Algonquin Power trustees announce convertible debenture exchange offer



    TORONTO, June 12 /CNW/ - The trustees of Algonquin Power Income Fund (the
"Fund") (TSX: APF.UN) announced today that they have entered into a unit-share
exchange support agreement (the "Agreement") to support an offer which will
provide the Fund's unitholders the opportunity to exchange their trust units
of the Fund, on a one-for-one basis, for the common shares of a corporation
("Algonquin Power Inc."). Following completion of the unit-share exchange,
unitholders will hold common shares in Algonquin Power Inc. which will own
100% of the outstanding trust units of the Fund.
    As an element of the transactions contemplated by the Agreement, holders
of the Fund's convertible debentures will be provided the opportunity to
exchange their debentures for securities of Algonquin Power Inc. (the "CD
Exchange Offer") on the following terms:

    
        In respect of the 6.65% convertible debentures maturing on July 31,
        2011 ("Series 1"), holders of Series 1 debentures will receive, for
        each $100 of Series 1 debenture principal, either of the following,
        at the option of each debenture holder to be exercised at the time of
        tender of their debentures:

           a. 31.152 common shares in Algonquin Power Inc. The closing price
              of the Fund's trust units on June 11, 2009 was $3.40 per trust
              unit. A maximum of $40 million of common shares will be
              available under this option and, if demand for this option
              exceeds such amount, such shares will be allocated pro-rata
              amongst tendering debenture holders; or

           b. a convertible debenture issued by Algonquin Power Inc. with the
              following terms:

                 i.   Principal: $105.00
                 ii.  Coupon: 7.50%, payable semi-annually (current Series 1
                      coupon is 6.65%)
                 iii. Conversion Security and Option Price: $4.08 for
                      Algonquin Power Inc. shares, representing a conversion
                      premium of 20% over the most recent closing price of
                      the Fund's trust units of $3.40. (current Series 1
                      conversion price is $10.65 for Fund trust units)
                 iv.  Maturity: November 30, 2014

        In respect of the 6.20% convertible debentures maturing on
        November 30, 2016 ("Series 2"), holders of the Series 2 debentures
        will receive, for each $100 of Series 2 debenture principal, a
        convertible debenture issued by Algonquin Power Inc. with the
        following terms:

                 i.   Principal: $100.00
                 ii.  Coupon: 6.35%, payable semi-annually (current Series 2
                      coupon is 6.20%)
                 iii. Conversion Security and Option Price: $6.00 for
                      Algonquin Power Inc. shares (current Series 2
                      conversion price is $11.00 for Fund trust units)
                 iv.  Maturity: November 30, 2016
    

    In respect of the offers to be made for both the Series 1 and Series 2
debentures, all accrued interest will be paid up to the date of take-up under
the offers.
    "The exchange of Fund trust units for shares of Algonquin Power Inc. has
positive capital market and competitive environment implications for Algonquin
Power and the Board of Trustees believes that providing an attractive offer to
holders of the Fund's convertible debentures will allow them to participate in
Algonquin Power Inc.'s growth prospects." explained Ian Robertson, Executive
Director of the Fund. "The terms of the offers to convertible debenture
holders were structured to be attractive in the context of current credit
market conditions." he continued.

    Description of Transactions

    The transactions contemplated by the Agreement involve a number of steps:

    
    1.  Pursuant to a plan of arrangement (the "Plan of Arrangement"), the
        assets and liabilities of Hydrogenics Corporation ("Old Hydrogenics")
        will be transferred to a newly formed corporation ("New Hydrogenics")
        and the common shares of Old Hydrogenics will be redeemed for common
        shares in New Hydrogenics. Following such redemption, the original
        shareholders of Old Hydrogenics will have no interest in Old
        Hydrogenics.

    2.  Promptly following the completion of the Plan of Arrangement, Old
        Hydrogenics will be renamed Algonquin Power Inc.

    3.  Pursuant to the Agreement, take-over bid offers (the "Exchange
        Offers") shall be made (a) to holders of Fund trust units to exchange
        their trust units for common shares of Algonquin Power Inc., on a
        one-for-one basis and (b) to holders of Fund convertible debentures
        to exchange their convertible debentures for securities issued by
        Algonquin Power Inc. as described above, both simultaneously with the
        completion of the Plan of Arrangement.

    4.  Excluding Algonquin Power Inc. shares that may be issued under the CD
        Exchange Offer, the number of common shares of Algonquin Power Inc.
        outstanding immediately after the completion of the transactions will
        be exactly the same as the number of Fund trust units outstanding
        immediately before the transactions.

    5.  Algonquin Power Inc. will have additional tax attributes of
        approximately $192 million in excess of the existing tax attributes
        of the Fund. Immediately following closing under the Exchange Offers,
        Algonquin Power Inc. will pay New Hydrogenics approximately
        $10 million.
    

    Following completion of the above noted steps, unitholders of the Fund
will be shareholders of Algonquin Power Inc. and Algonquin Power Inc. will
hold 100% of the currently issued and outstanding trust units in the Fund. The
Fund will continue to exist in its current form as a trust owned by Algonquin
Power Inc. In the event all of the trust units of the Fund are acquired by
Algonquin Power Inc. and less than all of the convertible debentures are
acquired by Algonquin Power Inc., the Fund will remain a reporting issuer
until the maturity of the Series 1 and Series 2 convertible debentures.
    The completion of the transactions contemplated by the Agreement
including the Exchange Offers will be conditional upon, among other things,
(a) regulatory and court approval and the approval of the Plan of Arrangement
by at least two-thirds of the shareholders of Old Hydrogenics who vote on the
arrangement, (b) approval by at least two-thirds of Fund unitholders who vote
on a special resolution respecting the Agreement at the annual and special
meeting of unitholders currently scheduled for July 27, 2009 (two-thirds of
the votes cast at such meeting being referred to as the "Exchange Threshold")
and (c) Fund trust units representing not less than the Exchange Threshold
being validly deposited under the Exchange Offers. The completion of the
Exchange Offers will not be conditional upon any minimum percentage of the
Series 1 or Series 2 debentures being validly tendered. Complete details of
the transactions contemplated by the Agreement including additional detail
regarding the Exchange Offers will be filed by the Fund on SEDAR
(www.sedar.com) under the Fund's profile.
    BMO Capital Markets has been retained by the Board of Trustees of the
Fund to review the proposed terms of the CD Exchange Offers and provide
opinions as to the fairness, from a financial point of view, of the
consideration to be offered to holders of the Series 1 and Series 2
convertible debentures.
    In addition, the Manager of the Fund has entered into an expense
re-imbursement agreement with Old Hydrogenics, which provides for the payment
by one party to the other of professional advisory costs and expenses incurred
in connection with the proposed transaction, to a maximum amount of $1,000,000
if the transactions contemplated in the Agreement fail to close under certain
circumstances.
    The mailing of an information circular to the holders of Series 1 and
Series 2 convertible debentures regarding a meeting of debentureholders to be
held to consider an amendment to the trust indentures governing the Series 1
and Series 2 convertible debentures is expected in June, 2009. The mailing of
information regarding the Exchange Offers and related matters is expected in
August 2009.
    The Fund will hold a conference call on this matter at 10:00 a.m. eastern
time on Friday, June 12, 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: Friday, June 12, 2009
    Start Time: 10:00 a.m. eastern
    Phone Number: Toll free within North America: 1-800-731-6941
                  or local 416-644-3418.
    Conference ID No.: 21308877

    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 21308877 followed by number sign from
    June 12, 2009 until June 19, 2009.
    

    About Algonquin Power Income Fund

    Algonquin Power Income Fund owns and operates a diverse portfolio of
approximately $1 billion of clean, renewable power generation and sustainable
utility infrastructure assets across North America. The Fund's generation
portfolio includes 42 renewable energy facilities and 11 thermal energy
facilities representing more than 400MW of installed capacity and the Fund
provides regulated utility services to more than 70,000 customers through its
portfolio of 18 water distribution and wastewater treatment utility companies.
Algonquin Power Income Fund'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 Income Fund on the web at
www.AlgonquinPower.com.

    %SEDAR: 00009265E




For further information:

For further information: Kelly Castledine or Dave Kerr, Telephone: (905)
465-4500, Algonquin Power Income Fund, 2845 Bristol Circle, Oakville, Ontario,
L6H 7H7


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