Algonquin Power Income Fund Strengthens Utility Division Through a Strategic Partnership with Emera Inc.



    OAKVILLE, ON, April 23 /CNW/ - Algonquin Power Income Fund ("Algonquin
Power") (TSX: APF.UN) today announced that it plans to co-acquire an
electrical generation and regulated distribution utility through a strategic
partnership with Emera Inc. ("Emera") (TSX:EMA). Algonquin Power and Emera
will each own 50% of the newly formed California Pacific Electric Company
("Calpeco"), which intends to acquire the California-based electricity
distribution and related generation assets (the "California Utility") of NV
Energy, Inc. (NYSE:   NVE) for the purchase price of approximately US $116
million, subject to certain working capital and other closing adjustments.
    Algonquin Power and Emera will jointly own and operate the California
Utility through Calpeco, leveraging Algonquin Power's utility and power
generating capabilities and Emera's proven electrical utility operational
expertise. The California Utility currently provides electric distribution
service to approximately 47,000 customers in the Lake Tahoe region, and owns a
newly re-powered 12 MW generation plant. Calpeco intends to make employment
offers to all current operation and customer service employees for the
California Utility. Ownership of the California Utility is anticipated to
provide Algonquin Power and Emera the opportunity for future investment in
both regulated utility assets and development of renewable power generation
because the California Utility is located in one of the United States' most
popular and affluent tourism destinations and will benefit from the growing
California renewable portfolio standards.
    Closing of the transaction is subject to usual closing conditions, and
state and federal regulatory approval, and is expected to occur in mid 2010.
Following the closing of the transaction, Algonquin Power will proportionally
consolidate Calpeco into its financial statements. Algonquin Power's share of
Calpeco's operations is expected to add approximately US$15 million of revenue
and US$10 million of EBITDA based on current rate case filings before the
regulator.
    Through Calpeco, Algonquin Power and Emera will jointly seek debt
financing for approximately half of the purchase price of the California
Utility, with the balance being satisfied through equal equity contributions
from each of Algonquin Power and Emera. As an element of the California
Utility strategic partnership, Emera has also agreed to a treasury
subscription of approximately 8.5 million trust units of Algonquin Power at a
price of $3.25 per unit, which is expected to represent 9.9% of the
outstanding units after the subscription. Funding under the private placement
is planned to occur simultaneously with the acquisition of the California
Utility and Algonquin Power intends to use the proceeds received to largely
fund Algonquin Power's equity commitment for the acquisition of the California
Utility of approximately USD $27 million.
    "The acquisition represents an important element in the strengthening of
Algonquin Power's low-risk utility infrastructure portfolio, and the highly
predictable, long-term regulated returns from these assets will contribute to
the stability of our earnings for years to come", commented Ian Robertson,
Executive Director of the manager of Algonquin Power. "The unique transaction
structure allows Algonquin Power to complete the acquisition of the California
Utility assets at an attractive valuation while preserving the ability to use
internally generated cash flows to strengthen its liquidity position."
    "The partnership with Algonquin Power positions Emera to increase our
holdings of renewable energy in North America and introduces us to a new
market" said Chris Huskilson, President and CEO, Emera Inc. "It also allows us
to increase value of jointly-owned energy infrastructure assets with Algonquin
Power. We look forward to working with Algonquin to build on our portfolio in
the utilities and renewable energy sectors."
    Terms of the private placement with Emera include customary anti-dilution
rights for Emera, requirements on voting, and a standstill agreement under
which Emera agrees to not increase its 9.9% holding in Algonquin Power to more
than 15% for two years following the anticipated California Utility closing.
    Robertson continued, "to further support our strategy and corporate
governance activities, we are also very pleased to announce that Chris
Huskilson, President and CEO, Emera Inc., will be invited by the Chairman of
the Trustees, Ken Moore, to join the Board of Trustees of Algonquin Power."
    A summary fact sheet on the assets being acquired can be found on
Algonquin Power's web site at www.algonquinpower.com.
    Algonquin Power will hold a conference call on this matter at 10:00 a.m.
eastern time today, Thursday, April 23, 2009, hosted by executive directors of
the manager Ian Robertson, Dave Kerr, Chris Jarratt, and Chief Financial
Officer David Bronicheski.

    
    Conference call details are as follows:
    Date: Thursday, April 23, 2009
    Start Time: 10:00 a.m. eastern
    Phone Number: Toll free within North America: 1-800-587-1893 or local
    416-644-3424.
    Conference ID No.: 21304685
    

    For those unable to attend the live call, a digital recording will be
available for replay two hours after the call by dialing 1-877-289-8525 or
416-640-1917 access code 21304685 followed by the number sign from April 23,
2009 until April 30, 2009.

    About Algonquin Power

    Algonquin Power owns and operates a diverse portfolio of approximately $1
billion of clean, renewable power generation and sustainable utility
infrastructure assets across North America. Algonquin Power's generation
portfolio includes 42 renewable energy facilities and 11 thermal energy
facilities representing more than 400MW of installed capacity and Algonquin
Power provides regulated utility services to more than 70,000 customers
through its portfolio of 18 water distribution and wastewater treatment
utility companies. Algonquin Power's trust units and convertible debentures
are traded on the Toronto Stock Exchange under the symbols APF.UN, APF.DB &
APF.DB.A. Visit Algonquin Power on the web at www.AlgonquinPower.com.

    Caution Regarding Forward Looking Information

    Any information contained in this News Release that relates to future
events or expected financial position or that otherwise speaks to the future
should be considered forward looking information. The information was
developed based on specific and general factors and assumptions. Specific
factors and assumptions relate to the electric utility business and the
regulatory climate in California. These include assumptions that the rate base
of the California Utility will remain substantially constant, and that the
California regulator will provide rates of return, processes and timelines
consistent with recent rates, processes and timelines. Specific risks exist
that the California regulator could act in a manner inconsistent with or more
onerous than past rate cases. The general factors and assumptions relate to
the performance of Algonquin Power's assets and business, interest and
exchange rates, commodity market prices, and the financial and regulatory
climate in which it operates. They include assumptions as to Algonquin Power's
own base case profitability and its continued access to debt and equity. Risks
exist that Algonquin Power's business may be less profitable than expected and
it may not have access to the capital and debt that it expects, and risks are
present in the continued volatility of world financial markets, the impact of
movements in exchange rates and interest rates, the effects of changes in
environmental and other laws and regulatory policy, decisions taken by
regulators on monetary policy and the taxation of income funds, and the state
of the Canadian and the US economy and accompanying business climate. Risk
factors may affect the actual results and the assumptions made may prove to
not be accurate, and accordingly Algonquin Power cautions that actual results
may vary from the forward looking information. Algonquin Power updates forward
looking information as required by law.

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For further information:

For further information: Ms. Kelly Castledine or Mr. David Kerr,
Algonquin Power Income Fund, 2845 Bristol Circle, Oakville, Ontario, L6H 7H7,
Telephone: (905) 465-4500, Web Page: www.algonquinpower.com


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