Primary Energy Recycling Corporation announces fourth quarter and year-end 2007 results



    Best quarter since third quarter of 2006

    OAK BROOK, IL, Feb. 29 /CNW/ - Primary Energy Recycling Corporation
(TSX: PRI.UN) (the "Company") today released its financial results for the
three months and year ended December 31, 2007. All amounts are in U.S. dollars
unless otherwise indicated.

    
    Summary

    -   Revenue of $21.2 million in the fourth quarter of 2007 increased by
        15.8% from the fourth quarter of 2006.
    -   Distributable cash for the fourth quarter of 2007 is 11.7% greater
        than the same period in 2006.
    -   Monthly cash distributions to holders of Enhanced Income Securities
        (EISs) resumed at an annualized rate of Cdn $0.80 per year in
        December 2007 following the Second Amendment and Limited Waiver to
        Credit Agreement.
    

    "The fourth quarter was our best quarter in a year," said John Prunkl,
President of the Company's Manager. "Throughout 2007, the Company's facilities
generally performed effectively. However, we had disappointing financial
performance at Harbor Coal, as well as a 35-day unplanned outage at our North
Lake facility which also impacted results. We continue to work to amend the
Harbor Coal agreement with a goal of providing a more simplified tolling
formula that is intended to yield improved stability and a more predictable
cash flow. It is our understanding all senior management approvals have been
obtained by our customer and the amendment is now before their board for final
ratification. While progress has been encouraging and the process is coming to
a conclusion, the agreement will not be executed as of February 29, 2008. As a
result, the Company is subject to provisions outlined in the Second Amendment
and Limited Waiver to Credit Agreement that may result in cash sweeps and
additional interest costs depending upon financial results. If the Harbor Coal
amendment is executed subsequent to February 29, 2008, the cash sweep and
increased interest provisions are eliminated."
    During 2007, the Company paid distributions of Cdn $0.83 per EIS to
unitholders which compares favorably to the current annualized Cdn $0.80
distribution level. At year-end 2007, the Company had cash on-hand of
$15.3 million and $12.0 million of undrawn revolver capacity.
    In the fourth quarter of 2007, the Company earned revenue of
$21.2 million, an increase of 15.8% from the fourth quarter of 2006 primarily
due to increased Energy Service revenue at the Company's Harbor Coal facility.
Total operating and maintenance expenses for the fourth quarter of 2007 were
$7.6 million, up 12.5% from the fourth quarter of 2006 due to additional
service fee expense at the Harbor Coal facility. General and administrative
expenses for the fourth quarter of 2007 were $2.9 million, an increase of
46.9% over the same period in the prior year which is the result of 2007
additional property tax expenses and professional fees totaling $0.3 million
combined with a fourth quarter 2006 management incentive fee expense reduction
of $0.6 million.
    The Company's revenue of $75.0 million for the full year of 2007
decreased 13.8% from 2006 primarily as a result of an Energy Service revenue
decline at the Harbor Coal facility and unplanned outages at other facilities.
Operating and maintenance expenses in 2007 were $30.1 million, down 4.1% over
2006 primarily due to lower production costs at the company's Harbor Coal
facility. General and administrative expenses for the year were $11.1 million,
an increase of 19.0% from the prior year primarily related to a $2.2 million
property tax settlement realized in 2006 which did not recur in 2007.

    
    Distributable Cash Summary
    (in 000's of US$, except per share data and
     as otherwise indicated)

                                                           For the Years
                                                         Ended December 31,
                                                     ------------------------
                                                        2007         2006
                                                    ------------ ------------
    Reconciliation of cash flows from
     operating activities to
     Distributable Cash:
    Cash provided by operating activities            $   14,588   $   31,774
    Add:
    Cash interest expense                                21,544       19,349
    Changes in operating assets and
     liabilities                                         (2,062)      (4,558)
    Accretion of asset retirement obligations              (216)        (202)
    Less:
    Interest on credit facility                          11,498       10,744
    Interest on separate subordinated notes               1,856        1,856
                                                    ------------ ------------
    Distributable Cash                               $   20,500   $   33,763
                                                    ------------ ------------
                                                    ------------ ------------
    Per Common and equivalent Common Share           $     0.55   $     0.91
                                                    ------------ ------------
                                                    ------------ ------------
    Interest on EIS Subordinated Notes               $    7,776   $    7,776
    Distributions on Common Shares                       14,290       22,293
    Distributions on non-controlling Class B
     preferred interest                                   1,520        1,523
    Distributions on non-controlling Class B
     common interest                                      2,921        4,558
                                                    ------------ ------------
    Total distributions                              $   26,507   $   36,150
                                                    ------------ ------------
                                                    ------------ ------------
    Per Common and equivalent Common Share           $     0.71   $     0.97
                                                    ------------ ------------
                                                    ------------ ------------
    Hedge rate (Cdn$ per US$)                        $   1.1698   $   1.1687
    Distributable Cash (Cdn$)                        $   23,981   $   39,459
                                                    ------------ ------------
                                                    ------------ ------------
    Per Common and equivalent Common Share (Cdn$)    $     0.64   $     1.06
                                                    ------------ ------------
                                                    ------------ ------------
    Hedge rate (Cdn$ per US$)                        $   1.1698   $   1.1687
    Total distributions (Cdn$)                       $   31,008   $   42,249
                                                    ------------ ------------
                                                    ------------ ------------
    Per Common and equivalent Common Share (Cdn$)    $     0.83   $     1.13
                                                    ------------ ------------
                                                    ------------ ------------
    Excess (shortfall) distributable cash (Cdn$)     $   (7,027)  $   (2,790)
                                                    ------------ ------------
                                                    ------------ ------------
    Per Common and equivalent Common Share (Cdn$)    $    (0.19)  $    (0.07)
                                                    ------------ ------------
                                                    ------------ ------------

    Payout Ratio                                         129.3%       107.1%

    Payout ratio since inception is 108.3%.
    

    The Company's full financial statements and Management's Discussion and
Analysis, are available at www.sedar.com or the Company's website at
www.primaryenergyrecycling.com.

    Conference Call and Webcast

    Management will also host a conference call to further discuss the fourth
quarter and annual results on Friday, February 29, at 10 a.m. (ET). Following
management's presentation, there will be a question and answer session. To
participate in the conference call, please dial 416-644-3418 or
1-800-732-6179. A conference call replay will be available until 12 a.m. on
March 7, 2008. The replay can be accessed by dialing 416-640-1917 or
1-877-289-8525 and entering passcode 21263186 followed by the number sign. A
webcast replay will also be available for 90 days by accessing a link through
the Investor Information section at www.primaryenergyrecycling.com.

    Non-GAAP Measures

    Distributable Cash and EBITDA are not recognized measures under U.S. GAAP
or Canadian GAAP and do not have standardized meanings prescribed by U.S. GAAP
or Canadian GAAP. Therefore, Distributable Cash and EBITDA may not be
comparable to similar measures presented by other companies. See the
definitions of Distributable Cash and EBITDA in the Company's MD&A.

    Forward-Looking Statements

    When used in this news release, the words "anticipate", "expect",
"project", "believe", "estimate", "forecast" and similar expressions are
intended to identify forward-looking statements. Such statements are subject
to certain risks, uncertainties and assumptions pertaining, but not limited,
to operating performance, regulatory parameters, weather and economic
conditions and the factors discussed in the Company's public filings available
on SEDAR at www.sedar.com. These forward-looking statements are made as of the
date of this press release and the Company assumes no obligation to update or
revise them to reflect new events or circumstances.

    About Primary Energy Recycling Corporation

    Primary Energy Recycling Corporation owns a majority interest in Primary
Energy Recycling Holdings LLC ("PERH"). PERH, headquartered in Oak Brook,
Illinois, indirectly owns and operates four recycled energy projects and a
50 percent interest in a pulverized coal facility (collectively, the
"Projects"). The Projects have a combined electrical generating capacity of
283 megawatts and a combined steam generating capacity of 1.8 MMlbs/hour. PERH
creates value for its customers by capturing and recycling waste energy from
industrial and electric generation processes and converting it into reliable
and economical electricity and thermal energy for its customers' use. For more
information, please see www.primaryenergyrecycling.com.





For further information:

For further information: V. Michael Alverson, Chief Financial Officer,
EPCOR USA Ventures LLC, (630) 371-0505, investorinfo@primaryenergy.com

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Primary Energy Recycling Corporation

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