Polaris Geothermal Inc.
TSX : GEO

Polaris Geothermal Inc.

April 15, 2009 11:35 ET

Polaris Issues 675,000 Shares Upon Exercise of Rights and Announces Participation by Investments and Technical Management Limited in Unit Financing

TORONTO, ONTARIO--(Marketwire - April 15, 2009) -

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Polaris Geothermal Inc. (TSX:GEO) ("Polaris" or the "Company") announces that it has issued a total of 675,000 Class A voting common shares (the "common shares") pursuant to the exercise of rights previously issued in a private placement of units which was completed on April 11, 2008. Details of the private placement can be found in the Company's press release of April 14, 2008.

Polaris also wishes to advise that as of March 25, 2009, Investments and Technical Management Limited of Caledonian House, Grand Cayman, Cayman Islands ("ITM") entered into an agreement with Polaris and others pursuant to which ITM agreed to acquire approximately US$200,000 of units (the "Units") of Polaris, at a price of Cdn$0.45 per Unit. Each Unit will consist of one (1) voting, convertible, redeemable preferred share of a class to be created (the "Preferred Shares") and one (1) common share purchase warrant (a "Unit Warrant"). The investment by ITM will be part of a US$10,000,000 private placement of Units by Polaris (the "Unit Offering"). Each Preferred Share will be convertible into one (1) common share without payment of any additional consideration, and each Unit Warrant will be exercisable into one common share at a price of Cdn$0.45 within 24 months of closing of the Unit Offering. The number of Units issuable upon closing will be determined using the Canadian dollar equivalent of U.S.$10,000,000 of Units, converted at the Bank of Canada noon rate on the day immediately prior to the closing date, divided by 0.45. For purposes of its filings with the TSX, Polaris assumed a maximum US/Canadian dollar exchange rate of 1.35:1, provided that if the U.S. dollar goes above $1.35, the filings with the TSX will be amended to reflect the actual rate as of the date immediately prior to closing. On this basis, up to 30,000,000 Units will be issued upon closing of the Unit Offering.

Concurrent with the Unit Offering, Polaris intends to implement amendments to the outstanding warrants issued on March 10, 2004, March 2006, July 2007 and March 2008, subject to applicable shareholder and regulatory (including TSX) approval. Polaris intends to reduce the respective exercise prices of such warrants to Cdn$0.45 and extend their respective exercise periods to the date that is 24 months from closing of the Unit Offering. ITM holds 2,700,000 of such warrants.

In accordance with the provisions of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") and the rules of the TSX, Polaris will be required to obtain minority shareholder and TSX approval in respect of the Unit Offering and warrant amendments. For the purpose of obtaining minority shareholder approval, the votes attached to the shares held by ITM and any other interested parties will be excluded.

Prior to entering into the agreement regarding the Unit Offering, ITM had ownership in 6,564,371 common shares and 2,700,000 warrants. 2,200,000 of these warrants were acquired on March 10, 2004 with an original expiry date of March 10, 2009 and an original exercise price of $1.00 per share. 500,000 of these warrants were acquired on March 3, 2006 with an original expiry date of March 3, 2011 and original exercise price of $1.50 per share. The expiry dates and exercise price of these 2,700,000 warrants are subject to amendments by Polaris concurrently with the Unit Offering in the warrant amendment as discussed above.

Assuming that ITM subscribes for 600,000 Units and assuming conversion of the approximately 600,000 Preferred Shares, full exercise by ITM of all warrants held by ITM, but excluding any common shares issuable upon conversion or exercise of all other outstanding convertible securities of Polaris, ITM will own an aggregate of 10,464,371 common shares (representing approximately 12.76% of the common shares that would be outstanding), which were primarily acquired as follows:

- On March 10, 2004, ITM acquired ownership over 5,167,500 common shares and 2,583,750 purchase warrants of Polaris in private transactions. 2,200,000 warrants were exercisable into common shares at $1.00 per share until March 10, 2009, unless extended. 383,750 warrants were exercisable into common shares $1.35 per share December 21, 2005. If all warrants held by ITM had been exercised, ITM would have had ownership over 7,751,251 common shares (representing approximately 31.41% of Polaris' then outstanding common shares).

- On December 30, 2004, ITM acquired ownership in 909,090 units of Polaris pursuant to a private placement of 4,849,236 units at a price of $1.10 per unit. Each unit consisted of one common share and one purchase warrant, with each warrant entitling the holder to purchase one additional common share at $1.50 per share until December 30, 2006. After the private placement, ITM had ownership over 6,286,591 common shares and 3,492,840 warrants. If all warrants held by ITM had been exercised, ITM would have had ownership of 9,779,431 common shares (representing approximately 27.55% of Polaris' then outstanding common shares).

- On December 28, 2006, ITM acquired beneficial ownership in 227,780 units of Polaris pursuant to a private placement of 9,462,000 units at a price of $1.25 per unit. Each unit consisted of one common share and one purchase warrant, with each warrant entitling the holder to purchase one additional common share at $1.50 per share until December 28, 2008. After the private placement, ITM had ownership over 6,564,371 common shares and 3,886,870 warrants. If all warrants held by ITM had been exercised, ITM would have had ownership of 10,451,241 common shares (representing approximately 21.11% of Polaris' then outstanding common shares).

ITM acquired the securities and is proposing to acquire the Units for investment purposes. ITM may, in accordance with applicable securities laws, increase or decrease its investment in Polaris depending on market conditions and other relevant factors.

ITM filed an Early Warning Report with the British Columbia, Alberta and Ontario Securities Commissions in respect of the acquisitions. Copies of the report may be obtained from SEDAR (www.sedar.com) or without charge from ITM. For further information on ITM, please contact John Clark at 416-367-0150.

This news release is not 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 in the United States or to, or for the account or benefit of, U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. All dollars in this news release are in Canadian funds.

About Polaris Geothermal Inc.

Polaris is a Canadian company, focused on the generation of renewable energy projects in Latin America and other parts of the world. For more information about Polaris visit www.polarisgeothermal.com.

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