Innergex Renewable Energy (TSX:INE) says its founder will retire following a planned merger of the company with Innergex Power Income Fund (TSX:IEF.UN) to create a dividend-paying corporation focused on renewable energy.
Gilles Lefrancois is ending his employment 20 years after he started the energy company but will remain chairman and member of the fund's board of trustees until the merger closes by the end of March.
He will be a special adviser for 12 months.
The two energy entities announced Monday that the fund will undertake a reverse takeover of Innergex Energy.
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Innergex Renewable currently owns 16.1 per cent of the fund and acts as its manager under a long-term agreement.
The plan is for investors will exchange each fund unit for 1.46 Innergex shares. As a result, Innergex shareholders will receive a consideration valued at $7 per share, which represents a 29 per cent premium to its Friday closing of $5.43.
Unitholders of the fund, which will be converted into a dividend-paying corporation, will own 61 per cent of the combined company, with Innergex's current shareholders holding the remaining 39 per cent.
The proposed transaction comes less than a year before a change in federal taxation of income trusts goes into effect next January.
The combined company intends to have a 58-cent per share dividend, which is equivalent to 85 cents per unit.
The transaction has received approval from several large investors as well as insiders with a total of about 57 per cent of INE shares and some 44 per cent of power fund units.
Approval from two-thirds of all shareholders and unitholders is required.
The combined company will own 326 megawatts of installed capacity in operation. An additional 128 MW of renewable power will be coming on-line in the next two years.
Innergex will generate 73 per cent of its power from hydroelectric facilities and 27 per cent from wind facilities.
Innergex president and CEO Michel Letellier said the new company will be a "renewable energy industry force - a pure play with significantly greater scale and the financial resources to compete for the most attractive renewable energy projects in Canada."
Innergex Power Income Fund indirectly owns interests in 10 hydroelectric power-generating facilities and two wind farms.
Innergex Renewable Energy Inc. is a leading developer, owner and operator of run-of-river hydroelectric facilities and wind energy projects in North America.
Innergex shares gained nearly 25 per cent, rising $1.34 to $6.77 in morning trading on the Toronto Stock Exchange. Innergex Power units fell 18 cents, or 1.72 per cent to $10.30.