Power producer Primary Energy to be taken over by Fortistar

Primary Energy Recycling Corp. (TSX: PRI), which generates revenue from capturing and recycling recoverable heat and byproduct fuels from industrial processes, and Fortistar LLC announced Oct. 20 that they have agreed to form a new company owned by a consortium led by Fortistar to acquire all of the outstanding common shares of Primary Energy for cash at a price of US$5.40 per common share.

The transaction will be carried out by way of a statutory “Plan of Arrangement.” It will be financed through a US$215m senior credit facility arranged by Investec USA Holdings Corp., with the balance through equity commitments from Fortistar and its partners, including John Hancock Life Insurance Company (U.S.A.) and Prudential Capital Group.

Following completion of the transaction, the Primary Energy common shares will be de-listed from the Toronto Stock Exchange and no longer traded publicly.

Primary Energy Chairman Robert Peiser said: “Through a broad and thorough process, the Company and its financial advisor, Moelis & Company LLC, contacted a large number of potential purchasers and reviewed a number of other alternatives to enhance shareholder value. This transaction with Fortistar, which is the culmination of this extensive review of strategic alternatives, provides clear and compelling value to our shareholders, while providing the same level of service that is now offered to our customers.”

Mark Comora, President of Fortistar, said: “We believe energy recycling is an important component of providing affordable, reliable and renewable energy to industrial America in general, and the steel industry in particular. We look forward to working with the existing management team, led by John Prunkl, to continue to deliver excellent service to the Company’s host steel mills.”

The transaction is subject to approval by the Supreme Court of British Columbia, as well as certain customary closing conditions. It is anticipated that the transaction, if approved by Shareholders and the Supreme Court of British Columbia, will be completed by the end of 2014.

Primary Energy, headquartered in Oak Brook, Illinois, owns and operates four recycled energy projects and a 50% interest in a pulverized coal facility. These facilities, all located in Indiana within a huge steel production region near Chicago, have a combined electrical generating capacity of 298 MW and a combined steam generating capacity of 1.8M lbs/hour. This includes Cokenergy LLC, which captures waste heat that is recycled into electricity and steam. Cokenergy’s electrical capacity is 95 MW and its steam capacity is 896 MLBS/HR Steam. Another facility is North Lake LLC, which recycles blast furnace gas into electricity and has an electrical capacity of 90 MW.

Fortistar, headquartered in White Plains, New York, has a 30 year history of investing in and managing power assets. From its inception, Fortistar has focused on cogeneration facilities and renewables. Fortistar currently has ownership stakes in over 40 projects in North America, including 265 MW of cogeneration and 400 MW of renewable facilities. Most recently, through its TruStar Energy affiliate, Fortistar has become a leading provider of compressed natural gas infrastructure in the United States.

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.