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Alterra Power weighs sale of Icelandic assets

Alterra executive chairman Ross Beaty

JOHN LEHMANN/JOHN LEHMANN/GLOBE AND MAIL

Alterra Power Corp., the Vancouver firm that knocked heads with Iceland's nationalistic singer Bjork when it bought a geothermal company in that country, is considering selling the assets.

Alterra said Friday that it has received an unsolicited offer for its two-thirds stake in HS Orka, which generates electricity and heat from two plants that tap into the island nation's volcanic resources. While it would like to hang on to Orka and expand its operations in Iceland, Alterra said the offered price was high enough that it had to consider the proposition.

Alterra vice-president of corporate relations Anders Kruus said the company received "an unsolicited yet friendly offer from some private investors working with a bank in Iceland."

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The offer was strong enough that "we felt we seriously have to pursue it" in order to "do the best thing for our shareholders," he said. "If you get a decent deal, you've got to look at it."

Discussions are under way and the bidder is conducting due diligence, Mr. Kruus said. But in the meantime, Alterra will continue its plans to build up its Icelandic assets, he said.

Alterra, whose executive chairman is veteran mining financier Ross Beaty, first bought a small stake in Orka three years ago. It eventually took full control, raising the wrath of Bjork who began a campaign to pressure politicians into reversing the sale.

Bjork and others in Iceland were concerned about the foreign takeover of many of the country's resource assets after the financial crisis that saw the meltdown of its banking sector.

After months of talks involving the government, in April 2011 Alterra -- which was then known as Magma Energy -- negotiated a deal to sell 25 per cent of Orka to a group of Icelandic pension funds. In February of this year, the funds exercised an option and increased their stake to one-third.

Alterra also owns wind and hydro power generating plants in British Columbia, and a geothermal plant in Nevada.

Alterra shares rose almost 15 per cent in early trading Friday, to 42.5 cents.

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About the Author
Reporter, Report on Business

Richard Blackwell has reported on Canadian business for more than three decades. At the Financial Post and the Globe and Mail he has covered technology, transportation, investing, banking, securities and media, among many other subjects. Currently, his focus is on green technology and the economy. More

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