Sierra Geothermal Power Corp. (TSX VENTURE: SRA) ("SGP") today
cautioned its shareholders that the "concerned shareholder" behind
a dissident proxy circular is not concerned with the interests of
all Sierra shareholders. The "concerned shareholder" is attempting
to seize control of Sierra's Board at a special meeting scheduled
for January 26, 2010.
In a letter to shareholders, Sierra's President and Chief
Executive Officer Gary Thompson noted the dissident's principal has
strong economic ties to Sierra's competitor, Ram Power, Corp.
Sierra believes these ties may compromise the loyalty of the
dissident's hand-picked nominees.
In contrast to the dissident's conflicting loyalties, Mr.
Thompson highlights the independence and experience of Sierra's
current board, which has successfully unlocked value for Sierra
shareholders during a turbulent market. He also provides detail on
the various strategic options currently being considered by the
company to unlock value. These options include the advancement of
projects, joint venture project agreements, equity financings and a
sale of the company.
Below is the text of Mr. Thompson's letter.
You may have received a dissident circular from Exploration
Capital Partners 2005 Limited Partnership, which styles itself as a
"concerned shareholder." Make no mistake. The dissident's principal
has strong economic ties to Sierra's competitor, Ram Power,
Corp.
To protect your interest in Sierra, it is important that you do
not sign or return the dissident proxy form. Instead, vote the
GREEN Proxy today against the dissident and in support of your
board and management.
Sierra's strategy is unlocking shareholder value
Sierra's strategy is to use both corporate equity and joint
venture partners to build a leading geothermal developer. Because
we also understand the obvious financial constraints, a special
committee of independent directors has been formed to carefully
consider all strategic alternatives with the assistance of a
financial advisory firm. The strategic alternatives are focused on
creating value for all Sierra shareholders and include the
following:
- Advancement of Projects - Sierra has access to cash and grants
that total nearly $20 million, allowing us to drill wells with
production potential that could advance projects towards
feasibility this year. Within the month we expect to commence a
drill program at Silver Peak and Alum that will include three holes
at each project: a core well, a slim well and a production
well.
- Joint Venture Project Agreements - Sierra is in joint venture
discussions at the project level which could provide alternatives
to equity financing and help one or more projects to bankable
feasibility - a significant event for value creation.
- Equity Financings - Absent a joint venture, we may need to
raise $30 million to follow our previously disclosed strategy of
bringing 50 MW to bankable feasibility by the end of this year.
Warrant holders who are in the money could provide much of that
amount and we may sell non-core assets to reduce dilution.
Investors have expressed interest in participating in future
financings.
- Sale of the Company - Sierra's asset portfolio is one of the
largest remaining high quality US land packages. Various well
funded utilities and developers have expressed a keen interest in
considering an acquisition of Sierra through a formal auction
process. Sierra's Board believes that a sale of the company might
be an attractive alternative to its current business plan, but only
if we receive a reasonable offer. We have yet to receive a
reasonable offer.
Given the various on-going strategies discussed, now is the time
to support your current board of directors to allow them the time
to maximize the value of your investment.
Your board has unlocked value during a turbulent market
Sierra has emerged intact from the global economic crisis. We
are capitalized and our strategic assets are of interest to a
variety of different partners and suitors. The increase in our
share price over the past few months reflects Sierra's tremendous
progress:
- Sierra secured $12.35 million in financings, all at prices
above Ram Power's $0.186 discount proposal. This amount includes
$1.35 million received upon the exercise of warrants by a large
institutional shareholder earlier this week at a price of $0.27 per
share, again well above Ram Power's discount proposal.
- Sierra was awarded US$10 million in US Department of Energy
grants, twice the US$5 million awarded to Ram Power.
- Sierra is successfully advancing its Tier One projects toward
bankable feasibility with drill results that increased the
estimated minimum megawatt capacity.
While there are constraints to being a small geothermal company,
there are also benefits to our pure-play focus on Nevada and
California. The size and strategic location of our high-quality
assets is garnering attention. Our success is creating
opportunities and your current board is reviewing all strategies to
unlock value, including a possible sale or joint venture. We will
act if the terms are beneficial and unlock value.
The dissident's ties are stronger to Ram Power than to
Sierra
We believe the dissident's only strategy for Sierra is
consolidation with Ram Power. In so doing, the dissident, and those
that control it, will consolidate their interests and ignore yours.
The dissident has the following strong economic ties to Ram
Power:
- Companies under common control with the dissident, when taken
together, are Ram Power's largest shareholder, with an aggregate of
nearly 10% of Ram's shares and a current value of more than $50
million. This is much greater than the dissident's ownership of 5%
of Sierra, with a current value of $2 million.
- All seven of the dissident's nominees helped to create Ram
Power last year.
- Two of the dissident's nominees are directors of Ram Power
with large stock option positions.
We believe that Ram Power has not made a reasonable offer for
the company because it is waiting for its allies to get control of
Sierra's board and facilitate a sale at a discount.
The dissident's criticisms are unfounded
In its circular, the dissident alleges Sierra "missed the boat"
but our stock's performance says otherwise. On Friday, January 8,
2010, Sierra closed at $0.33, up 46% from our value in July when we
received the discount price proposal from Ram Power, Corp.
As illustrated in the table below, you gained 41% because your
board questioned the Ram Power proposal. You would not have had
this gain if Sierra had listened to the dissident's principal and
participated in the Ram Power transaction in July.
Your Board would have forgone value by accepting the Ram Power
offer
--------------------------------------------------------------------------
July 2009 (3) Jan. 8, 2010 Gain
--------------------------------------------------------------------------
Sierra's real market gain $0.226 $0.33 46%
--------------------------------------------------------------------------
Ram Power's gain $3.00 (1) $3.78 26%
--------------------------------------------------------------------------
Equivalent increase from discount proposal $0.186 (2) $0.234 26%
--------------------------------------------------------------------------
What Sierra holders would have gained with
Ram Power $0.226 $0.234 3.54%
--------------------------------------------------------------------------
Extra value because Sierra questioned the
Ram Power proposal $0.234 $0.33 4%
--------------------------------------------------------------------------
(1) Ram Power's deemed value for the July proposal was $3.00
(2) Ram Power's proposal for Sierra was an 18% discount to July market value
(3) Except for $0.234, which is the Jan. 8, 2010 deemed value of Sierra if
it had participated in the Ram Power proposal.
If a sale, especially to Ram Power, proves to be the right path
for Sierra, your current board is better positioned to handle the
negotiations than a board dominated by the dissident's nominees.
Your current board is not compromised and can and will continue to
vigorously advocate on behalf of Sierra.
The dissident says Sierra does not have the capacity to finance
yet it criticizes Sierra's dilution when we do finance. Given the
discount price at which the dissident proposed to sell the entire
company, it is not in a position to comment on dilution now.
The Board accepts that dilution may be necessary and will
continue to carefully consider any appropriate means by which to
minimize it. For example, by working hard to win US$10 million in
government grants we effectively doubled the value of every dollar
Sierra raised in equity financings last year without any additional
dilution. For a company of our size, that is a big benefit for all
shareholders.
Our conclusion is that the sole purpose of this proxy battle is
to re-engage with Ram Power though the back door. In coming months,
Sierra will need strong advocates in any negotiations. If you elect
the dissident's nominees, don't expect all of them to sit on
Sierra's side of the table when the negotiations commence.
Our board is independent and experienced
The Sierra board takes seriously its fiduciary duty of loyalty
to Sierra and discharges its actions in good faith and in the best
interest of Sierra. Our track record is proven. We did not crumble
when the dissident pressured us to accept a discount takeover last
July.
The dissident's hand-picked nominees, with their conflicting
loyalties, should not be relied on to advance the interest of
Sierra. The dissident is concerned with its interests, which
include Ram Power. The dissident's principal does not deny that he
would have sold Sierra at less than 20 cents a share.
Your current board is independent and knows how to negotiate
with Ram Power or any other interested party. Moreover, the current
Sierra directors have a depth of relevant geothermal industry and
business experience. We know and understand your company and our
successful strategy is steadily and consistently raising the share
price - all to the benefit of Sierra shareholders.
As part of our focus to continue to deliver value to
shareholders, your Board commits to you:
- We will not be pressured to accept a discounted offer.
- We will continue to thoroughly evaluate all offers
- We will always be open to ideas to enhance the value of
Sierra.
- We will continue to practice strong corporate governance to
protect shareholders.
Yours truly
Gary Thompson, Chief Executive Officer, President and
Director
Sierra Geothermal Power Corp.
To support your board, vote the Green Proxy:
- Against the resolution to increase the size of the Board,
and
- Withhold your vote on the resolution to elect seven
dissidents.
How to Cast Your Vote
The Management Circular and related proxy materials, including
the GREEN proxy, have been mailed to persons who were shareholders
of record as of the close of business on December 15, 2009.
Investors and security holders may obtain a free copy of these
documents on our website at www.sierrageopower.com/proxy at the
Canadian securities regulators web site www.sedar.com and by mail.
You can request the materials by contacting SGP's Investor
Relations department, Sierra Geothermal Power Corp., Suite 500 -
666 Burrard Street, Vancouver, B.C., Canada, V6C 3P6, or by
telephone: 1-800-563-5631, or by email at
info@sierrageopower.com.
SGP and its directors, executive officers and other members of
its management and employees may be deemed to be participants in
the solicitation of proxies from SGP's shareholders in connection
with the proposed acquisition. Information concerning the interests
of SGP's management who are participating in the solicitation is
set forth in the Management Circular.
If you have any questions or need assistance in completing your
GREEN proxy, please call Laurel Hill Advisory Group at toll free
1-888-534-1149 or email at assistance@laurelhillag.com and they
will be happy to help.
About Sierra Geothermal Power Corp
Sierra Geothermal Power Corp. is a renewable energy company
focused on the exploration and development of clean, sustainable
geothermal power. It is based in Vancouver, British Columbia and
listed on the TSX Venture Exchange under the symbol SRA. Its
portfolio of geothermal projects located in Nevada and California
exceeds 365 square kilometres (90,000 acres) and has a combined
total estimated capacity of greater than 500 MW. SGP intends to
finance development by utilizing a combination of corporate equity,
joint venture partnerships and project debt, with the support of US
government grants and loan guarantees. To find out more about
Sierra Geothermal Power Corp. (TSX VENTURE: SRA) visit our website
at www.sierrageopower.com.
On behalf of the Board of Directors
Gary Thompson, Chief Executive Officer, President and
Director
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This news release may contain forward-looking statements. All
statements, other than statements of historical fact, included or
incorporated by reference in this news release are forward-looking
statements, including, without limitation, statements regarding
activities, events or developments that Sierra expects or
anticipates may occur in the future. Forward-looking statements can
be identified by the use of forward-looking words such as "may",
"would", "could", "expect", "intend", "plan", "estimate",
"anticipate", "believe" or "continue" or similar words or the
negative thereof.
Forward-looking statements in this news release include
statements about the timing and design of Sierra's proposed drill
program, that joint venture discussions could lead to alternatives
to equity financing that would help carry one or more of Sierra's
projects to bankable feasibility, that Sierra might need to raise
additional money to fund its business plan, that it can do so
through the sale of equity, that it can reduce the dilution that
results from equity financings if it can arrange project level
joint venture financing or the sell non-core assets, its
expectation that current discussions can result in joint venture or
other project level financing alternatives, that the current Board
can maximize the value of your investment, that the dissident's
objective is to sell Sierra to Ram Power, Corp. at a discount
price, that Ram Power would make such an offer and that, if
elected, the dissident's nominees would support such a transaction.
There can be no assurance that the plans, intentions or
expectations upon which these forward-looking statements are based
will occur. Readers are cautioned not to place undue reliance on
these forward-looking statements, which are not a guarantee of
performance and are subject to a number of uncertainties and other
factors that could cause actual results to differ materially from
those expressed or implied by such forward-looking statements.
These factors include general economic and market conditions,
changes in the law, actions of competitors, drill results and other
changes in circumstance, and Sierra's ability to implement business
strategies and pursue its business plan. In addition, all
forward-looking statements involve risks and uncertainties,
including the risks and uncertainties detailed in Sierra's filings
with the applicable Canadian securities commissions, copies of
which are available at www.sedar.com. We urge you to carefully
consider these factors.
All of the forward-looking statements contained in this news
release are expressly qualified in their entirety by this
cautionary statement. The forward-looking statements included in
this news release are made as of the date of this news release and
Sierra undertakes no obligation to publicly update such
forward-looking statements to reflect new information, subsequent
events or otherwise, except as required by law.
Neither the TSX Venture Exchange nor its Regulation Services
Provider accepts responsibility for the adequacy or accuracy of
this release.
Contacts: Sierra Geothermal Power Corp. Gary Thompson President
& CEO (604) 683-0332 / 1-800-563-5631 info@sierrageopower.com
Sierra Geothermal Power Corp. Anthony Srdanovic Investor Relations
(604) 642-6179 asrdanovic@sierrageopower.com
www.sierrageopower.com
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