Maxim to sell U.S. power plants to affiliate of Rockland Capital

Maxim Power Corp. (TSX: MXG) said Aug. 6 that it has entered into an agreement to sell 100% of its ownership interest in Maxim Power (USA) Inc. (MUSA) to Patriot Power Holdings LLC, an affiliate of Rockland Capital, for US$112m.

That price tag includes the assumption of US$22m of debt resulting in sales proceeds of US$90m. MAXIM also announced that the Alberta Energy Regulator has authorized the issuance of an amendment to Mine Licence No. C 2011-9A held by MAXIM’s wholly owned subsidiary, Summit Coal Inc.

The sale of MUSA is scheduled to close during the fourth quarter of 2013, subject to regulatory approvals and customary closing conditions. The sale is structured as a lockbox structure under which Patriot will bear the risk and receive the rewards of economic ownership of MUSA from April 1, 2013, onward. MUSA sale proceeds will be used to repay bank operating lines and cash collateralize letters of credit leaving significant cash for strategic corporate purposes.

MUSA owns and operates MAXIM’s five natural gas-fired facilities in the United States. These facilities have an aggregate generating capacity of 446 MW and are located in New Jersey, Connecticut, Rhode Island, Massachusetts and Montana. Credit Suisse Securities (USA) LLC was retained as MAXIM’s exclusive financial advisor for this transaction.

The MAXIM website said the current U.S. plants are:

  • Basin Creek, a 54.9-MW, gas-fired simple cycle plant in Butte, Mont.;
  • CDECCA (Capitol District Energy Center Cogeneration Associates), a 62.1-MW gas-fired (dual fuel capable), simple cycle plant in Hartford, Conn.;
  • Forked River, an 87.2-MW gas-fired (dual fuel capable) simple cycle plant in Ocean County, N.J.;
  • Pawtucket, a 63.5-MW, gas fired (dual fuel capable), combined cycle plant in Pawtucket, R.I.; and
  • Pittsfield, a 181-MW, gas-fired (dual fuel capable), combined cycle plant in Pittsfield, Mass.

Company ups capacity of planned Alberta coal mine

The amendment to SUMMIT’s Mine 14 (M14) licence increases the permitted run-of-mine production rate of SUMMIT’s M14 project from 480,000 tonnes to 1,300,000 tonnes per year. This amendment, coupled with the previously announced regulatory approvals for the Coal Beneficiation Plant, provide SUMMIT with all of the requisite government and regulatory approvals to construct and operate M14.

M14 is located north of Grande Cache, Alberta, near MAXIM’s HR Milner power plant, and is estimated to have 18.9 million tonnes of coal reserves and a mine life of 17 years. The new Coal Beneficiation Plant, to be located on MAXIM’s existing Milner industrial complex, will split M14’s run-of-mine coal into an estimated annual production of 950,000 tonnes of high-quality, low-mid volatile, metallurgical coal for shipment to export markets, and 350,000 tonnes of coal suitable for burning at HR Milner. As previously reported, SUMMIT has also entered into a long-term terminal services agreement for port terminal capacity at Ridley, British Columbia, and an agreement for supply of mine equipment.

MAXIM considers SUMMIT’s coal resources, which are comprised of M14 and Mine 16S (M16S), to be valuable strategic assets. The M16S project is located 30 kilometers northwest of M14 and represents 1,792 hectares or 29% of SUMMIT’s total area of leases. SUMMIT is considering an extensive exploration and drilling program on M16S and will provide an update on plans when ready.

“Today’s announcements mark a significant step in MAXIM’s previously announced strategic review,” the company said. “MAXIM has accumulated an attractive portfolio of operating and development assets, the value of which has not been fully reflected in the Corporation’s share price. The sale of MUSA unlocks a portion of this value and MAXIM continues to pursue other strategic initiatives aimed at maximizing value for its shareholders.”

Based in Calgary, Alberta, MAXIM is an independent power producer, which acquires or develops, owns and operates innovative and environmentally responsible power and power related projects. MAXIM currently owns and operates 41 power plants in western Canada, the United States and France, having 804 MW of generating capacity.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.