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Atlantic Power Corp. operates and manages Curtis Palmer facility near Corinth, New York, a run-of-river hydroelectric facility. The Boston-based electricity producer says it has not received any viable offers for the company, and will now consider asset sales and joint ventures.

Beaten-down electricity producer Atlantic Power Corp. took another hit Tuesday after it said it received no viable offers to buy the company for more than $3.04 (U.S.) a share.

That news, and the firm's insistence that it will continue to operate as an independent company, prompted a drop of almost 9 per cent in its share price on the New York Stock Exchange, to close at $2.29. (The company also trades on the Toronto Stock Exchange.)

Boston-based Atlantic Power, which owns more than two-dozen gas, wind and hydro power plants across Canada and the United States, is in the midst of a fight with an activist investor that wants the company sold.

A sale seemed to be in the cards in early May, when Atlantic Power said it had hired investment advisers – including Goldman Sachs & Co. – to look at a range of options, including a sale or merger of the company. Atlantic Power had been struggling with high debt levels, volatile markets for its electricity and increased costs of natural gas to power some of its plants.

Investors seemed to be on side with that plan, and the stock price gradually rose over the course of the summer from around $3 a share to over $4.

Then on Sept. 16, the bottom fell out. Atlantic Power announced that any sale or merger was off the table, that its chief executive officer, Barry Welch, was leaving and being replaced temporarily by one of the directors, and – worst of all for income-oriented investors – the annual dividend was being slashed by 70 per cent.

The stock price immediately plunged by more than $1.

A few weeks later, New York-based activist investor Clinton Group took the stage. In a letter to Atlantic Power's board of directors, Clinton Group's senior portfolio manager Joseph De Perio said the company should restart the sales process. Mr. De Perio said he believed some bids had come in at $4 a share or more during the time that the company was actively seeking offers.

Tuesday's release from Atlantic Power denied that it had rejected any healthy offers, and it reiterated that the firm has no intention to continue looking for a buyer, although it will consider asset sales or joint ventures to raise money. It said the company did not get any offers the board "believed could be consummated" at or above $3.04 a share – the price its stock was trading at on May 1, just before word came out that its advisers were shopping the company.

Clinton Group's Mr. De Perio would not make any comment on the situation Tuesday, saying his firm is still considering its options.

Among the possible actions Clinton Group could take is to call a special meeting of shareholders to try to replace the Atlantic Power board, but it would have to raise its stake above the 5-per-cent level to do that. Currently, it has less than 5 per cent of the stock.

Analyst Ben Pham of BMO Nesbitt Burns said he thinks Atlantic Power has a breakup valuation of at least $3 a share, and he has a "market perform" rating on the stock with a target of $3. "There is some decent value there," he said, although investors interested in the power sector will likely find "better money making opportunities elsewhere." Indeed, there are a lot of value-priced investments outside the power group because of the recent market drop, and many retail investors will be looking at those rather than sticking with Atlantic Power, he said.

Rupert Merer, an analyst with National Bank Financial, said many retail investors abandoned Atlantic Power when the dividend was cut – even though that move put the company in a stronger financial position. Those that remain must be "ready to roll up their sleeves and do a lot of work" to determine whether there is upside to the stock, by figuring out the value of the power-generating assets relative to the debt, which stands at around $2-billion. They should also be prepared for volatility, he added.

But by cutting the dividend, the company is now in a position to manage its debt for the time being, giving it stability for a few years until it faces debt maturities in 2017 and beyond, he said.

Mr. Merer said it would likely be much easier for Atlantic Power to sell specific assets, rather than the company as a whole. Many buyers might be interested in single power-generating facilities rather than the whole package, which includes so many different technologies. "They are much more likely to sell one than the whole basket [because] there is much less risk for the buyer," he said.

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