Maxim Power Corp.
TSX : MXG

Maxim Power Corp.

January 26, 2007 09:15 ET

Maxim Power Corp. Announces Acquisition and Decree Permitting PPA Renewals in France, Completion of a Forward Sales Contract in Alberta, and Termination of CDECCA Demand Response Agreement

CALGARY, ALBERTA--(CCNMatthews - Jan. 26, 2007) -

Acquisition of Cogeneration Assets in France

MAXIM (TSX:MXG) is pleased to announce that COMAX France S.A.S., the Corporation's wholly-owned French subsidiary, has entered into an agreement for the acquisition of six cogeneration plants in France, for a total consideration of Cdn$29.2 million (EUR 19.1 million). The total purchase consideration includes Cdn$20.5 million (EUR 12.1 million) in cash plus the assumption of Cdn$9.3 million (EUR 6.1 million) in capital leases. The total capacity of the plants is 36.9 MW electrical and 27.2 MW Thermal. This acquisition, which is expected to close on February 6, 2007, is subject to the satisfaction of certain conditions precedent. Under the purchase agreement, MAXIM is entitled to the benefits of the 2006/07 cogen season, which commenced November 1, 2006 and concludes on March 31, 2007. It is anticipated that this acquisition will result in additional EBITDA of Cdn$5.5 - $6.0 million on an annual basis. Upon closing, MAXIM's generation portfolio in France will grow to 18 power plants with a total of 113.7 MW electric and 65.2 MW thermal installed generating capacity.

Electrical output from the plants is contracted under 12 year Power Purchase Agreements ("PPAs") to Electricite de France ("EdF"), the state owned power company, which will expire between 2010 and 2013. Following the initial PPA terms, Maxim anticipates that it will be able to renew the PPAs at each plant for renewal terms of an additional 12 years, consistent with recently passed French Legislation (see below).

Thermal energy of 27.2 MW is currently sold under long term Thermal Supply Agreements ("TSAs") to seven customers across the six cogeneration sites. Maxim anticipates renewal of all of these TSAs concurrent with the renewed PPA terms.

Cogeneration Plant Decree in France

The Ministry of Finance, Economy and Industry of France recently passed a decree requiring EdF to enter into renewed 12 year PPAs with owners of cogeneration plants following expiration of their original PPAs. The criteria for renewal is capital investment of a minimum of EUR 350 per kW of contracted capacity for upgrades or to recondition the plant. All of the commercial terms of the PPAs are substantially similar to those of the original PPAs. Passing of this legislation, as interpreted by Maxim, should ensure stable, long term cash flows and underpin the value of MAXIM's French cogeneration assets.

Forward Sales Contract in Alberta

As part of the Corporation's strategy to have a portion of its Alberta generating capacity contracted to assure reliable cash flows, an agreement has been signed to sell 25 MW at $75.85 per MWh, on a fully unit contingent basis, for the periods from January 1, 2007 to December 31, 2007, excluding the month of April. This power will be produced by the H R Milner Power Plant ("Milner"), located in Grande Cache, Alberta. The balance of the power produced by Milner will be sold on a merchant basis.

Demand Response Agreement with Connecticut Light & Power Company

On November 9, 2006, MAXIM announced that Capitol District Energy Center Cogeneration Associates ("CDECCA"), its wholly-owned subsidiary in Connecticut, had entered into a demand response agreement with Connecticut Light & Power Company ("CL&P") for the output of its CDECCA Cogeneration plant. ISO New England has now advised that it will not allow CDECCA to change its status from a generating resource to a demand response resource. As a result, CDECCA cannot satisfy this condition under the agreement with CL&P and the agreement will be terminated. The CDECCA plant will continue to receive payments under the New England Forward Capacity Market program in addition to participating on a merchant basis in the New England real-time and day-ahead energy markets. MAXIM is considering other short to medium term offtake arrangements for output from this plant with several parties in the ISO New England market. As a result, the termination of the Demand Response Agreement is not expected to have a material impact on MAXIM's anticipated results.

ABOUT MAXIM

Based in Calgary, Alberta, MAXIM is an Independent Power Producer, which acquires or develops, owns and operates innovative and environmentally responsible power projects. Upon conclusion of the acquisition in France, MAXIM will own and operate 30 power plants in Western Canada, United States, and France, having 482 MW of electric and 95 MW of thermal generating capacity. MAXIM will continue to execute on its strategy as an Independent Power Producer and is targeting significant growth through acquisitions and development of power projects which utilize hydrocarbon based fuels and renewables in the markets of Western Canada, United States and France. MAXIM trades on the TSX under the symbol "MXG". For more information about MAXIM, visit our website at www.maximpowercorp.com.

Statements in this release which describe MAXIM's intentions, expectations or predictions, or which relate to matters that are not historical facts are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of MAXIM to be materially different from any future results, performances or achievements expressed in or implied by such forward-looking statements. MAXIM may update or revise any forward-looking statements, whether as a result of new information, future events or changing market and business conditions.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of the press release.

Contact Information

  • Maxim Power Corp.
    John R. Bobenic
    President and CEO
    (403) 750-9300
    or
    Maxim Power Corp.
    Victor S. Dusik
    Vice President, Finance and CFO
    (403) 750-9319
    Website: www.maximpowercorp.com