram, Ram Power’s Chief Executive Officer, said: “From the beginning, Ram Power set out to be the market leader in geothermal power, and the Sierra acquisition is expected to contribute to the synergistic advantages we are seeking in our portfolio of properties.”