IPO to be Conducted to Raise Capital for Retail Supply Holding Company

An IPO will be conducted to infuse capital into Crius Energy, LLC, which as previously reported will be the company formed by the combination of Regional Energy Holdings, Inc. (REH) and Public Power, LLC.

As only reported by Matters, the combination of Regional Energy Holdings and Public Power, LLC is to consolidate each company's separate, multi-state retail gas and electric marketing businesses under the umbrella of a new corporate entity, Crius Energy LLC. Regional Energy Holdings is the parent of the retail brands Viridian Energy, Cincinnati Bell Energy, FTR Energy Services, and Fairpoint Energy.

Regional Energy Holdings and Public Power, LLC have also told FERC that as part of the transaction, an IPO will be conducted to infuse capital into Crius Energy LLC.

"The structure of the Proposed Transaction is primarily driven by Canadian and U.S. tax considerations and is complex as a result," Regional Energy Holdings and Public Power, LLC said.

The first stage is the Exchange Transaction, the purpose of which is to consolidate the Regional Energy Holdings and Public Power retail operating entities under the ownership of Crius Energy LLC. After FERC approval is obtained, but before the IPO, REH, Public Power and Crius Energy LLC will implement an exchange agreement. At closing, each of the REH stockholders and the Public Power members will contribute a portion (approximately 75 percent) of their interests in Public Power and the REH retail supply companies to Crius Energy LLC, each in exchange for 50 percent of the Crius Energy LLC interests. The REH Stockholders and the Public Power Members will also retain 25 percent of their respective ownership interests in Public Power and the REH retail supply companies (the Retained Interest).

The second and third stages of the proposed transaction are the IPO and the acquisition of the Acquired Interest in Crius Energy LLC.

The IPO will specifically be conducted by Crius Energy Trust, a newly formed, unincorporated, open-ended limited purpose trust established under the laws of the Province of Ontario, Canada. Following the IPO, the Trust will wholly own Crius Energy Holdings Inc., and will not carry on any other business activities.

Crius Energy Holdings Inc. will be a newly formed Canadian holding company incorporated under the laws of the Province of Ontario, Canada. Following the IPO, Crius Energy Holdings Inc. will own all of the shares of Crius Energy Corporation, and will not carry on any other business activities.

Crius Energy Corporation will be incorporated under the laws of the State of Delaware and its sole function will be to acquire and hold a membership interest in Crius Energy LLC (the Acquired Interest), following the closing of the IPO. Crius Energy Corporation will contribute the net proceeds of the IPO to Crius Energy LLC in exchange for a portion of the ownership interests therein.

To summarize, following the closing of the Exchange Transaction, it is intended that a public offering will be made in Canada of units of the Trust and members of the public will purchase the units. Assuming the IPO is completed, the proceeds of the IPO will be used by the Trust to subscribe for additional shares of Crius Energy Holdings Inc., which in turn will use the net proceeds to subscribe for additional shares and debt of Crius Energy Corporation. Crius Energy Corporation will use the proceeds to acquire the Acquired Interest in Crius Energy LLC.

The fourth stage of the Proposed Transaction is the Cash Redemption Transaction. In this stage, cash from the IPO, either in the form of loans or cash, is passed down to REH, which will acquire the Retained Interest of the REH owners in REH, and to Crius Energy LLC, which will acquire the Retained Interest held by the Public Power members. After the Cash Redemption Transaction, Crius Energy LLC will own 100 percent of the common shares of REH, and 100 percent of the ownership interests in Public Power, representing an increase from pre-redemption ownership levels of 75 percent in each of REH and Public Power, respectively. The Retained Interests in the owners of REH and Public Power will be eliminated.

The IPO is contemplated to occur by January 21, 2013.