Boralex Has a Very Satisfactory Start to Year

MONTREAL, May 11 /CNW Telbec/ - Boralex Inc. ("Boralex" or the "Corporation") closed its first quarter 2010 with adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") (1) of $21.4 million, up 5.9% compared to $20.2 million for the same period in 2009.

"We are very satisfied with the first quarter results. Boralex is also pleased with its recent announced proposal to buy all of the issued and outstanding trust units of the Boralex Power Income Fund," said Patrick Lemaire, President and Chief Executive Officer of Boralex Inc. If Boralex acquires the Fund, it will add top quality assets to its portfolio, bringing its installed capacity to about 600 MW and reducing the Corporation's exposure to volatility in electricity prices in the United States. "From this standpoint we think this acquisition is entirely consistent with the Corporation's strategy to achieve 1,000 MW within the next four years" said Mr. Lemaire.

    
    (in millions of dollars, except per share data)
    -------------------------------------------------------------------------
                                                             Three-month
                                                            periods ended
                                                      -----------------------
                                                      March 31,     March 31,
                                                          2010          2009
                                                      -----------------------
    Data as reported in the financial statements
    Revenues from energy sales                            51.0          57.2
    EBITDA                                                17.6          21.0
    Net earnings                                           1.3           7.2
      per share (basic and diluted)                      $0.04         $0.19
    Cash flows from operations                            15.5          15.3

    Adjusted data
    Adjusted EBITDA                                       21.4          20.2
    Adjusted net earnings                                  5.5           6.7
      per share (basic and diluted)                      $0.15         $0.18
    -------------------------------------------------------------------------
    

Revenues from energy sales amounted to $51.0 million, down $6.2 million compared to the first quarter 2009. These results are mainly due to the rise in the Canadian dollar versus the U.S. dollar and the euro, and to lower electricity prices on the U.S. market. However, the decrease in results was offset by start-ups in the wind power segment. At a constant exchange rate, revenues would have risen 3.8%. The 5.9% increase in adjusted EBITDA stems mainly from lower fuel costs and the Corporation's expansion in installed capacity in the wind power and hydroelectric power segments over the past 12 months.

During the quarter, the refinancing of Boralex's loan for Phase I of the Thames River wind power site resulted in about $36 million in additional debt. In addition, the Corporation had to write off deferred financing expenses incurred for the first financing arrangement, which had an unfavourable impact of $2.7 million on first quarter 2010 results. Lastly, there was an amount of $3.7 million in asset impairments for the Dolbeau thermal power station, which belongs to the Fund. Excluding specific items net of income taxes for the first quarter of 2010 and 2009, net earnings would have been $5.5 million or $0.15 per share compared to net earnings of $6.7 million or $0.18 per share for the same period in 2009.

In the quarter ended March 31, 2010, the wind power segment generated revenue from energy sales of $11.4 million and EBITDA of $9.4 million, up 25.3% and 30.6% respectively over first quarter 2009 results. This increase is due mainly to the 48.6% increase in production volume from the start-up of 40 MW in Phase I of the Thames River wind farm.

The hydroelectric power stations reported revenue of $3.1 million, up 10.7%, and EBITDA of $1.9 million, up 11.8% over the first quarter 2009. These increases are primarily due to the contribution of the Ocean Falls power station.

The wood-residue segment felt the effects of a difficult economic context, marked by weak electricity prices in the U.S. and an unfavourable exchange rate, but it also benefited from a significant reduction in fuel costs thanks to greater efficiency and the new Biomass Crop Assistance Program. As a result, for the first quarter 2010, this segment generated revenue of $30.2 million versus $38.2 million in the same quarter in 2009 and the segment's EBITDA stood at $10.0 million compared to $11.8 million in 2009.

The natural gas plant ended the first quarter 2010 with revenue of $6.3 million, compared to $7.2 million a year ago, primarily due to currency fluctuations. Excluding this element, the lower average electricity price was offset by an increase of 5.4% in steam sales volume. EBITDA, at a constant exchange rate, rose 46.7% over the first quarter 2009.

Lastly, operating activities in the first quarter 2010 generated total cash flows of $22.3 million versus $14.3 million in the first quarter 2009. The Corporation has a solid cash balance of more than $66 million, which gives it significant financial flexibility for pursuing its growth strategy.

About Boralex

Boralex is a major independent power producer whose core business is the development and operation of power stations that generate renewable energy.

Employing over 300 people, the Corporation operates 28 power stations with a total installed capacity of 410 megawatts ("MW") in Canada, in the Northeastern United States and in France. In addition, the Corporation has, alone or with its European and Canadian partners, power projects under development that will add close to 300 MW of power, of which almost 100 MW will come online by the end of fiscal 2010. Boralex is distinguished by its diversified expertise and in-depth experience in three power generation segments - wind, hydroelectric and thermal. Boralex also holds a 23% interest in Boralex Power Income Fund, which has 10 power stations with a total installed capacity of 190 MW in Québec and the United States. These sites are managed by Boralex. Boralex shares are listed on the Toronto Stock Exchange (TSX) under the ticker symbol BLX. More information is available at www.boralex.com or www.sedar.com.

Certain statements contained in this press release, including those regarding future results and performance, are forward-looking statements based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the general impact of economic conditions, raw material price increases and availability, currency fluctuations, fluctuations in electricity selling prices, the Company's financing capacity, adverse changes in general market and industry conditions, as well as other factors listed in the Company's filings with different securities commissions.

The summarized financial statements included in this press release also contain certain financial measurements that are not recognized as Generally Accepted Accounting Principles of Canada (GAAP). To assess the operating performance of its assets and reporting segments, the Corporation uses earnings before interest, taxes, depreciation and amortization (EBITDA) and cash flows from operations as performance measurements. These measures are not defined under GAAP and do not have a standardized definition prescribed by GAAP. Therefore, they may not be comparable to similar measures presented by other companies. EBITDA corresponds to Operating income before amortization as defined in the summarized financial statements included with this press release. Cash flows from operations corresponds to cash flows from operating activities before changes in non-cash working capital items as disclosed in the consolidated statements of cash flows attached in this press release.

The following table reconciles EBITDA and net earnings as reported in the financial statements with adjusted EBITDA and net earnings:

    
    -------------------------------------------------------------------------
                                  EBITDA for the     *Net earnings for the
                                  quarters ended              quarters ended
                        -----------------------------------------------------
    (in thousands         March 31,     March 31,     March 31,     March 31,
     of dollars)              2010          2009          2010          2009
    -------------------------------------------------------------------------

    As reported in the
     financial statements   17,632        20,952         1,348         7,212
      Specific items:
        Share of Boralex
         in impairment of
         property, plant
         and equipment at
         a power station
         owned by the
         Fund                3,721             -         2,739             -
        Amortization of
         balance of
         deferred
         financing costs
         under former
         financing for
         Phase I of
         Thames River            -             -         1,915             -
        Gain on sale of
         subsidiary              -             -          (519)            -
        Gain on disposal
         of investment in
         subsidiary              -          (720)            -          (482)
    -------------------------------------------------------------------------
    Adjusted data           21,353        20,232         5,483         6,730

    * Impact net of
        income taxes
    -------------------------------------------------------------------------


    ----------------------------------
    (1) Non-GAAP performance measure, refer to the reconciliation table at
    the end of this press release.

    Consolidated Balance Sheets

                                                         As at         As at
                                                      March 31,  December 31,
    (in thousands of dollars) (unaudited)                 2010          2009
    -------------------------------------------------------------------------

    ASSETS
    CURRENT ASSETS
    Cash and cash equivalents                           66,388        37,821
    Restricted cash                                     94,287             -
    Accounts receivable                                 37,238        39,632
    Future income taxes                                    471           422
    Inventories                                          7,633         8,726
    Prepaid expenses                                     3,216         2,537
    Fair value of derivative financial instruments      10,226             -
    -------------------------------------------------------------------------
                                                       219,459        89,138
    Investment                                          52,121        55,446
    Property, plant and equipment                      414,112       413,539
    Power sales contracts                               46,238        49,023
    Other assets                                        44,486        56,621
    -------------------------------------------------------------------------
                                                       776,416       663,767
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    CURRENT LIABILITIES
    Bank loans and advances                              7,794        12,291
    Accounts payable and accrued liabilities            46,661        28,913
    Income taxes                                         2,338           283
    Current portion of long-term debt                   18,121        24,273
    -------------------------------------------------------------------------
                                                        74,914        65,760
    Long-term debt                                     321,571       206,116
    Future income taxes                                 35,650        37,185
    Fair value of derivative financial instruments       9,523         7,645
    Non-controlling interests                            7,299         7,031
    -------------------------------------------------------------------------
                                                       448,957       323,737
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Capital stock                                      222,694       222,694
    Contributed surplus                                  4,617         4,295
    Retained earnings                                  161,248       159,900
    Accumulated other comprehensive loss               (61,100)      (46,859)
    -------------------------------------------------------------------------
                                                       327,459       340,030
    -------------------------------------------------------------------------
                                                       776,416       663,767
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Earnings

                                                            FOR THE QUARTERS
                                                              ENDED MARCH 31,
    (in thousands of dollars, except per share
     amounts and number of shares) (unaudited)            2010          2009
    -------------------------------------------------------------------------

    Revenues from energy sales                          51,004        57,198
    Renewable energy tax credits                             -         3,488
    Operating costs                                     28,496        39,653
    -------------------------------------------------------------------------
                                                        22,508        21,033
    Share in earnings of the Fund                       (1,461)        2,303
    Management revenues from the Fund                    1,755         1,380
    Other income                                           300         1,504
    -------------------------------------------------------------------------
                                                        23,102        26,220
    -------------------------------------------------------------------------

    OTHER EXPENSES
    Management and operation of the Fund                 1,505         1,129
    Administrative                                       3,965         4,139
    -------------------------------------------------------------------------
                                                         5,470         5,268
    -------------------------------------------------------------------------

    OPERATING INCOME BEFORE AMORTIZATION                17,632        20,952

    Amortization                                         7,699         6,465
    Foreign exchange loss (gain)                           876           (43)
    Net gain on financial instruments                     (560)         (115)
    Financing costs                                      5,762         3,418
    Gain on sale of subsidiary                            (774)            -
    -------------------------------------------------------------------------
                                                        13,003         9,725
    -------------------------------------------------------------------------

    EARNINGS BEFORE INCOME TAXES                         4,629        11,227

    Income taxes                                         3,001         3,956
    -------------------------------------------------------------------------
                                                         1,628         7,271
    Non-controlling interests                             (280)          (59)
    -------------------------------------------------------------------------

    NET EARNINGS                                         1,348         7,212

    Net earnings per Class A share (basic)                0.04          0.19
    Net earnings per Class A share (diluted)              0.04          0.19
    Weighted average number of Class A shares
     outstanding (basic)                            37,740,921    37,740,921
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Retained Earnings

                                                            FOR THE QUARTERS
                                                              ENDED MARCH 31,

    (in thousands of dollars) (unaudited)                 2010          2009
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Balance - beginning of period                      159,900       135,461
    Net earnings for the period                          1,348         7,212
    -------------------------------------------------------------------------

    Balance - end of period                            161,248       142,673
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Comprehensive Income (Loss)

                                                            FOR THE QUARTERS
                                                              ENDED MARCH 31,

    (in thousands of dollars) (unaudited)                 2010          2009
    -------------------------------------------------------------------------

    Net earnings for the period                          1,348         7,212
    -------------------------------------------------------------------------

    Other comprehensive income (loss)
      TRANSLATION ADJUSTMENTS
      Unrealized foreign exchange gain (loss) on
       translation of financial statements of
       self-sustaining foreign operations               (9,300)        4,751
      Reclassification to net earnings of a realized
       foreign exchange loss (gain) related to the
       reduction of net investment in self-sustaining
       foreign operations                                  422           (65)
      Share of cumulative translation adjustments of
       the Fund                                           (478)          539
      Taxes                                                  6          (127)
      CASH FLOW HEDGES
      Change in fair value of financial instruments     (5,595)        6,726
      Hedging items realized and recognized in net
       earnings                                         (1,219)       (6,677)
      Hedging items realized and recognized in
       balance sheet                                     1,146        (1,097)
      Taxes                                                777           (42)
    -------------------------------------------------------------------------
                                                       (14,241)        4,008
    -------------------------------------------------------------------------
    Comprehensive income (loss) for the period         (12,893)       11,220
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Cash Flows

                                                            FOR THE QUARTERS
                                                              ENDED MARCH 31,

    (in thousands of dollars) (unaudited)                 2010          2009
    -------------------------------------------------------------------------

    Operating Activities
    Net earnings                                         1,348         7,212
    Distributions received from the Fund                 1,721         2,409
    Adjustments for non-cash items
      Net gain on financial instruments                   (560)         (115)
      Share of earnings of the Fund                      1,461        (2,303)
      Amortization                                       7,699         6,465
      Amortization of financing costs and
       monetization program expenses                     2,918           772
      Renewable energy tax credits                         907          (867)
      Gain on sale of subsidiary                          (774)            -
      Future income taxes                                   51         2,143
      Other                                                761          (395)
    -------------------------------------------------------------------------
                                                        15,532        15,321
    Change in non-cash working capital items             6,766        (1,040)
    -------------------------------------------------------------------------
                                                        22,298        14,281
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Additions to property, plant and
     equipment-projects under construction             (16,188)       (5,233)
    Additions to property, plant and
     equipment-power stations in operation              (4,520)       (1,530)
    Change in restricted cash                          (94,287)            -
    Proceeds from sale of a subsidiary                     878             -
    Change in restricted funds                             857           (21)
    Development projects                                   (45)       (5,885)
    Other                                                  958        (3,324)
    -------------------------------------------------------------------------
                                                      (112,347)      (15,993)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Increase (decrease) in bank loans and advances      (4,427)        3,689
    Increase in long-term debt                         188,549             -
    Payments on long-term debt                         (59,417)       (6,691)
    -------------------------------------------------------------------------
                                                       124,705        (3,002)
    -------------------------------------------------------------------------
    TRANSLATION ADJUSTMENT ON CASH AND CASH
     EQUIVALENTS                                        (6,089)       (2,090)
    -------------------------------------------------------------------------
    NET CHANGE IN CASH AND CASH EQUIVALENTS             28,567        (6,804)
    CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD     37,821        69,195
    -------------------------------------------------------------------------
    CASH AND CASH EQUIVALENTS - END OF PERIOD           66,388        62,391
    -------------------------------------------------------------------------

    SUPPLEMENTAL INFORMATION
    CASH AND CASH EQUIVALENTS PAID FOR:
      Interest                                           2,937         2,116
      Income taxes                                         220           269
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SEGMENTED INFORMATION

The Corporation's power stations are grouped into four distinct segments: wind power, hydroelectric power, wood-residue thermal power and natural gas thermal power, and are engaged mainly in power generation. The classification of these segments is based on the different cost structures relating to each of the four types of power stations. The main accounting policies that apply to the operating segments are the same as those described in note 2 in the Fund's 2009 annual report.

The Corporation analyzes the performance of its operating segments based on the earnings before interest, taxes, depreciation and amortization ("EBITDA"). EBITDA is not a measure of performance under Canadian GAAP; however, management uses this measure to assess the operating performance of its segments. EBITDA corresponds to Operating income before amortization. Results for each segment are presented on the same basis as those of the Corporation.

The following table reconciles EBITDA with net earnings:

    
                                                            FOR THE QUARTERS
                                                              ENDED MARCH 31,
    -------------------------------------------------------------------------
                                                          2010          2009
    -------------------------------------------------------------------------
    Net earnings                                         1,348         7,212
    Non-controlling interests                              280            59
    Income taxes                                         3,001         3,956
    Gain on sale of subsidiary                            (774)            -
    Financing costs                                      5,762         3,418
    Net gain on financial instruments                     (560)         (115)
    Foreign exchange loss (gain)                           876           (43)
    Amortization                                         7,699         6,465
    -------------------------------------------------------------------------
    EBITDA                                              17,632        20,952
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    INFORMATION BY SEGMENT

                                FOR THE QUARTERS            FOR THE QUARTERS
                                  ENDED MARCH 31,             ENDED MARCH 31,
    -------------------------------------------------------------------------
                              2010          2009          2010          2009
    -------------------------------------------------------------------------
                                                        Revenues from energy
                           Power generation (MWh)                      sales
                         ----------------------------------------------------
    Wind farms              90,291        60,761        11,413         9,083
    Hydroelectric power
     stations               40,309        35,666         3,054         2,760
    Wood-residue thermal
     power stations        320,057       296,688        30,216        38,181
    Natural gas thermal
     power station          22,430        22,613         6,321         7,174
    -------------------------------------------------------------------------
                           473,087       415,728        51,004        57,198
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                       Additions to property,
                                          EBITDA         plant and equipment
                         ----------------------------------------------------
    Wind farms               9,419         7,215        19,342         5,141
    Hydroelectric power
     stations                1,873         1,709           215             -
    Wood-residue thermal
     power stations         10,028        11,803           984         1,459
    Natural gas thermal
     power station           2,038         1,511             3            22
    Corporate and
     eliminations           (5,726)       (1,286)          164           141
    -------------------------------------------------------------------------
                            17,632        20,952        20,708         6,763
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                             AS AT         AS AT         AS AT         AS AT
                          MARCH 31,  DECEMBER 31,     MARCH 31,  DECEMBER 31,
                              2010          2009          2010          2009
    -------------------------------------------------------------------------
                                                         Property, plant and
                                    Total assets                   equipment
                         ----------------------------------------------------
    Wind farms             480,490       363,644       293,679       288,225
    Hydroelectric power
     stations               35,564        34,622        25,388        25,758
    Wood-residue thermal
     power stations        136,317       138,014        81,437        84,660
    Natural gas thermal
     power station          13,088        13,600         6,293         7,150
    Corporate and
     eliminations          110,957       113,887         7,315         7,746
    -------------------------------------------------------------------------
                           776,416       663,767       414,112       413,539
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    INFORMATION BY GEOGRAPHIC SEGMENT

                                FOR THE QUARTERS            FOR THE QUARTERS
                                  ENDED MARCH 31,             ENDED MARCH 31,
    -------------------------------------------------------------------------
                              2010          2009          2010          2009
    -------------------------------------------------------------------------
                                                        Revenues from energy
                           Power generation (MWh)                      sales
                         ----------------------------------------------------
    United States          350,942       327,651        32,137        40,604
    France                  85,317        83,374        14,432        16,257
    Canada                  36,828         4,703         4,435           337
    -------------------------------------------------------------------------
                           473,087       415,728        51,004        57,198
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                       Additions to property,
                                          EBITDA         plant and equipment
                         ----------------------------------------------------
    United States           11,051        13,236         1,171         1,377
    France                   7,068         7,807        15,552           233
    Canada                    (487)          (91)        3,985         5,153
    -------------------------------------------------------------------------
                            17,632        20,952        20,708         6,763
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                             AS AT         AS AT         AS AT         AS AT
                          MARCH 31,  DECEMBER 31,     MARCH 31,  DECEMBER 31,
                              2010          2009          2010          2009
    -------------------------------------------------------------------------
                                                         Property, plant and
                                    Total assets                   equipment
                         ----------------------------------------------------
    United States          173,884       179,494        86,152        89,889
    France                 234,782       254,142       176,902       190,797
    Canada                 367,750       230,131       151,058       132,853
    -------------------------------------------------------------------------
                           776,416       663,767       414,112       413,539
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SUBSEQUENT EVENT

On May 3, 2010, Boralex and the Fund jointly announced that they have entered into a definitive support agreement, pursuant to which Boralex, through one of its wholly-owned subsidiaries, has offered to acquire by way of a take-over bid (the "Offer") all of the issued and outstanding trust units in the capital of the Fund (the "Units") in exchange for $5 cash equivalent value per Unit in the form of 6.25% Convertible Unsecured Subordinated Debentures of Boralex (the "Debentures"). Boralex has agreed to offer holders of Units ("Unitholders") $100 principal amount of Debentures for each 20 units held.

The special committee of independent trustees of Boralex Power Trust (the "Special Committee") and the Board of Trustees have unanimously determined that the Offer is fair to Unitholders other than Boralex and is in the best interest of the Fund and such Unitholders.

A take-over bid circular containing the full details of the Offer and other related documents are expected to be mailed to Unitholders no later than May 21, 2010.

The Offer is conditional on the deposit in response to the Offer of at least 66 2/3% of the outstanding Units, and a majority of the Units not controlled by Boralex, the receipt of any necessary regulatory approvals and satisfaction or waiver of other customary conditions.

Under the terms of the support agreement, the Fund has agreed that it will not solicit or initiate any competing third-party proposals. In the event that the transaction is not completed in certain circumstances, the Fund has agreed to pay Boralex a termination fee of approximately $6,800,000.

This transaction will be described in more detail in the joint information circular which will be filed no later than May 21, 2010 with the regulatory authorities.

SOURCE Boralex Inc.

For further information: For further information: Ms. Patricia Lemaire, Director, Publics Affairs and Communications, Boralex Inc., (514) 985-1353, patricia.lemaire@boralex.com


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