Creststreet Power & Income Fund LP Reports Fourth Quarter and Annual 2007 Financial Results



    /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
    DISSEMINATION IN THE UNITED STATES/

    CALGARY, March 27 /CNW/ - Creststreet Power & Income Fund LP (the
"Partnership") (CRS.UN, CRS.DB, CRS.DB.A) today reported its fourth quarter
and 2007 annual financial results. Electrical based revenue for the year
ending December 31, 2007 was $17.6 million, an increase from $15.3 million for
2006 due to improved operating performance. The increase of $2.3 million over
2006 revenue was primarily due to higher wind speeds in the first quarter of
2007 compared to the first quarter of 2006 and improved turbine availability.
The Partnership's production was approximately 6% (2006: 17%) below
management's long-term projection. The wind energy projects delivered an
aggregate 271 gigawatt hours compared to 238 gigawatt hours in 2006 of
electricity to Hydro-Quebec and Nova Scotia Power in 2007 pursuant to their
long term power purchase agreements.
    Cash flow from operations before non-cash working capital changes for the
year ended December 31, 2007 was $7.1 million compared to $6.4 million in the
prior year due to improved turbine availability and wind performance in the
first quarter of 2007. The Partnership had cash flow from operations including
non-cash working capital items of $3.5 million for the year ended December 31,
2007, which was lower than the prior year in 2006 of $5.6 million cash flow,
as the improved operating performance was offset by an increase in non-cash
working capital items predominately due to continued growth in interest
receivable on the Kettles Hill Subordinated Notes investment. This receivable
will ultimately be collected when Kettles Hill completes its sale process. We
declared total cash distributions of $7.5 million by paying a monthly cash
distribution of $0.0542 per Unit during the year ended December 31, 2007
compared to distributions of $8.0 million in 2006. At December 31, 2007, the
Partnership had cash and cash equivalents of $2.7 million on hand.
Distributions to unitholders in 2007 were 46% tax deferred.
    On a quarterly basis, the Partnership recorded electrical based revenues
of $5.1 million in the fourth quarter of 2007 compared to $3.3 million in the
third quarter and $4.5 million in the fourth quarter of 2006. The primary
reason for the increase was higher wind speeds and not having lost nine days
of production in the fourth quarter of 2007 at Mount Copper as Hydro Quebec
was not switching the windpower facility to a new 161kv transmission line as
they did in 2006.

    Operations

    For the year ended December 31, 2007, Mount Copper's production was 6%
below Management's long term projection compared to 22% below in 2006. This
increase is due to higher wind speeds and improved turbine availability. In
the third quarter of 2007, production at Mount Copper was curtailed to 25
megawatts (MW) (from 54 MW) for 20 days during the quarter as Hydro-Quebec
performed maintenance work on its own transmission lines, this resulted in a
loss of revenue of approximately $0.26 million. Turbine availability at Mount
Copper for 2007 averaged approximately 94% which was greatly improved over the
prior year from 92%. While turbine availability was above the prior year it
was below warranted levels and as a result, the Partnership recorded and
subsequently received liquidated damages under its warranty agreement with
Vestas.
    For the year ended December 31, 2007, Pubnico Point's production was 5%
below management's long term projection compared to 6% below in 2006. The
majority of the deviation in energy production was the result of wind speeds
that were below the projected long-term average. The improvement from the
prior year related to improved turbine availability. Pubnico's turbine
availability for the year at 97.5% exceeded Management's expectations and
warranted levels.

    Distributions

    The Board of Directors of the Partnership has authorized monthly cash
distributions of $0.0542 per Unit to be paid according to the following
schedule:

    
    Distribution period       Record date        Payment date     $ per Unit
    -------------------------------------------------------------------------
    March 2008             March 31, 2008      April 15, 2008        $0.0542
    April 2008             April 30, 2008        May 15, 2008        $0.0542
    May 2008                 May 30, 2008       June 16, 2008        $0.0542
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    At December 31, 2007, the Partnership had 11.5 million units issued and
outstanding.

    Strategic Review

    Following the announcement of the taxation of distributions from income
trusts and limited partnerships in October, 2006 the Board of Directors of the
Partnership began to consider the impact on Limited Partner's Unit values. In
the third quarter of 2007 the independent members of the Board of Directors,
formed a Special Committee which was mandated to review strategic options
available to maximize Unitholder value. The Special Committee hired CIBC World
Markets Inc. and Davies Ward Phillips Vineberg LLP to assist them in this
process. The Special Committee has formally instructed CIBC World Markets Inc.
to begin a process to maximize Unitholder value. The work of the Special
Committee and its advisors is continuing.
    Kettles Hill announced substantial completion of its windpower project on
July 30, 2007. Kettles Hill is a 63 MW windpower facility in Southern Alberta
that has completed its construction, and that is producing and selling
electricity from all thirty five of its turbines. On March 5, 2007,
Creststreet Kettles Hill Windpower LP announced it had retained a financial
advisor to assist the Independent Committee of its Board of Directors on its
mandate to provide liquidity to its unitholders after completion of the
windpower project. On March 26th Creststreet Kettles Hill Windpower LP
announced it had entered into a Purchase and Sale Agreement with ENMAX Green
Power Inc. to sell all of the shares of Kettles Hill Wind Energy Inc. In
conjunction with this the Partnership has exercised its put option to have its
$35.90 million note investment purchased for cash for its principal amount
plus a 10% premium plus accrued and unpaid interest of $4.54 million at
December 31, 2007 and 50% of the amount, if any that the fair market value of
each Class A Share of Kettles Hill realized upon the change of control,
exceeds $1.87 per Class A share multiplied by the principal amount of the
Kettles Hill subordinated notes held by the Partnership divided by $1.70.

    2007 Tax Information

    The Partnership has released its 2007 tax information that is intended to
assist unitholders in completing their 2007 income tax returns and calculate
their adjusted cost base ("ACB")
    Of the distributions paid in 2007, 46% is non-taxable as return of
capital and 54% is taxable income.
    The following table summarizes information on the 2007 cash distributions
declared by the Partnership on a per unit basis. Unitholders are required by
the Income Tax Act (Canada), to report taxable amounts allocated to them on
their federal and provincial 2007 income tax return.
    T5013 and Relevé 15 tax slips for the 2007 tax year will be prepared and
provided by the Investment Dealer through which you hold the units of the
Partnership. This information is required to be reported to you no later than
March 31, 2008. If you do not receive the tax information by this date, please
contact your Investment Advisor directly.

    
    -------------------------------------------------------------------------
                                                     Taxable
                                                     Box 51
                                            Taxable  Taxable Box 27:
                                   Taxable:  Box 50  Divi-    Non
                            Total   Box 22  Interest dends  Taxable:  Box 34
                           Distri- Business   from    from   Return    Gross
      Record     Payment   bution    Loss/    Cdn.    Cdn.     of      Loss/
       Date        Date       C$    Income  Sources Sources Capital   Income
    -------------------------------------------------------------------------
    2007-01-30  2007-02-15  0.0542 (0.0819) 0.0730  0.0286   0.0345  0.06511
    -------------------------------------------------------------------------
    2007-02-28  2007-03-15  0.0542 (0.1022) 0.0727  0.0286   0.0552  0.09795
    -------------------------------------------------------------------------
    2007-03-30  2007-04-16  0.0542 (0.0248) 0.0724  0.0286        -  0.11977
    -------------------------------------------------------------------------
    2007-04-30  2007-05-15  0.0542 (0.0726) 0.0728  0.0286   0.0254  0.17284
    -------------------------------------------------------------------------
    2007-05-31  2007-06-15  0.0542 (0.0735) 0.0752  0.0286   0.0240  0.14039
    -------------------------------------------------------------------------
    2007-06-29  2007-07-16  0.0542 (0.0729) 0.0728  0.0286   0.0258  0.07397
    -------------------------------------------------------------------------
    2007-07-31  2007-08-15  0.0542 (0.0743) 0.0758  0.0286   0.0241  0.19715
    -------------------------------------------------------------------------
    2007-08-31  2007-09-14  0.0542 (0.0759) 0.0771  0.0286   0.0244  0.07782
    -------------------------------------------------------------------------
    2007-09-28  2007-10-15  0.0542 (0.0749) 0.0745  0.0286   0.0261  0.07518
    -------------------------------------------------------------------------
    2007-10-31  2007-11-15  0.0542 (0.0765) 0.0768  0.0286   0.0254  0.07762
    -------------------------------------------------------------------------
    2007-11-30  2007-12-14  0.0542 (0.0774) 0.0743  0.0286   0.0288  0.07499
    -------------------------------------------------------------------------
    2007-12-31  2008-01-15  0.0542 (0.0776) 0.0766  0.0286   0.0266  0.09022
    -------------------------------------------------------------------------
    

    About Creststreet Power & Income Fund LP

    Creststreet Power & Income Fund LP (the "Partnership") owns and operates
two wind energy projects in Quebec and Nova Scotia with a total of 47 wind
turbines and power generating capacity of 84.6 megawatts. All electricity
generated by these wind energy projects is being sold pursuant to long-term
power purchase agreements with provincial electricity utilities.

    CERTAIN STATEMENTS INCLUDED IN THIS NEWS RELEASE CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT
(ONTARIO) INCLUDING THE OUTCOME OF THE STRATEGIC REVIEW PROCESS. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS
OF THE PARTNERSHIP TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS.
    THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS
THE EXPECTATIONS OF CRESTSTREET POWER & INCOME FUND LP AS AT MARCH 27, 2008
AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. HOWEVER, CRESTSTREET
POWER & INCOME FUND LP EXPRESSLY DISCLAIMS ANY INTENTION OR OBLIGATION TO
UPDATE OR REVISE ANY FORWARD-LOOKING INFORMATION, WHETHER AS A RESULT OF NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY APPLICABLE LAW.


    
    Consolidated Balance Sheets

                                                         As at         As at
                                                   December 31,  December 31,
    (In Thousands)                                        2007          2006
    -------------------------------------------------------------------------
    Assets :
    Current Assets
    Cash and cash equivalents                        $   2,454     $   5,721
    Restricted cash                                        225           225
    Accounts receivable                                  2,716         2,908
    Due from related parties                             4,780         1,363
    Prepaid and other assets                               449           347
    -------------------------------------------------------------------------
                                                        10,624        10,564
    Prepaid and other assets                               207            89
    Notes receivable                                    35,712        33,219
    Deferred charges                                         -         3,850
    Plant and equipment                                120,560       127,146
    Pre-operating costs                                    115           198
    Intangible asset                                     4,401         4,696
    -------------------------------------------------------------------------
                                                     $ 171,619     $ 179,762
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities:
    Current Liabilities
    Accounts payable and accrued liabilities         $   2,682     $   2,865
    Deferred revenue                                         -            33
    Distribution payable                                   623           623
    Due to related parties                               5,535         2,501
    -------------------------------------------------------------------------
                                                         8,840         6,022
    Notes payable                                       46,971        44,000
    Unsecured convertible debentures                    53,318        55,532
    Deferred revenue                                         -            64
    Asset retirement obligation                          1,418         1,280
    Future income tax liability                          8,401        10,127
    -------------------------------------------------------------------------
                                                       118,948       117,025
    Partners' capital                                   67,635        75,156
    Deficit and accumulated other comprehensive loss   (14,964)      (12,419)
    -------------------------------------------------------------------------
                                                     $ 171,619     $ 179,762
    -------------------------------------------------------------------------



    Consolidated Statements of Operations and Comprehensive Loss

                                                    Year Ended    Year Ended
                                                   December 31,  December 31,
    (In Thousands except per unit amounts)                2007          2006
    -------------------------------------------------------------------------
    Revenue:
    Electricity sales                                $  16,845     $  14,721
    Windpower production incentive                         723           607
    Investment income                                    3,710         2,231
    -------------------------------------------------------------------------
                                                        21,278        17,559

    Expenses:
    Operating costs                                      3,059         2,600
    Management fees                                        465           855
    Administrative costs                                 2,552         2,546
    Strategic review costs                                 623             -
    Unrealized loss on financial instrument              2,823           832
    Realized loss on settlement of financial
     instrument - 3Ci acquisition                            -         4,098
    Amortization of deferred charges                         -           805
    Amortization of intangible assets                      295           294
    Amortization of plant and equipment                  6,949         7,032
    Amortization of pre-operating costs                     83            82
    Accretion on asset retirement obligation               138            26
    Interest expense                                     8,556         5,363
    -------------------------------------------------------------------------
    Loss before income taxes and non-controlling
     interest                                           (4,265)       (6,974)
    -------------------------------------------------------------------------
    Income taxes
      Future income tax recovery                        (1,769)       (1,739)
    -------------------------------------------------------------------------
                                                        (1,769)       (1,739)
    Non-controlling interest                               426           401
    -------------------------------------------------------------------------
    Loss and comprehensive loss                         (2,922)       (5,636)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Loss per unit - basic and diluted                $   (0.25)    $   (0.49)
    -------------------------------------------------------------------------
    Weighted average number of units                    11,501        11,501
    -------------------------------------------------------------------------

    Deficit, beginning of year, as previously
     reported                                        $ (12,419)    $  (6,783)
    Financial instruments - recognition and
     measurement (Note 2)                                  377             -
    -------------------------------------------------------------------------
    Restated deficit, beginning of year                (12,042)       (6,783)
    Net Loss                                            (2,922)       (5,636)
    -------------------------------------------------------------------------
    Deficit, end of year                             $ (14,964)    $ (12,419)
    -------------------------------------------------------------------------
    Accumulated other comprehensive loss                     -             -
    -------------------------------------------------------------------------
    Deficit and accumulated other comprehensive loss $ (14,964)    $ (12,419)
    -------------------------------------------------------------------------



    Consolidated Statements of Partners' Capital

                                                    Year Ended    Year Ended
                                                   December 31,  December 31,
    (In Thousands)                                        2007          2006
    -------------------------------------------------------------------------
    Partners' capital - beginning of year            $  75,156     $  81,980
    Unsecured convertible debentures option value          (40)        1,144
    Distributions declared to the unitholders           (7,481)       (7,968)
    -------------------------------------------------------------------------
    Partners' capital - end of year                  $  67,635     $  75,156
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows

                                                    Year Ended    Year Ended
                                                   December 31,  December 31,
    (In Thousands)                                        2007          2006
    -------------------------------------------------------------------------
    Cash flows from operating activities:
      Net loss                                       $  (2,922)    $  (5,636)
      Add (deduct) items not affecting cash:
      Unrealized loss on financial instrument            2,823           832
      Realized loss on settlement of financial
       instrument - 3Ci acquisition                          -         4,098
      Warrant option                                      (148)          (24)
      Amortization of deferred charges                       -           805
      Amortization of intangible assets                    295           294
      Amortization of plant and equipment                6,949         7,032
      Amortization of pre-operating costs                   83            82
      Accretion of asset retirement obligation             138            26
      Accretion of interest expense                      1,329           190
      Accretion of interest income                         (61)            -
      Recognition of revenue on redemption of EFC
       Notes                                               (51)            -
      Future income tax recovery                        (1,769)       (1,739)
      Non-controlling interest                             426           401
    -------------------------------------------------------------------------
                                                         7,092         6,361

      Non-cash operating working capital:
      Decrease in accounts receivable                      192            90
      Decrease (increase) in prepaid and other assets      (72)           91
      Increase (decrease) in accounts payable and
       accrued liabilities                                (180)          318
      Increase in deferred revenue                           -            97
      Increase in amounts due to/from related parties   (3,534)       (1,328)
    -------------------------------------------------------------------------
                                                         3,498         5,629
    -------------------------------------------------------------------------
    Cash flows used in financing activities:
      Finance issue costs                                    -        (2,133)
      Increase in notes payable (net)                    3,659        14,000
      Issue of unsecured convertible debentures              -        30,000
      Dividends to non-controlling interest               (476)         (396)
      Realized loss on settlement of financial
       instrument - 3Ci acquisition                          -        (4,098)
      Distributions to unitholders                      (7,481)       (8,066)
    -------------------------------------------------------------------------
                                                        (4,298)       29,307
    -------------------------------------------------------------------------
      Cash flows used in investing activities:
      Decrease in restricted cash                            -         6,143
      Net increase in loans receivable                  (2,481)      (33,219)
      Decrease (increase) into plant and equipment          14        (6,034)
    -------------------------------------------------------------------------
                                                        (2,467)      (33,110)
    -------------------------------------------------------------------------
    Net increase (decrease) in cash                     (3,267)        1,826
    Cash and cash equivalents, beginning of year         5,721         3,895
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of year           $   2,454     $   5,721
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash information:
    Interest paid                                    $   7,595     $   4,055
    Interest received                                $    (240)    $    (523)
    Large corporate tax paid                         $       -     $      40
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Derren Newell, VP, Finance and CFO, Creststreet
Power & Income General Partner Limited, Tel: (403) 513-0766, E-mail:
dnewell@creststreet.com

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