Sierra Geothermal Power Corp. (TSX VENTURE: SRA) today warned
shareholders of a risk of a fire sale takeover by Ram Power, Corp.
if seven nominees put forward by a dissident shareholder are
elected to the board, and told shareholders that it is in a strong
position to benefit from US incentives as Sierra develops its
geothermal projects.
Sierra urged shareholders to protect their investment against a
fire sale takeover by voting the GREEN Proxy in support of Sierra's
board and management. To count, Computershare Investor Services
must receive the GREEN Proxy prior to 10:00 am (Vancouver Time)
tomorrow (January 22, 2010).
Sierra's management and board are exploring the full range of
strategic alternatives to unlock value for Sierra's shareholders.
Further to our January 11, 2010 news release, Sierra continues to
receive inquiries from a number of different parties. Sierra is
currently engaged in discussions with several parties, including
two geothermal power companies, two large-scale utilities and a
major oil and gas producer, about the possibility of a joint
venture, or a merger or out-right sale that could maximize
shareholder value.
"The dissident's only strategy is to put Sierra up for sale,"
said Gary Thompson, Sierra's President and Chief Executive Officer.
"Because the dissident has no operating plan, even as a fallback,
it is clear that the dissident's nominees will take whatever price
is offered. This means that there is virtually no prospect of a
fair price. There is however a big risk of a fire sale, especially
if the preferred buyer is Ram Power, given the dissident's strong
connections to Ram Power."
"While the incumbent board will consider any and all reasonable
buyout offers, and has formed a special committee to encourage such
offers from interested parties, we see no reason for a fire sale.
If there is no fair price available, we believe our exploration and
development strategy is the way to unlock value in geothermal
projects, especially when combined with the US government
incentives. Sierra believes this strategy will deliver value to
shareholders in the long term."
How Sierra's strategy is benefiting from US government
policy
Sierra's development strategy continues to benefit from major US
government incentives that favour geothermal projects. Sierra
disputes the dissident's position that Sierra will miss out on
these benefits.
The US government is offering billions of dollars in grants, tax
incentives and loan guarantees for renewable energy projects,
including geothermal projects. Sierra believes it is in a strong
position to obtain in the range of US$50 million to US$60 million
in possible US grants if, as targeted, management brings projects
to bankable feasibility by the end of this year.
This would be in addition to the US$10 million of matching
government grants that Sierra was awarded in October 2009. Sierra's
award in October was the second largest amount received by any of
the 19 awardees and twice the amount received by Ram Power.
Sierra's management anticipated this success and has raised more
than $12 million in equity financings since 2009. As a result,
Sierra now has the funds to utilize the matching grants immediately
for additional exploratory drilling. Sierra, which yesterday
commenced drilling at its Silver Peak property in Nevada utilizing
its US government matching grants, does not intend to miss out on
additional available incentives.
The positive impact of US government incentives, which also
include low-cost loan guarantees for up to 80% of the capital
expenditures for a geothermal project, can be especially
significant to fund development. The Board and management have
moved fast to take advantage of available incentives and have
earned the right to continued shareholder support.
Dissident's defense of the July 2009 discount takeover
proposal
The dissident's principal, Arthur Richards Rule, called the July
2009 discount price takeover proposal at $0.186 per share a "value
creating" alternative in a recent letter to shareholders. Mr. Rule
has continued to defend the $0.186 proposal even though Sierra
shareholders would not have benefited from it.
"Our shareholders have benefited because our board questioned
the discount takeover proposal in July 2009," said Mr. Thompson.
"Our shares have risen by 28.3% since then, and our shareholders
would have forgone virtually all of this gain if the board had
accepted the discount price."
By questioning the discount price, Sierra's board believed at
the time that it was acting in the best interests of Sierra and its
shareholders. Based on Sierra's outperformance of Ram Power in the
stock market since then, shareholders now have incontrovertible
evidence that Sierra's board made the right call.
Because Sierra's board questioned the discount price valuation,
all of Sierra's shareholders have benefited by 27.8% from Sierra's
outperformance of Ram Power. The table below shows the calculation
using the closing prices of Sierra and Ram Power yesterday (January
20, 2010).
--------------------------------------------------------------------------
July 2009 Jan. 20, 2010 Gain
--------------------------------------------------------------------------
Sierra's real market gain $0.226 $0.29 28.3%
--------------------------------------------------------------------------
Ram Power's gain $3.00 (1) $3.66 22.0%
--------------------------------------------------------------------------
Equivalent increase from discount
proposal $0.186 (2) $0.227 22.0%
--------------------------------------------------------------------------
What Sierra holders would have actually
gained with Ram Power (3) $0.226 $0.227 0.41%
--------------------------------------------------------------------------
Extra value because Sierra questioned
the Ram Power proposal $0.227 (4) $0.29 27.8%
--------------------------------------------------------------------------
(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) Comparing Sierra's market price in July 2009 to the deemed value of
Sierra yesterday, had it participated in the Ram Power proposal
(4) Except for $0.227, which is the Jan. 20, 2010 deemed value of Sierra if
it had participated in the Ram Power proposal.
Since the dissident cannot deny Sierra's outperformance of Ram
Power, the dissident has instead chosen to take the credit for it.
The dissident would have shareholders believe that the hard work of
the current board and management through successful exploration and
financing activities, including obtaining US$10 million in
government grants in October 2009, was insignificant. The
dissident's claim is simply not credible.
Mr. Rule's continuing criticism of Sierra fails to address the
fundamental truth that the discount price was unattractive at the
time and is even more unattractive with hindsight. Moreover, Sierra
believes Mr. Rule's continuing defense of the discount price
provides a clear insight into his plans for Sierra if the
dissidents are elected.
A conflict of loyalties is the real issue
Sierra believes Mr. Rule's loyalties and those of the dissident
nominees, all of whom helped create Ram Power, are conflicted, and
that this is the real issue of the proxy contest. Companies
associated with Mr. Rule are Ram Power's largest shareholder and
would have benefited from the "value creating" alternative while
Sierra shareholders would have lost out. Given this situation,
Sierra believes shareholders should not take at face value Mr.
Rule's statement that the dissident does not intend to sell Sierra
at a discount.
The independent proxy advisor RiskMetrics Group has carefully
considered management's plans and has endorsed management and the
current board in this proxy contest. RiskMetrics is objective and
sophisticated and after conducting its own diligence it said the
incumbent board and management's actions appear reasonable and "the
intricate business relationships among the dissident nominees
appear to be worrisome."
Said Mr. Thompson, "Considering the dissident's ties to Ram
Power, and considering that the dissident nominees include two Ram
Power directors, there can be no question that Ram Power is aware
of the dissident's strategy. In such circumstances there is no
incentive for Ram Power to offer a fair price for Sierra. We
believe shareholders should NOT hand Mr. Rule yet another
opportunity to sell Sierra at a discount."
How to cast your vote
A special meeting of Sierra shareholders has been scheduled for
January 26, 2010. 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 Anthony Srdanovic,
Sierra Geothermal Power Corp., Suite 500 - 666 Burrard Street,
Vancouver, B.C., Canada, V6C 3P6, or by telephone: 604-642-6179, or
by email asrdanovic@sierrageopower.com, or follow the web link
http://www.sierrageopower.com/index.php/proxy.
Sierra 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 Sierra's shareholders in
connection with the proposed acquisition. Information concerning
the interests of Sierra'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. Sierra 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 that the dissident's objective is to sell Sierra
at a fire sale price; that Ram Power would make such an offer;
that, if elected, the dissident's nominees would support such a
transaction; that Sierra will be in a strong position to benefit
from US government incentives; that Sierra's strategy will deliver
shareholder value; that Sierra will bring projects to bankable
feasibility by the end of the year, and that discussions with
interested parties could lead to a joint venture or a transaction
that maximizes shareholder value.
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 the election of the dissident nominees, the
possibility that Sierra does not qualify for additional US
government incentives, or that Sierra cannot otherwise finance its
operations, as well as 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 or 1-800-563-5631 info@sierrageopower.com
Sierra Geothermal Power Corp. Anthony Srdanovic Investor Relations
(604) 642-6179 asrdanovic@sierrageopower.com
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