Polaris Geothermal Inc.

Polaris Geothermal Inc.

January 02, 2007 16:59 ET

Polaris Geothermal Completes First Tranche of Unit Financing

TORONTO, ONTARIO--(CCNMatthews - Jan. 2, 2007) -

Not For Distribution to US Newswire Services or for Dissemination in the United States

Polaris Geothermal Inc. ("Polaris Geothermal" or the "Company"), (TSX VENTURE:GEO) a renewable energy geothermal power producer, is pleased to announce that it closed on December 29, 2006 the first tranche of its previously announced offering of 9,600,000 units (the "Units") at a price of $1.25 per Unit. The first tranche was comprised of 9,462,000 Units for gross proceeds of $11,827,500. Each Unit consists of one class A common share and one share purchase warrant (a "Warrant"). Each Warrant entitles the holder to acquire one class A common share ("Common Share") of Polaris Geothermal at an exercise price of $1.50 for a period of 24 months from the date of issuance. The Warrants are subject to an acceleration clause that if, at any time after six months following the closing of the Offering, the closing price of the Common Shares of the Company on the TSX Venture Exchange or the Toronto Stock Exchange exceeds $2.50 per share or higher for a period of twenty (20) consecutive trading days, then the Company shall give notice to the investors that the Warrants must be exercised or they will expire thirty (30) days after such notice. It is expected that the second tranche of $172,500 will be closed in the first week of January, 2007.

Dundee Securities Corporation acted as agent on the offering and received a commission equal to 7% of the gross proceeds placed by the agent under the offering and compensation options equal to 7% of the number of securities placed by the agent under the Offering. Each compensation option will be exercisable at a price of $1.25 for one Unit until December 28, 2008 and is also subject to the acceleration clause described above. The securities issued pursuant to the offering are subject to a four month hold period.

The Company is also pleased to announce that it has completed the previously announced bridge loan with Quest Capital Corp. ("Quest") pursuant to which Quest advanced the sum of $5 million (the "Loan") to the Company. The Loan is due and payable in full on June 30, 2007 and bears interest at the rate of 12% per annum, payable monthly on the last business day of each month. The net proceeds from the Loan will be used to pay amounts owing under the Company's existing credit facility (the "Senior Loan") with Standard Bank plc and Central American Bank for Economic Integration. In connection with the entering into of the Loan and the restructuring of the Senior Loan, Polaris issued an aggregate of 592,500 Common Shares to Quest and Standard Bank plc.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. All dollars in this release are in Canadian funds.


This press release includes certain "forward-looking statements". All statements regarding the ability of the Company to successfully complete the second tranche of the Offering are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. All statements that are not historical facts, including without limitation statements regarding future estimates, plans, objectives, assumptions or expectations of future performance, are "forward-looking statements". We caution you that such "forward looking statements" involve known and unknown risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such statements. Such risks and uncertainties include unpredictable results of exploration activities, uncertainties inherent in the estimation of geothermal resources, fluctuations in the costs of goods and services, problems associated with production operations, changes in legal, social or political conditions in the jurisdictions where the Company operates, lack of appropriate funding and other risk factors, as discussed in the Company's filings with Canadian securities regulatory agencies. The Company expressly disclaims any obligation to update any forward-looking statements.

Contact Information