After months of criticism over its purchase of a key geothermal plant in Iceland, Magma Energy (TSX:MXY) has agreed to sell 25% of the plant to a group of Icelandic pension funds.
On Monday, the Vancouver-based company said it would sell a quarter stake in its 98.5%-owned HS Orka plant for US$71.5 million, which is approximately equal to what it originally paid for the asset.
Magma didn’t identify the pension funds, but said they hold an option to increase their stake in the plant to 33.4% for an additional US$41.7 million.
The Vancouver energy provider has also agreed to allow the pension funds to appoint board members and play a role in the decision-making for HS Orka.
“The Iceland pension funds are absolutely ideal partners for the continued expansion of our operations in Iceland,” Anders Kruus, Magma’s vice president corporate relations, told Business in Vancouver Monday. “We always said our acquisition of HS Orka was based on a long-term view and the pension funds are interested in supporting the Orka operations.”
The deal comes months after singer-songwriter Bjork blasted the company for acting like a “vulture” by allegedly taking advantage of the country’s weak economic position to buy the plant.
In an interview last September, Bjork told BIV that Iceland needs to decide if it wants to privatize its energy assets (see “Bjork says Vancouver energy company acted a like a "vulture" in Iceland geothermal bid” – BIV Business Today; September 10, 2010).
Kruus said the deal has been in the works for months and is not a sign that the company is bowing to political pressure abroad.
“This transaction was not initiated in response to those criticisms and motivations that were voiced,” he said.
At press time, Magma’s shares were up $0.01 to $1.05.