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Canwest News Service
MONTREAL – Innergex Renewable Energy and Innergex Power Income Fund said yesterday they will combine to create a wind and hydro dividend-paying corporation and hope to expand in Canada and the United States.
The two entities, after securing votes from shareholders and fund unit holders in March, will undertake a reverse takeover of Innergex Renewable Energy.
President and CEO of Innergex Renewable Energy Michel Letellier, who will stay on in his post after the merger, said the company will have greater scale and more financial resources to compete for energy projects.
"This transaction is a win-win situation both sides. We've talked with major shareholders and so far everybody is pleased with how the process was done," he said.
Investors in the income fund will receive 1.46 shares for each fund unit and former fund investors will own 61% of the new company. Innergex's current shareholders will hold 39% of the new company and will receive a consideration for $7 a share, 29% higher than the closing price last Friday. Innergex shares gained $1.37, or 25.2%, yesterday on the TSX and closed at $6.80.
Jean La Couture, chairman of the board of trustees and co-chairman of the special committees, said during a conference call with analysts yesterday that he wanted to make clear that the company's cash distribution, which will become a dividend, will remain unchanged.
The company will pay 58¢ a share, which represents 85¢ a share for former unitholders, equaling — after taxes — what was distributed in the income fund.
Mr. La Couture, said the new company will be worth about $1-billion and control 326 megawatts of renewable power. Innergex also has signed three deals for two wind farms and one small hydro plant, which will add 128MW in the next two years, expanding the company by 30%.
The new company, which operates primarily in British Columbia, Ontario and Quebec, sees significant opportunities for growth in all three regions.
But Mr. Letellier said he is worried about the consequences for Innergex and other independent power producers in Ontario after the provincial government signed a deal with South Korean industrial company Samsung Group. Critics claim the Ontario government sweetened the deal by offering more than $400-million of subsidies to the company and is giving Samsung preferential access to the province's power grid.
"It doesn't make any sense to me," Mr. Letellier said. "It could eventually [affect us negatively]. B.C. and Quebec believe in free enterprise, and I thought Ontario had the same philosophy, but they really pulled this one out of a hat without warning."
Innergex has a couple of projects that "are promising" in northern Ontario where Samsung isn't scheduled to be operating.
"But if Ontario turns out to be not a good market then we'll look elsewhere," Mr. Letellier said. "There is a lot of potential in the U.S., and as well in Mexico."
The merged company will generate 73% of its power from hydroelectric facilities and 27% from wind, but Mr. La Couture said this will even out in few years to a 60/40 division with 40% of the company's energy coming from wind.
gvaliante@nationalpost.com—
INNERGEX RENEWABLE ENERGY INC.
Ticker INE/TSX
Close $6.80, up $1.37
Volume 1,537,950
Avg. 6-month vol. 32,654
