LS Power and Global Infrastructure Partners Jointly Propose Acquisition of TransAlta for C$39 per Share



    
        Proposal would provide a 21 percent premium to TransAlta shareholders
             as of the close of markets on Friday July 18, 2008

    TransAlta headquarters and corporate infrastructure would remain
                                 in Alberta

      Support of TransAlta Board of Directors and management sought
                               for transaction
    

    NEW YORK CITY, July 21 /CNW Telbec/ - LS Power Equity Partners (LS Power)
and Global Infrastructure Partners (GIP) today announced that they have
jointly made a proposal (see letter attached) to TransAlta Corporation
(TSX:TA, NYSE:  TAC) to acquire all outstanding TransAlta common stock for a
price per share of C$39 in an all-cash transaction. The proposal represents a
21 percent premium above the closing price of TransAlta common stock on July
18, 2008 and a premium to the stock's 52-week (and all time) high.
    "We have a great deal of respect for TransAlta, its employees, its Board
of Directors, its management team led by Steve Snyder, and its heritage.
Furthermore, we have confidence in the underlying value proposition that
TransAlta's business provides," said James Bartlett, President of LS Power
Equity Advisors, LLC, speaking on behalf of LS Power and GIP. "To that end, we
believe that our proposal for TransAlta provides shareholders with compelling
value. It also provides continuity for the company's customers, employees,
management and communities where it operates."
    LS Power and its affiliates are shareholders of TransAlta and currently
hold approximately nine (9) percent of TransAlta's common stock. This proposal
is being made public pursuant to US securities regulations.

    Compelling proposal

    The proposed transaction offers TransAlta shareholders compelling value.
This fact, coupled with the commitment to maintaining TransAlta's
well-deserved status as a corporate leader in the Albertan and Canadian
business communities, makes this an attractive proposal for all stakeholders.
TransAlta would continue on a business-as-usual basis, headquartered in
Calgary.
    LS Power and GIP are committed to working closely with TransAlta's Board
of Directors and management as they evaluate this proposal. The goal is to
successfully complete a consensual, negotiated transaction that is supported
by the TransAlta Board of Directors and management.

    The right partners for TransAlta

    LS Power is an experienced owner and operator of power generation assets
throughout the United States. GIP is an organization that invests in
infrastructure companies and assets worldwide. In a private company structure,
with owners taking a long-term view, TransAlta and its leadership would have
significant flexibility in making strategic investments and plans that benefit
stakeholders.
    "We are convinced that we are the right partners for TransAlta, as
management would have enhanced flexibility to execute longer-term strategies
for growth," concluded Mr. Bartlett.

    About LS Power

    LS Power is a fully integrated power sector focused development,
investment and asset management group with a proven track record of successful
development activities, operations management and commercial execution.
LS Power has developed gas-fired and coal-fired facilities in various
jurisdictions. LS Power currently owns and is developing a diverse mix of
power generation facilities fueled by natural gas, coal, and renewable
resources, including wind and solar.
    For more information please visit: www.lspower.com

    About Global Infrastructure Partners

    Global Infrastructure Partners is an independent fund that invests
worldwide in infrastructure assets in both OECD and select emerging market
countries. GIP targets investments in single assets, portfolios of assets, and
companies in the energy, transport, water, and waste management sectors. GIP
has offices in New York, London and Hong Kong and Operational Headquarters in
Stamford, Connecticut. Credit Suisse and General Electric are the founding
investors of GIP. For more information please visit: www.global-infra.com


    Letter sent to the CEO of TransAlta
    -----------------------------------

    Following is the text of the letter sent to the CEO of TransAlta with
respect to the proposal, and filed this morning with the U.S. Securities and
Exchange Commission by LS Power:


    
    July 18, 2008

    Dear Mr. Snyder:

    As recently discussed with you, we have a great deal of respect for
    TransAlta Corporation, its Board of Directors and its management team and
    believe fully in the underlying value proposition of your business.
    LS Power Equity Partners ("LS Power") has demonstrated the strength of
    its conviction by becoming your largest shareholder, holding 9% of the
    current shares outstanding.

    While we are enthusiastic about TransAlta, we continue to believe that
    the TransAlta is undervalued and will not be fairly valued as a public
    company. It is for that reason that we believe that your shareholders
    would be best served by an acquisition of TransAlta. To that end, we have
    evaluated a possible acquisition of TransAlta by LS Power and Global
    Infrastructure Partners ("GIP") and are convinced that we can offer a
    proposal that presents compelling value to TransAlta shareholders. Our
    goal is to consummate a consensual, negotiated transaction that is
    supported by the TransAlta Board of Directors and management. In this
    spirit, we ask the TransAlta Board of Directors to seriously consider
    this proposal and engage with us in a meaningful dialogue.

    We propose that LS Power and GIP acquire all outstanding shares of
    TransAlta not currently owned by LS Power for a price per share of
    CDN $39.00 in an all-cash transaction, structured through a plan of
    arrangement. This price represents a premium of approximately 21% to
    today's closing share price and a premium to the 52-week (and all-time)
    high. We believe that this offer represents a compelling opportunity for
    your shareholders to realize immediate and substantive value in an
    uncertain economic environment and that our proposal will be well
    received by other TransAlta stakeholders.

    We are committed to maintaining TransAlta's well deserved status as a
    corporate leader in the Albertan and Canadian business communities. This
    includes:

      - delivering on its capital investment strategy and environmental
        leadership for Alberta and Canada;

      - honoring TransAlta's commitments to its customers, employees and
        retirees;

      - maintaining TransAlta's headquarters and corporate infrastructure in
        Alberta; and

      - building on TransAlta's outstanding legacy in the area of corporate
        philanthropy and community engagement.

    We would hope the current management team would agree to continue to lead
    the Company. We believe that in a private company structure, the Company
    and its leadership would have significant flexibility in making long-term
    investments and plans that benefit stakeholders. In short, our aim would
    be to maintain TransAlta as a responsible, values-driven Canadian company
    that continues to demonstrate, as it has in the past, the same high
    regard for its employees, customers and the communities in which it
    operates.

    Given our familiarity of TransAlta and its industry, we are prepared to
    work with you and your team to move expeditiously. We have completed due
    diligence based on publicly available information and would require only
    a short period of confirmatory due diligence to finalize our offer. We
    have already retained Credit Suisse to serve as our financial advisor and
    Stikeman Elliott and Skadden Arps to serve as our legal advisors. We and
    our advisors are willing to meet with you to answer your questions
    regarding any aspect of our proposal. We are willing to sign an
    appropriate confidentiality agreement to expedite the diligence process.

    The transaction would be funded with approximately $6 billion of equity.
    We have reviewed this opportunity with our respective investment
    committees, each of which fully supports this transaction.

    Our collective equity investment would be supplemented with a $2 billion
    debt facility provided by Credit Suisse, which will also provide a
    $1.5 billion backstop credit facility, if necessary, to refinance
    TransAlta's existing commercial bank facility and the recently-issued
    $500 million of senior notes should the holders exercise their change of
    control put. We would be happy to make representatives of Credit Suisse
    available to discuss the terms with you.

    Importantly, the new $8 billion equity and debt financing that will fund
    the consideration being paid to your shareholders would not subordinate
    any of your existing debt or lenders. In addition, our financing plan is
    designed so as to not affect the investment grade rating of TransAlta
    Utilities. Also, we do not foresee any material regulatory issues in
    completing such a transaction.

    LS Power is an integrated developer, manager and investor focused
    exclusively on the power and energy sector. For almost two decades,
    LS Power has developed a significant portion of North America's energy
    infrastructure, including over 7,000 MW of power generating capacity, and
    demonstrated a strong record of community partnership.

    GIP is an independent $5.64 billion fund that invests in operating
    infrastructure companies and assets worldwide. GIP, whose founding
    investors are Credit Suisse and General Electric, is a long-term investor
    that concentrates on the energy, transport and water and waste industry
    sectors with the goal of improving the service quality of the assets it
    invests in to benefit all stakeholders.

    As you may know, we are required to file this letter publicly given our
    disclosure obligations under the U.S. securities laws.

    Nothing in this letter is considered to be binding on TransAlta, LS Power
    or GIP and no binding obligations shall be created until all parties have
    executed definitive agreements.

    We believe that this is a significant value-creating opportunity for
    TransAlta shareholders and that it will be favorably received by all
    parties. We look forward to receiving a response at your earliest
    convenience and continuing our dialogue on this subject.

    Sincerely,


    James Bartlett, President
    LS Power Equity Partners


    Adebayo Ogunlesi, Chairman & Managing Partner
    Global Infrastructure Partners


    Cautionary Statement Regarding Forward Looking Statements and Regarding
    the Nature and Legal Effect of the Proposal

    Some information in this news release may be forward-looking. Implicit in
that information are assumptions and expectations which, although considered
reasonable by us, may prove to be incorrect. Actual future outcomes and
results, including whether our proposal is acted upon by TransAlta, whether a
transaction and the definitive documentation relating thereto are agreed to by
the parties and whether the conditions relating to such transaction are
satisfied, are subject to a number of risks and uncertainties, and could
differ materially from what is currently proposed or planned as described
herein. You should not place undue importance on forward-looking information.
While we may elect to, we are under no obligation and do not undertake to
update this information at any particular time.
    The non-binding proposal is subject to, among other things, the
satisfactory completion of confirmatory due diligence, the negotiation and
execution of a definitive agreement on mutually agreeable terms and the
receipt of any necessary corporate and other third party approvals, including
the approval of TransAlta's Board of Directors and shareholders. No binding
obligation will arise with respect to the proposed transaction unless and
until a definitive agreement with TransAlta has been executed and delivered.


                           BACKGROUNDER - LS POWER
                           -----------------------

    LS Power is a fully integrated power sector focused development,
investment and asset management group with a proven track record of successful
development activities, operations management and commercial execution. The
company currently owns and is developing a diverse mix of power generation
facilities fueled by natural gas, coal, and renewable resources, including
wind and solar.
    In its 18 year history, LS Power has been involved in the development,
construction, or operations of over 20,000 MW of power generation, including
the successful development of new gas-fired and coal-fired facilities
representing more than 7,000 MW of total capacity.
    LS Power's modern plant designs include some of the most efficient
facilities of their kind in the country, and use advanced control technologies
to reduce emissions. The company is also providing funding for advanced
research for new technologies to further reduce emissions.
    LS Power employs over 140 people with extensive expertise in all areas of
the power sector including project management, power marketing, construction,
operations, regulatory, environmental, financial, legal, and tax.
    The company has raised more than $10 billion in debt and equity, including
two private equity funds totaling over $4 billion focused on the power
industry. LS Power's projects create quality jobs, provide revenues for
schools and local government, and fulfill a need for energy which is critical
to economic sustainability and growth. LS Power partners with local
communities to ensure its projects fit with each community's plans and goals.
    LS Power is a privately held company with principal offices in New Jersey,
New York, Missouri, California, Florida, and New Hampshire.
    




For further information:

For further information: Nicole Fisher, Hill & Knowlton Canada, (403)
268-7853, c: (403) 461-7102, nicole.fisher@hillandknowlton.ca

Organization Profile

LS POWER EQUITY PARTNERS

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GLOBAL INFRASTRUCTURE PARTNERS

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