Canada's Magma Energy Corp. (TSX: MXY) announced that its subsidiary, Magma Energy Sweden A.B., has acquired further shares of Iceland geothermal company HS Orka hf.
Magma Sweden now holds an 84.21% interest in HS Orka.
There has been political opposition to the acquisition in Iceland over recent months, as some Icelanders believe the nation's geothermal resources should not be sold to foreign firms. However, Iceland's economy took a huge hit in the recession that began in 2008, and foreign capital has been welcomed by some.
Magma Sweden acquired 38.03% of HS Orka's outstanding shares from Geysir Green Energy ehf in consideration for 3,871,195,513 Icelandic Króner (ISK) (approximately US$32.3 million); 24,808,569 subscription receipts of Magma Energy Corp.; and payment on November 30, 2010 of approximately 3,062,612,586 ISK (approximately US $25.6 million), subject to certain interest adjustments.
Each subscription receipt will convert into one common share of Magma Energy Corp. on December 18, 2010 for payment of no additional consideration.
Magma Energy Corp. has the right to repurchase the subscription receipts, in whole or in part. The maximum aggregate cost to repurchase all of the subscription receipts will be approximately US $29.5 million.
Magma Sweden's previously announced agreement to acquire Geysir's remaining 14.32% interest in HS Orka has not yet closed and remains subject to certain outstanding closing conditions, which are expected to be met in the near term.
