Algonquin Power Income Fund to convert to corporation in deal with Hydrogenics
MISSISSAUGA, Ont. — Hydrogenics Corp. (TSX:HYG) and Algonquin Power Income Fund (TSX:AFP.UN) said Friday they had reached a reverse-takeover deal that would see the fund convert to a corporation. Hydrogenics estimated the net value of the transaction at $9.3 million.
The multi-pronged deal involves a plan of arrangement and an exchange offer that will see Hydrogenics acquire all Algonquin units in return for new securities. Under the plan, Hydrogenics would then transfer all of its operations to a new entity dubbed New Hydrogenics.
Algonquin Power unitholders will be able to exchange their holdings for a new class of shares in Hydrogenics, while current debenture holders will have the opportunity to obtain equivalent Hydrogenics debentures or new common shares.
Upon completion of the deal, old Hydrogenics will be renamed Algonquin Power Inc., while New Hydrogenics will reassume the name of Hydrogenics Corp. Algonquin will be a subsidiary of the new company.
“This non-dilutive financing transaction with Algonquin Power is both timely and in the best interests of our shareholders,” Hydrogenics chief utive Daryl Wilson said in a statement.
“Over the past three years, Hydrogenics has sharpened its market focus and strategy, and we have diligently sought innovative ways to finance our expected growth going forward. Through this agreement, the resulting increase in our cash reserves and shareholder equity will provide the means to our focused efforts in renewable energy storage, industrial hydrogen products and commercialization of fuel cells in commercial markets.”
Ian Robertson, Algonquin´s utive director, touted the benefits of converting to a corporation.
“The board of trustees and the manager believe that the conversion of our unitholders´ interests into shares of Algonquin Power Inc. is an important element of the strategic initiatives announced last October, will appropriately position Algonquin Power within the capital markets and will increase Algonquin Power´s competitive effectiveness in the power and utility sectors,” he said.
“The ability to reinvest future cash flows retained as a result of the increased tax attributes available to Algonquin Power Inc. will support our growth objectives.”
Claire F
July 7, 2009 | 11:09 AMAs a HYGS (US) shareholder it seems as if I will now be a shareholder in a financial fund as well as a hydrogen fuel cell company. Will the new financial statements show income from both operations of HYGS as well as management income from Algonquin? I can sort of understand the synergies but it is an odd breed from an investing standpoint. Usually it is the other way around with the fund being a large shareholder of the company.