One of Vancouver’s last small-cap geothermal energy developers announced Monday morning it had been acquired.
Reno-based Ram Power Corp. (TSX:RPG) had previously attempted to acquire Vancouver’s Sierra Geothermal Power Corp. (TSX-V:SRA) a year ago.
Ram Power finally acquired Sierra Geothermal in a 1:12 share exchange that represented an 18.5% premium on the $0.18 closing price of Sierra shares last Friday.
The deal will see approximately 11.125 million common shares of Ram Power distributed to Sierra shareholders. The firms expect to enter into definitive agreements by the end of June.
Ram and its majority owner Arthur Richards Rule own a number of geothermal energy properties in the same southern Nevada region where Sierra’s holdings lie.
Last January he initiated an unsuccessful proxy battle to remove Sierra’s board and management, claiming the company lacked capital and management know-how. Sierra had previously rejected a bid to be acquired by Ram for $0.186 per share, an 18% discount to the company’s market price at the time. Sierra’s board had enough votes to quash the proxy, but extended an olive branch to dissident shareholders by adding two directors of the dissidents’ choosing to the board.
Sierra CEO Gary Thompson told BIV on Monday morning that the deal was fair given the market conditions.
He said Sierra gets access to the managerial experience and capital required to develop its series of properties in California and Nevada that the company believes could produce up to 600 megawatts of geothermal energy annually.
“It’s a pretty tough slog right now,” he said. “There’s a lot of interest in geothermal, but I think the big money wants to see scale and production – which is something that Sierra has been working towards for a number of years. When you’re a $0.20 stock it is pretty tough to raise $50 million.”
Last February, BIV looked at the wave of consolidation occurring in the geothermal energy space. (“Geothermal power gathering investor steam” – issue 1061; February 23-March 1, 2010)