Last updated on April 19, 2014 at 13:20 EDT

Sprott Power, Wind Canada Investments and Shear Wind announce agreement for the acquisition of Shear Wind by Sprott Power and $30 million public offering by Sprott Power of Extendible Convertible Unsecured Subordinated Debentures

August 8, 2012


        --  The acquisition of Shear Wind by Sprott Power (the
            "Acquisition") includes two operating assets representing a
            combined capacity of 63.7 megawatts ("MW"), including the 62.1
            MW Glen Dhu asset (the largest wind farm in Nova Scotia)
        --  80% increase in gross operating assets under Sprott Power
        --  Strategic partnerships between Sprott Power and each of Wind
            Canada Investments and Genera Avante Holdings Canada Inc.
            ("GAHC"), both subsidiaries of Genera Avante S.L. ("Genera
            Avante"), with respect to development assets with a potential
            capacity of over 860 MW and operating assets with power
            purchase agreements ("PPAs") with Nova Scotia Power Inc.
        --  Accretive to free cash flow per Sprott Power share
        --  Shareholders representing 74%of Shear Wind's shares outstanding
            have entered into voting support agreements
        --  Sprott Power entering into $30million bought deal financing of
            extendible convertible unsecured subordinated debentures to
            partially fund the Acquisition

TORONTO, Aug. 8, 2012 /CNW/ – Sprott Power Corp. (TSX: SPZ) (“Sprott
Power”), Wind Canada Investments Ltd. (“Wind Canada Investments”) and
Shear Wind Inc. (TSXV: SWX) (“Shear Wind”) are pleased to announce that
they have entered into an Arrangement Agreement (the “Agreement”)
pursuant to which Sprott Power will acquire all of the issued and
outstanding shares of Shear Wind (the “Shear Wind Shares”). Pursuant to
the Agreement, Sprott Power will acquire each Shear Wind Share for cash
consideration of $0.2213, which represents a premium to the 20-day
volume-weighted trading price of approximately 20%, corresponding to an
aggregate purchase price (the “Purchase Price”) of approximately $33 million, as may be adjusted and as further detailed below.

Shear Wind owns a portfolio of operating and development assets in
Canada. The operating assets are located in Nova Scotia and have a
combined installed capacity of 63.7 MW. They are comprised of a 51%
interest in Glen Dhu Wind Energy Limited Partnership (“Glen Dhu LP”),
which operates the Glen Dhu wind farm (“Glen Dhu”) and has a 20-year
PPA with NSPI, and a 100% interest in Fitzpatrick Mountain Wind Energy
Inc. (“Fitzpatrick”), which operates the Fitzpatrick Mountain wind farm
(“Fitzpatrick Mountain”) and has a 15-year PPA with NSPI (collectively,
the “Operating Facilities”). The development assets portfolio is
comprised of wind projects in various stages of development having a
potential aggregate installed capacity of over 860 MW (collectively,
the “Prospective Projects”).

In connection with the Acquisition, Sprott Power has entered into
working agreements with GAHC and Wind Canada Investments pursuant to
which, following the closing of the Acquisition, Sprott Power and GAHC
will complete an operating joint venture for the Operating Facilities
and Sprott Power and Wind Canada Investments will complete a
development joint venture for the Prospective Projects. GAHC currently
directly owns the remaining 49% of Glen Dhu LP.

Immediately following the Acquisition, GAHC and Wind Canada Investments
will make a cash payment of approximately $1.8 million to Sprott Power
to increase GAHC’s ownership of Glen Dhu LP by 2% (to a total of 51%)
and to purchase a 50% interest in Fitzpatrick, resulting in Sprott
Power holding a 49% ownership interest in Glen Dhu LP and a 50%
ownership interest in Fitzpatrick, in each case indirectly through SP
Operating Limited Partnership. In addition, Sprott Power, indirectly
through SP Development Limited Partnership, and Wind Canada Investments
will enter into a new 50/50 joint development limited partnership for
the Prospective Projects.

“The acquisition will increase the assets of Sprott Power from a
portfolio including 80 MW currently operating or under construction to
144 MW operating under management when the expected mid October closing occurs”
, states Mr. Jeff Jenner, President and Chief Executive Officer of
Sprott Power. “Shear Wind’s development pipeline is also attractive, given its size
and location throughout Canada. We look forward to working together
with Genera Avante, whose knowledge and expertise from their other
projects around the world will make them valuable partners. ”

The board of directors of Shear Wind, based on the recommendation of its
special committee, unanimously determined that the Acquisition is in
the best interests of Shear Wind and recommends that Shear Wind
shareholders vote in favour of the Acquisition.  Shareholders,
including certain directors and officers of Shear Wind, representing
74% of Shear Wind Shares (including minority shareholders representing 24%
of the Shear Wind Shares held by minority shareholders) have entered
into voting support agreements whereby they have agreed to, among other
things, vote in favour of the Acquisition.

Acquisition Enterprise Value

The Acquisition places a value on the Shear Wind enterprise of
approximately $79 million. In addition to the approximately $33 million consideration for
the Shear Wind Shares, Sprott Power is assuming approximately $51 million in debt (its share of Glen Dhu LP’s long-term debt), offset by
approximately $5 million in cash-on-hand following certain adjustments.

Key Attributes of the Transaction

Operating Facilities with long term PPAs

Supported by a 20-year PPA and a 15-year PPA with NSPI, respectively,
the Glen Dhu and Fitzpatrick Mountain Operating Facilities have a
combined installed capacity of 63.7 MW. Glen Dhu is the largest wind farm in Nova Scotia.
It was commissioned in 2011, has 19 years left on its PPA, and has a
gross operating MW capacity of 62.1 MW.  Fitzpatrick Mountain was
commissioned in 2007, has eight years left on its PPA, and has a gross
operating MW capacity of 1.6 MW.

Expected to provide meaningful synergies between Sprott Power and Shear

Glen Dhu and Fitzpatrick Mountain are within a two hour drive from
Sprott Power’s Amherst wind farm (“Amherst”) in Nova Scotia.  This
should allow for operational efficiencies and cost savings for Sprott
Power. Sprott Power’s increased operating base will also benefit from
reduced corporate overhead and the operating expertise of Sprott
Power’s management.

Accretive to distributable cash per share

The Acquisition is expected to be accretive to Sprott Power’s
distributable cash per share, given the historical and expected free
cash flow generated by Shear Wind’s Operating Facilities.

Low cost, long-term financing

The total debt that Sprott Power is assuming in the Acquisition is its
49% share of debt in Glen Dhu LP, which as at March 31, 2012, had a
balance of approximately $103.7 million (Sprott Power’s share would be
approximately $50.8 million). This debt currently has an effective
interest rate of approximately 6.0% per annum. The loan has principal
and interest payments, with the last payment expected in 2029.

Prospective Projects

The Prospective Projects represent a potential aggregate installed
capacity in excess of 860 MW of wind projects located throughout
Alberta, Saskatchewan, Nova Scotia and New Brunswick at various stages
of development. Shear Wind currently owns 100% of the Prospective Projects, but immediately following the
Acquisition, these assets and the current loan payable to Wind Canada
Investments will be transferred into the new 50/50 joint development
limited partnership. Going forward, Sprott Power will fund its contributions to the joint venture through management, the funding of
development costs and potential success fees.

Willow Ridge Sale

Willow Ridge is a Prospective Project (the “Willow Ridge Project”)
currently owned by Shear Wind that may be sold.  If the Willow Ridge
Project is sold prior to completion of the Acquisition, the Shear Wind
shareholders will be entitled to the net cash consideration of the sale
of the Willow Ridge Project (less all taxes, costs and expenses)
divided by the aggregate number of Shear Wind Shares issued and
outstanding. If the Willow Ridge Project is not sold prior to
completion of the Acquisition, the Shear Wind shareholders will be
entitled to (i) the sum of the amount of any non-refundable cash
deposit received by Shear Wind from any potential purchaser of the
Willow Ridge Project, and the remaining cash deposit made by Shear Wind
in connection with the Willow Ridge Project, (ii) less all taxes, costs
and expenses; divided by the aggregate number of Shear Wind Shares
issued and outstanding.

Bought Deal Financing of Extendible Convertible Unsecured Subordinated

In conjunction with the Acquisition, Sprott Power is pleased to announce
that, to partially finance the Acquisition, it has entered into an
agreement to sell on a bought deal basis (the “Offering”), to a
syndicate of underwriters led by Canaccord Genuity Corp. and including TD Securities Inc., National Bank Financial Inc., NCP Northland Capital
Partners Inc., Stifel Nicolaus Weisel and Macquarie Capital Markets
Canada Ltd. (collectively, the “Underwriters”), $30,000,000 aggregate principal amount of extendible convertible
unsecured subordinated debentures (the “Debentures”). It has also
granted the Underwriters an option, exercisable in whole or in part at
any time up to 30 days following closing of the Offering, to purchase
up to an additional $4,500,000 aggregate principal amount of Debentures on the same terms.

The Debentures will have an initial maturity date of October 15, 2012,
extendable at Sprott Power’s option to December 31, 2012 (the “Initial
Maturity Date”), which will automatically be extended to December 31,
2017 (the “Final Maturity Date”) upon completion of the Acquisition. If
the Acquisition does not close on or prior to 5:00 p.m. (Toronto time)
on the Initial Maturity Date, or the Agreement is terminated at any
earlier time (in any case, the “Termination Date”), the maturity date
of the Debentures will remain as the Initial Maturity Date and, upon
maturity, holders thereof will receive the full amount paid for their
Debentures, plus accrued and unpaid interest thereon.

The Debentures will have an interest rate of 6.75% per annum payable
semi-annually in arrears on June 30 and December 31 in each year, with
the first coupon paid December 31, 2012. Each $1,000 principal amount of Debentures will be
convertible into approximately 769.23 common shares of Sprott Power at any time following the
Acquisition, at the option of the holder, representing a conversion
price of $1.30 per share (the “Conversion Price”).

The Debentures will not be redeemable before December 31, 2015. Subject
to automatic extension, on or after December 31, 2015 and prior to
December 31, 2016, Sprott Power may, at its option, redeem the
Debentures at par plus accrued and unpaid interest, provided that the
weighted average trading price for the Sprott Power Shares on the
Toronto Stock Exchange (the “TSX”) for the 20 consecutive trading days
ending five trading days prior to the applicable date (the “Current
Market Price”) is not less than 125% of the Conversion Price. From
December 31, 2016, the Debentures will be redeemable at Sprott Power’s
option at any time at par plus accrued and unpaid interest.

In the event that automatic extension has occurred, Sprott Power has the
option, subject to regulatory approval, to satisfy its obligations to
repay the principal amount of the Debentures upon redemption or at
maturity on the Final Maturity Date, provided no event of default has
occurred, by issuing that number of Sprott Power Shares obtained by
dividing the principal amount of the Debentures by 95% of the Current
Market Price.

Upon the occurrence of a change of control, Sprott Power will be
required to make an offer to purchase, within 30 days of the change of
control, all of the Debentures at a price equal to 101% of the
principal amount thereof plus accrued and unpaid interest. Subject to
regulatory approval, in the event of certain types of changes of
control, holders of the Debentures may elect to convert their
Debentures and receive, in addition to the number of Sprott Power
Shares they otherwise would have been entitled to under conversion, an
additional number of Sprott Power Shares to be set out in the debenture
indenture governing the Debentures. If 90% or more of the aggregate
principal amount of the Debentures outstanding upon the occurrence of a
change of control have been tendered to Sprott Power pursuant to an
offer made to the holders of all Debentures, Sprott Power will have the
right to redeem all the remaining Debentures at the same price.

The debenture indenture governing the Debentures will contain certain
customary events of default and covenants.

A preliminary short form prospectus qualifying the distribution of the
Debentures will be filed with securities regulatory authorities in all
provinces of Canada, other than Québec.

Completion of the Offering is anticipated to occur on or about August
28, 2012, and is subject to the satisfaction or waiver of various
conditions, such as the receipt of normal regulatory approvals,
including approval of the TSX.

Closing Date and Conditions to Closing

The Acquisition is expected to proceed as a plan of arrangement under
the Canada Business Corporations Act and to close in mid-October 2012. The Acquisition has been unanimously
approved by the Board of Directors of Sprott Power and Shear Wind and
is subject to approval by Shear Wind shareholders, including approval
of the minority shareholders (excluding Wind Canada Investments) in
accordance with Multilateral Instrument 61-101 and the policies of the
TSX Venture Exchange (the “TSX-V”), and other customary conditions,
including court approvals and the receipt of all necessary regulatory
approvals (including the TSX and TSX-V).


Sprott Power was advised by Canaccord Genuity Corp. and TD Securities
Inc. Legal advice was provided by Cassels Brock & Blackwell LLP.

Shear Wind was advised by Stikeman Elliott LLP and McInnes Cooper  and a
fairness opinion was provided to its special committee and board by
PricewaterhouseCoopers Canada LLP.

Availability of Documents

Copies of the Agreement and related documents, such as the management
information circular for the Shear Wind shareholders’ meeting relating
to the Acquisition, will be filed with Canadian securities regulators
and will be available on SEDAR (www.sedar.com) as part of the public filings of Sprott Power and Shear Wind.

This press release does not constitute an offer of securities for sale
in the United States or to “U.S. persons” (“U.S. persons”), as such
term is defined in Regulation S promulgated under the United States
Securities Act of 1933, as amended (the “U.S. Securities Act”). The
securities being offered have not been, nor will be, registered under
the U.S. Securities Act or any state securities laws, and may not be
offered or sold in the United States or to U.S. persons absent
registration or an applicable exemption from such registration

Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this press

About Sprott Power Corp.

Sprott Power is a publicly-traded Canadian-based company dedicated to
the development, ownership and operation of renewable energy projects.
Through project development efforts, acquisitions, partnerships and
joint ventures, Sprott Power provides its shareholders with income and
growth from the renewable power generation sector of the energy

About Shear Wind

Founded in 2005, Shear Wind is headquartered in Bedford, Nova Scotia and is engaged in the exploration and development
of renewable wind energy properties in Canada. Shear Wind is focused on
building a strong company based on a secure and sustainable supply of
clean wind energy. Shear Wind is committed to building shareholder
value governed by environmental stewardship. Inveravante Inversiones
Universales, S.L., an international corporation based in Spain,
indirectly owns 66.1% of Shear Wind on a fully-diluted basis and 49% of
Glen Dhu Wind Energy Limited Partnership through Genera Avante Holdings
Canada Inc., following its investment in Shear Wind in November 2009.

About Genera Avante

Genera Avante is a Spanish company focused on creating a global
renewable independent power producer, with almost 400 MW under
operation or construction (wind in Spain, Canada, Brazil, concentrating
solar power in Spain, hydro in Panama and Brazil) and a portfolio of
projects in various stages of development for over 1,000 MW.

Forward-Looking Information

This press release contains forward-looking information within the
meaning of applicable securities laws. All information and statements
other than statements of historical facts contained in this press
release are forward-looking information. Such statements and
information may be identified by looking for words such as “about”,
“approximately”, “may”, “believes”, “expects”, “will”, “intend”,
“should”, “plan”, “predict”, “potential”, “project”, “anticipate”,
“estimate”, “continue” or similar words or the negative thereof or
other comparable terminology. Such forward-looking information
includes, without limitation, statements with respect to: the
anticipated closing of the Acquisition, the benefits which may accrue
to Sprott Power and Shear Wind and their respective shareholders as a
result of the Acquisition, the anticipated closing of the Offering, the
operating joint venture between Sprott Power and GAHC and development
joint venture between Sprott Power and Wind Canada Investments, cash
flows, dividends, power generation, growth prospects, business strategy
and plans, and objectives of or involving Sprott Power. The
forward-looking information is based on certain key expectations and
assumptions made by Sprott Power and Shear Wind, including expectations
and assumptions concerning satisfaction of all conditions of closing,
absence of exercise of any termination right and the timing and receipt
of regulatory approval with respect to the Offering, availability of
capital resources and performance of operating facilities. Although
Sprott Power and Shear Wind believe that the expectations and
assumptions on which such forward-looking information is based are
reasonable, undue reliance should not be placed on the forward-looking
information since no assurance can be given that they will prove to be
correct. Actual results could differ materially from those currently
anticipated due to a number of factors and risks. These include, but
are not limited to, the market for the Debentures, volatility of market
price for the Debentures, failure to close the Acquisition, potential
undisclosed liabilities associated with the Acquisition and integration
of the business of Shear Wind, failure to realize the benefits of the
Acquisition (including cost synergies, operational efficiencies and
added stability of cash flows), power generation and the limited nature
of the indemnities in the Agreement and other risks generally
attributable to the business of Sprott Power and Shear Wind. For
additional information with respect to risks and uncertainties, refer
to the risks listed under the headings “Risk and Uncertainties” in
Sprott Power’s management’s discussion and analysis of financial
results for the period ended December 31, 2011, “Appendix B – Risk
Factors” in Sprott Power’s annual information form dated March 26,
2012, and “Risks and Uncertainties” in Shear Wind’s management
discussion and analysis for the three months ended March 31, 2012. The
forward-looking information is made as of the date of this press
release and neither Sprott Power nor Shear Wind assume any obligation
to update or revise it to reflect new events or circumstances, except
as required by law.

SOURCE Sprott Power Corp.

Source: PR Newswire