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Plutonic announces milestone $70-million financing deal
Posted October 15th, 2009
Vancouver Sun
Plutonic Power announced a milestone financial deal Wednesday that fortifies its massive Toba Inlet project and diversifies the Vancouver company’s green power asset base.
Montreal-based Cormark Securities and a syndicate of underwriters will pay $70.35 million in a bought deal for 21 million common shares of Plutonic.
The proceeds will be mostly split between construction of a transmission line to carry electricity from hydro projects under construction in a southwest BC inlet, and Plutonic’s share of the acquisition of the stalled Dokie Ridge wind project in northeast BC.
About $10 million will be set aside as working capital, according to Plutonic vice-chairman and CEO Donald McInnes.
The transmission line is the linchpin for two run-of-river hydro projects in the Toba Inlet-Montrose corridor. Plutonic is spending $660 million to develop them and expects to commence power delivery to BC Hydro in 2010.
Plutonic and its investment partner, GE Energy Financial Services, are buying Dokie from EarthFirst Canada, a Calgary-based company that is in creditor protection after spending $100 million to get it started.
“It was a huge day,” McInnes said, though noting that Plutonic’s share price dropped 26 cents to $3.34 after the announcement.
“But I think that’s very short-term, and we’ve got a fantastic vote of confidence from Bay Street on making clean power investments in British Columbia,” he said.
“It clearly positions us as a leading British Columbia company and it allows us to leverage the money we’re raising from Canadian institutions with the debt market.
“Between the two projects we will have invested over $900 million in clean power in British Columbia in a two-year period, so it should be viewed as a good-news story for the province.”
Plutonic will hold 51 per cent of Dokie, which had a power purchase agreement in place with Hydro. EarthFirst planned to hold onto carbon credits the potential 300-megawatt green power project would generate, but Plutonic is selling them to Hydro in exchange for extending the original power sales agreement to 25 years from 20.
Analyst Tania MacIver of Haywood Securities rates Plutonic as “sector outperform” with a $4.25 target price.
MacIver said it made sense for Plutonic to simultaneously raise the funds for both projects and believes that the company’s decision to diversify into wind power development will benefit shareholders in the long run.
“It looks like the lenders are loaning money again for projects that they see near-term resolution to, and believe can hit their [commercial operation] date,” MacIver said.
Melissa Davis, executive director of Citizens for Public Power, said her organization continues to oppose the B.C. government’s decision to support private-sector electricity projects such as Toba Inlet and Dokie.
“The people of this province aren’t fooled,” Davis said. “They know many proposed private power projects carry significant environmental impacts to our forests, water, fish, and wildlife.”
Plutonic Power announced a milestone financial deal Wednesday that fortifies its massive Toba Inlet project and diversifies the Vancouver company’s green power asset base.
Montreal-based Cormark Securities and a syndicate of underwriters will pay $70.35 million in a bought deal for 21 million common shares of Plutonic.
The proceeds will be mostly split between construction of a transmission line to carry electricity from hydro projects under construction in a southwest BC inlet, and Plutonic’s share of the acquisition of the stalled Dokie Ridge wind project in northeast BC.
About $10 million will be set aside as working capital, according to Plutonic vice-chairman and CEO Donald McInnes.
The transmission line is the linchpin for two run-of-river hydro projects in the Toba Inlet-Montrose corridor. Plutonic is spending $660 million to develop them and expects to commence power delivery to BC Hydro in 2010.
Plutonic and its investment partner, GE Energy Financial Services, are buying Dokie from EarthFirst Canada, a Calgary-based company that is in creditor protection after spending $100 million to get it started.
“It was a huge day,” McInnes said, though noting that Plutonic’s share price dropped 26 cents to $3.34 after the announcement.
“But I think that’s very short-term, and we’ve got a fantastic vote of confidence from Bay Street on making clean power investments in British Columbia,” he said.
“It clearly positions us as a leading British Columbia company and it allows us to leverage the money we’re raising from Canadian institutions with the debt market.
“Between the two projects we will have invested over $900 million in clean power in British Columbia in a two-year period, so it should be viewed as a good-news story for the province.”
Plutonic will hold 51 per cent of Dokie, which had a power purchase agreement in place with Hydro. EarthFirst planned to hold onto carbon credits the potential 300-megawatt green power project would generate, but Plutonic is selling them to Hydro in exchange for extending the original power sales agreement to 25 years from 20.
Analyst Tania MacIver of Haywood Securities rates Plutonic as “sector outperform” with a $4.25 target price.
MacIver said it made sense for Plutonic to simultaneously raise the funds for both projects and believes that the company’s decision to diversify into wind power development will benefit shareholders in the long run.
“It looks like the lenders are loaning money again for projects that they see near-term resolution to, and believe can hit their [commercial operation] date,” MacIver said.
Melissa Davis, executive director of Citizens for Public Power, said her organization continues to oppose the B.C. government’s decision to support private-sector electricity projects such as Toba Inlet and Dokie.
“The people of this province aren’t fooled,” Davis said. “They know many proposed private power projects carry significant environmental impacts to our forests, water, fish, and wildlife.”