Maxim Power Corp. (TSX: MXG) announced Dec 23 that it has entered into an agreement to sell 100% of its ownership interest in its wholly-owned subsidiary Maxim Power (USA) Inc. (MUSA) to an affiliate of Hull Street Energy LLC for an implied enterprise value of US$106 million, inclusive of anticipated working capital.
Net proceeds to MAXIM after accounting for debt and transaction costs are anticipated to be US$84 million.
MUSA owns and operates MAXIM’s five natural gas-fired generation facilities in the United States. These facilities have an aggregate generating capacity of 446 MW.
Hull Street Energy is a specialized private equity firm that targets power generation assets and other related businesses that are strategically positioned to benefit as the electricity industry transitions to a more sustainable future.
MAXIM intends to hold a special meeting of the shareholders to seek approval of the disposition during the first quarter of 2017. MAXIM shareholders, including all of its directors and officers, who collectively own or control approximately 42% of the outstanding common shares, have committed to vote in favor of the transaction. The transaction is anticipated to close during the first quarter of 2017, subject to receipt of all applicable regulatory approvals, MAXIM shareholder approval, completion of the buyer’s financing, and the satisfaction of other closing conditions customary for a transaction of this nature.
Credit Suisse is acting as financial advisor to the board of directors of MAXIM for purposes of the transaction. The board of directors of MAXIM has unanimously determined that the transaction is in the best interests of MAXIM and has approved the terms of the agreement and unanimously recommends that shareholders of MAXIM vote in favor of the transaction at the special meeting of MAXIM shareholders expected to be held in February 2017.
MUSA sale proceeds will be held by MAXIM for strategic corporate purposes, including providing the potential opportunity for MAXIM to invest in new projects in Alberta’s power market which is expected to undergo significant reforms in the coming years. MAXIM currently owns and operates a number of operating and development stage projects and assets in Alberta, including HR Milner, a 150 MW coal-fired facility located near the town of Grande Cache, Alberta.
The U.S. plants are:
- Basin Creek, a 54.9 MW natural gas-fired, simple cycle plant in Butte, MT.
- CDECCA, a 62.1 MW natural gas-fired, dual fuel capable, combined-cycle cogeneration plant in Hartford, CT.
- Forked River, an 87.2 MW natural gas-fired, dual fuel capable, simple cycle plant in Ocean County, NJ.
- Pawtucket, a 63.5 MW natural gas-fired, dual fuel capable, combined-cycle plant in Pawtucket, RI.
- Pittsfield, a 181.0 MW natural gas-fired, dual fuel capable, combined-cycle plant in Pittsfield, MA.
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 seven power plants in Alberta and the United States, having 603 MW of electric generating capacity.
Hull Street Energy is a private equity firm that acquires, optimizes and grows power businesses through the application of industry leading risk management, efficiency enhancements and commodity contract structuring. Headquartered in Bethesda, Maryland, the team leverages its decades of experience and unique knowledge of North American electricity infrastructure, including fuel inputs, generation assets, transmission and distribution systems, and demand focused businesses such as retail supply, distributed generation, and micro-grid systems to build value for our investors and stakeholders.