Primary Energy Recycling Agrees to Buyout Minority Interest and Terminate Management Agreement

- Aggregate value of the transaction is approximately US$30 Million -

OAK BROOK, IL, Feb. 16, 2012 /CNW/ - Primary Energy Recycling Corporation (TSX: PRI) (Primary Energy or the Company) today announced that it has entered into an agreement with Atlantic Power Corporation (TSX: ATP, NYSE: AT) (Atlantic Power) to purchase the 7,462,830.33 common membership interests in Primary Energy Recycling Holdings LLC (PERH) (14.3% of PERH total common membership interests) not currently held by the Company for approximately US$24 million plus a management agreement termination fee of approximately US$6.1 million for a total price of US$30.1 million, which is equivalent to C$4.021 per common share of the Company.

The agreed upon price for Atlantic Power's common membership interest in PERH, not including the management agreement termination fee, was established on December 19, 2011 and represented a 16% discount to the 60 day volume weighted average trading price of Primary Energy's common shares at that time.  The transaction remains subject to pricing adjustment or termination under certain circumstances. The transaction is expected to close in April, 2012.

"Completing this transaction has been a long standing goal of the Company," said John Prunkl, President and Chief Executive Officer of Primary Energy Recycling. "We believe the repurchase is an attractive use of capital.  Once this transaction closes, each shareholder of Primary Energy will have proportionally increased their share of the Company's facilities by 14.3%, and we will gain operational autonomy and flexibility that we believe will allow us to better execute our strategy going forward. With the successful renewal of two long-term customer agreements in 2011 and the expected termination of the management agreement, we are more optimistic than ever about our future."

On closing of the transaction, the management agreement, under which an indirect subsidiary of Atlantic Power provides certain operational and administrative services to the Company and its subsidiaries, will be terminated on payment of a termination fee as specified in the management agreement. If closing occurs as expected in April 2012, Primary Energy will be required to pay a US$6.1 million fee to terminate the management agreement. Primary Energy currently pays an approximate US$3.0 million annual fee, subject to annual escalation, under the management agreement, which will cease when the management agreement is terminated.  On a cash basis, the estimated cost to internalize the services provided by the Manager is in the range of this annual fee.

Primary Energy currently owns 85.7% of the common membership interests in PERH, and on completion of the transaction, will own 100% of PERH. The Company's total outstanding shares will remain unchanged at 44,706,186, as Primary Energy intends to finance the transaction through debt.  Completion of the transaction is conditional upon obtaining financing on terms acceptable to the Company.

About Primary Energy Recycling Corporation
Primary Energy Recycling Corporation owns a majority interest in Primary Energy Recycling Holdings LLC ("PERH"). PERH, headquartered in Oak Brook, Illinois, indirectly owns and operates four recycled energy projects and a 50 per cent interest in a pulverized coal facility (collectively, the "Projects"). The Projects have a combined electrical generating capacity of 283 megawatts and a combined steam generating capacity of 1.8M lbs/hour. PERH creates value for its customers by recycling recoverable heat and byproduct fuels from industrial and electric generation processes and converting it into reliable and economical electricity and thermal energy for resale back to its customers. For more information, please see www.primaryenergy.com.

Forward-Looking Statements
When used in this news release, the words "anticipate", "expect", "project", "believe", "estimate", "forecast" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions pertaining, but not limited, to completion, timing and the anticipated benefits of the transaction described in this press release, operating performance, regulatory parameters, weather and economic conditions and other factors discussed in the Company's public filings available on SEDAR at www.sedar.com. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect new events or circumstances except as required by applicable securities laws.

 

For Primary Energy please contact:

Chief Financial Officer
Mike Alverson
630.230.1314
[email protected]

Media and Investor Relations
Adam Peeler
416.815.0700 ext. 225
[email protected]