Phoenix India Acquisition (stock symbol: [t]PXIA[/t]) is not going to meet its April 5 deadline to complete an acquisition and anticipates that the company will have to distribute the cash in its trust account. However, the company wants to amend its certificate of incorporation to allow for is continued existence so that it can raise money through a private placement and complete the acquisition of a 65% interest in Citius Power Limited.
Phoenix India Acquisition Corp. Agrees to Purchase 65% of Citius Power Limited; Intends to Seek Amendment to Certificate of Incorporation
Tuesday March 4, 5:17 pm ET
NEW YORK, March 4 /PRNewswire-FirstCall/ -- Phoenix India Acquisition Corp. (OTC Bulletin Board: PXIA - News, PXIAU - News, PXIAW - News; "Phoenix") today announced that it has entered into a definitive agreement to purchase convertible preferred shares of Citius Power Limited, a company registered under the laws of Mauritius ("Citius"), representing 65% of the common shares of Citius on an as converted, fully diluted basis. Citius Power Limited, through a 99.99% owned subsidiary in India, Citius Power Limited (India), has entered into agreements to purchase up to 109 Megawatts ("MW") of operating wind energy assets in India and has a business plan to own and operate 3,000 MW of wind energy generating assets in India, subject to availability of financing.
Under the existing provisions of Phoenix's certificate of incorporation, it would have to obtain stockholder approval and complete the transaction, by April 5, 2008. Phoenix does not believe that there is sufficient time remaining to complete those actions by that date. As a result, it is likely that the funds in the trust account funded with the proceeds of Phoenix's initial public offering will be distributed to its stockholders. Phoenix intends to seek stockholder approval of an amendment to its certificate of incorporation to permit it to continue in existence following such distribution. Phoenix would then attempt to raise the capital needed to complete the transaction through a private placement. However, there is no assurance that its stockholders will approve such an amendment or that Phoenix will be able to raise the necessary funds.
Description of Citius Business
Citius' subsidiary in India has entered into agreements ("Purchase Agreements") to acquire operating wind energy assets with a total capacity of 109 MW. The assets include wind turbines, the land (or rights to use the land) on which the assets are installed, rights under long-term power purchase agreements ("PPA"), and receivables and liabilities associated with the assets ("Wind Energy Assets"). Simultaneously with the closing of Phoenix's investment, Citius would close on Wind Energy Assets having a total capacity of 33 MW, for which all the legal, technical and financial due diligence has been satisfactorily completed. Additional capacity of approximately 22 MW where such due diligence has also been completed would be acquired within 90 days from closing of the Phoenix investment.
Provided sufficient funding is available, Citius intends to acquire the remaining 54 MW of existing and operational Wind Energy Assets mentioned above. Citius has also entered into other purchase agreements to acquire an additional 175 MW of newly constructed Wind Energy Assets with a delivery schedule in 2008, and 128 MW of existing assets also available for purchase in 2008. Further, the Company is in advanced stages of negotiations to acquire 800 MW of new constructs for deliveries between 2008 and 2012. The orders for new constructs can be finalized within three to six months of the close of this Transaction.
The operating Wind Energy Assets subject to Purchase Agreements are high quality, cash flow generating and relatively new (with an average age of five years), and have long term PPAs in place. The negotiated purchase price of these assets is based on a multiple of the Wind Energy Assets' historic EBITDA.
The generation from all of these Wind Energy Assets is contracted under long term (approximately twenty year) PPAs with either the distribution companies of the relevant State Electricity Boards ("SEBs"), or independent third party purchasers, helping to ensure the security of cash flow of such assets for the duration of the PPA term. The Wind Energy Assets being acquired have been well-maintained by the operations and maintenance ("O&M") contractors and have excellent performance records.
The Company has an India-based, seasoned management team that includes entrepreneurs, who have managed several successful businesses in India and one of the leading experts in installation of Wind Power facilities in India. The Advisory Board comprises prominent leaders from industry, banking and government.
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