Maxim Power Corp.

Maxim Power Corp.

January 07, 2005 14:00 ET

Maxim Power Corp. Announces Proposed Acquisition of HR Milner Power Station And Change of Control of MAXIM




JANUARY 7, 2005 - 14:00 ET

Maxim Power Corp. Announces Proposed Acquisition of HR
Milner Power Station And Change of Control of MAXIM

CALGARY, ALBERTA--(CCNMatthews - Jan. 7, 2005) - Maxim Power Corp. (TSX
Venture: MXG) ("Maxim" or the "Company"), a company listed on the TSX
Venture Exchange (the "Exchange"), announced today that effective
December 31, 2004, it entered into an agreement to acquire the balance
of the Milner Power Limited Partnership (the "Milner Partnership") from
the existing partners in the Partnership, each of whom act at arm's
length to Maxim. The Milner Partnership was formed as a special purpose
vehicle in January 2004 to acquire the HR Milner Power Station (the
"Power Plant"). Approximately 20% of the Milner Partnership is currently
owned by Maxim and approximately 68% is held by two private Alberta
companies, one of which is controlled by Mr. M. Bruce Chernoff, and one
of which is controlled by Mr. W. Brett Wilson. An additional approximate
10% interest is held by ENTx Capital Corporation ("ENTx"), a private
Alberta company, with the residual interest (approximately 2%) held by
certain arm's length Alberta companies. ENTx is a Calgary based private
equity group that is focused on investments in the power sector.

Acquisition of the Milner Partnership

The Milner Partnership owns and operates the Power Plant, a 144-megawatt
("MW") coal-fired facility located near the town of Grande Cache,
Alberta. The Milner Partnership holds an attractive long-term coal
supply agreement for the supply of thermal coal to the facility and also
owns extensive coal leases in the Grande Cache area.

Over four years remain on the initial term of a 5-year coal supply
agreement ("CSA") with Luscar Ltd. ("Luscar") for the supply of up to
540,000 tonnes of thermal coal per year. There is an option to extend
the CSA by a further 5 years. The high volatile bituminous coal is
sourced from Luscar's Coal Valley mine located approximately 100 km
south of Edson, Alberta.

The coal leases held by the Milner Partnership provide Maxim with the
opportunity for the potential future mining of coal which could be
utilized ultimately by the Power Plant or sold in the international
marketplace. Both the long-term coal supply agreement and the coal
leases will be acquired pursuant to the transaction.

The following is a summary of certain selected unaudited management
prepared financial information for the Milner Partnership (representing
the 100% interest of the Milner Partnership in the Power Plant) as at
and for the 8 months ended September 30, 2004:

September 30, 2004
(8 months from January 29, 2004)

MWh 615,822

Revenue $ 33,937,564

Net Income $ 7,321,233

Total Assets $ 15,716,393

Total Liabilities $ 6,132,363

The acquisition will be completed through the issuance of 220,000,000
common shares of Maxim, subject to normal course purchase adjustments,
to the remaining partners in the Milner Partnership, at a deemed price
of $0.32 per share, for aggregate deemed consideration of $70,040,000,
and will constitute a "reverse take-over" of Maxim under the rules of
the Exchange. On closing, and prior to any consolidation of the common
shares, Maxim will have approximately 356,500,000 common shares issued
and outstanding (approximately 368,000,000 common shares on a fully
diluted basis).

Completion of the acquisition is subject to requisite Exchange and
shareholder approval. Maxim anticipates that it will be in a position to
hold a special meeting of shareholders in March 2005 to approve the
proposed acquisition.

It is a condition to the completion of the proposed acquisition that the
board of directors of Maxim will be reconstituted, such that it will be
comprised of five members, including three nominees from the existing
board of directors of Maxim, namely, Mr. John Bobenic, President & Chief
Executive Officer and a director of Maxim, Mr. William Gallacher and Mr.
Johann Polz.

The two new nominees from the Milner Partnership are Mr. M. Bruce
Chernoff and Mr. W. Brett Wilson.

Mr. Chernoff is the President and a director of Caribou Capital Corp. (a
private investment management company) since June 1999 and is currently
the Chairman of Harvest Energy Trust and a director of other public and
private corporations.

Mr. Wilson is the President of Prairie Merchant Corporation (a private
investment management company) and co-founder and Managing Director &
Chairman of FirstEnergy Capital Corp. (an investment banking firm).

Acquisition of Finning Control Block

It is a further condition to the completion of the proposed acquisition
that arrangements shall have been concluded, reasonably satisfactory to
Maxim and the HR Milner partners, for the concurrent acquisition of
50,000,000 common shares of Maxim currently held by Finning
International Inc. ("Finning"), Maxim's single largest shareholder. In
this connection, Messrs. W. Brett Wilson and M. Bruce Chernoff, on their
own behalf and on behalf of certain nominees, have agreed to acquire all
of the 50,000,000 common shares currently held by Finning by way of an
exempt takeover bid at a purchase price of a $0.32 per share, for an
aggregate consideration of $16,000,000. Mr. Wilson has an approximate
35% indirect interest, in the Milner Partnership and Mr. Chernoff has an
approximate 35% indirect interest in the Milner Partnership. Each will
receive common shares of Maxim through the completion of that

Mr. Wilson announces that, on completion of the acquisition of the
Milner Partnership and the Finning share block, he will own, directly or
indirectly, or exercise control or direction over, an aggregate of
approximately 101 million common shares of Maxim, representing
approximately 28% of the outstanding common shares of Maxim.

Mr. Chernoff announces that, on completion of the acquisition of the
Milner Partnership and the Finning share block, he will own, directly or
indirectly, or exercise control or direction over, approximately 101
million common shares, representing approximately 28% of the outstanding
common shares of Maxim.

Each of Messrs. Wilson and Chernoff may in the future take such actions
in respect of their respective shareholdings as each may deem
appropriate in light of the circumstances then existing, including the
purchase of additional shares or other securities of Maxim through open
market purchases or privately negotiated transactions, or the sale of
all or a portion of their respective holdings in the open market or in
privately negotiated transactions to one or more purchasers.

John Bobenic, President & CEO of Maxim reports, "We are pleased to be
expanding our business significantly through this acquisition of HR
Milner. It is an operating entity that we know very well and we are
confident that it will continue to account for significant financial
returns for Maxim. Through this acquisition, Maxim will increase its
interest in the Milner Partnership from 29 MW to 144 MW which will more
than double the size of our business from 96 MW to 211 MW of installed
generation capacity. Given the current and forecasted natural gas and
power market prices, HR Milner is and will remain very competitive
relative to the entire generation portfolio in the province. We will be
pursuing capital investment opportunities at HR Milner to continually
improve plant efficiency and expand the generating capacity of the
facility. We also anticipate that this acquisition will significantly
enhance Maxim's scale and reduce Maxim's cost of capital for new growth

Conditions to Completion

Maxim is in the process of seeking an exemption from the sponsorship
requirements of the Exchange, given that it currently holds a 20%
interest in the Power Plant and acts as manager of the Power Plant.

Completion of the proposed acquisition of the Milner Partnership is
subject to a number of conditions, including but not limited to,
Exchange acceptance and shareholder approval. The proposed transaction
cannot close until the required shareholder approval is obtained. There
can be no assurance that the proposed transaction will be completed as
proposed or at all.

In conjunction with the shareholder approval of the proposed
transaction, Maxim shall seek approval for a share consolidation.

Investors are cautioned that, except as disclosed in the Information
Circular to be prepared in connection with the proposed transaction, any
information released or received with respect to the proposed
transaction may not be accurate or complete and should not be relied
upon. Trading in the securities of Maxim should be considered highly
speculative at this time based on the information contained herein.

Trading in Maxim's common shares will recommence at the open of markets
on Tuesday, January 11, 2005.

About Maxim

Based in Calgary, Alberta, MAXIM provides innovative distributed power
solutions in domestic and international energy markets. MAXIM currently
owns and operates 96 MW of electric and 18 MW of thermal generating
capacity in Canada, Europe and Asia. MAXIM trades on the TSX Venture
Exchange under the symbol "MXG". For more information about MAXIM, visit
its website at

The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.


Contact Information

    Maxim Power Corp.
    John R. Bobenic
    President and CEO
    (403) 750-9300
    Maxim Power Corp.
    Victor S. Dusik
    Vice President Finance and CFO
    (403) 750-9319
    The TSX Venture Exchange has in no way passed upon the merits of the
    proposed transaction and has neither approved nor disapproved the
    contents of this press release.