SkyPower Wind Energy Fund LP Enters into Definitive Purchase Agreement to Sell its Terrawinds Project Near Rivière-du-Loup, Québec to SkyPower Corp.



    Unitholders Expected to Receive Net After-Tax Proceeds and the Benefit of
    Prior and Future Period Tax Savings Totalling Approximately $9.72 per
    Unit

    Meeting of Unitholders to be Held on December 28, 2007

    TORONTO, Nov. 27 /CNW/ - SkyPower Wind Energy Fund LP (the "Partnership")
announced today that it has entered into a definitive purchase agreement (the
"Asset Purchase Agreement") to sell its Terrawinds wind energy project near
Rivière-du-Loup, Québec and related assets to SkyPower Corp. for proceeds (net
of the assumption of approximately $211 million of indebtedness and certain
other liabilities of Terrawinds by SkyPower Corp.) of approximately
$77.2 million in cash (the "Asset Sale").
    A special committee of independent directors (the "Special Committee") of
the Partnership's general partner, SkyPower I GP Inc. (the "General Partner"),
carefully reviewed and considered the terms of the Asset Purchase Agreement
and the Partnership's current circumstances and alternatives with the advice
and assistance of its legal and financial advisors. Credit Suisse Securities
(Canada), Inc. acted as financial advisor to the General Partner and has
provided an opinion to the Board of Directors of the General Partner that, as
at November 26, 2007 and subject to the qualifications and limitations set out
in the opinion, the consideration expected to be received by Unitholders as a
result of the Asset Sale is fair, from a financial point of view, to
Unitholders. A copy of that opinion will be included in the Circular to be
sent to Unitholders as described below. The Special Committee has determined
that the Asset Sale is in the best interests of the Partnership and its
Unitholders and will recommend that Unitholders vote their Units to approve
the Asset Sale and related matters.

    The Asset Purchase Agreement

    In accordance with the terms of the Asset Purchase Agreement, SkyPower
Corp. will purchase substantially all of the assets of Terrawinds for a
purchase price of approximately $77.2 million in cash (net of the assumption
by SkyPower Corp. of the existing debt of approximately $211 million and
certain other liabilities of Terrawinds) (the "Purchase Price"). The cash
proceeds of sale will be used as follows:

    
    -  At closing (expected to occur in late December 2007), approximately
       $24.5 million of the Purchase Price or approximately $3.17 per Unit
       (the "Tax Indemnity Amount") will be paid by Terrawinds to a tax
       indemnity payment agent (the "Indemnity Agent") and will be used to
       indemnify Unitholders for the taxes payable by them as a result of the
       loss of certain deductions from income for Canadian federal and
       provincial income tax purposes that Unitholders expected to receive
       for their 2005 taxation year at the time they purchased their Units.
       Unitholders will be entitled to claim compensation from the Indemnity
       Agent for the taxes payable as a result of the loss of those
       deductions (but not for interest payable by them in respect of those
       taxes) after they have received and presented to the Indemnity Agent
       the relevant tax assessments from Canadian federal and provincial
       taxation authorities.  Any balance of the Tax Indemnity Amount
       remaining after Unitholders have received their indemnity payments,
       plus accrued interest and net of expenses, will be returned to
       Terrawinds and will ultimately be distributed to all Unitholders pro
       rata. The Partnership and its advisers will discuss with the Canada
       Revenue Agency and Revenue Québec whether a process can be implemented
       that will expedite delivery of the tax reassessments to Unitholders.
       Detailed information concerning the process that Unitholders must
       follow to obtain indemnification will be set out in the Circular
       referred to below which will be sent to Unitholders in early December
       2007. Unitholders may also review the Asset Purchase Agreement and the
       Circular when they become available at www.sedar.com.

    -  At closing, $5 million of the Purchase Price (approximately $0.65 per
       Unit) will be paid into an escrow account for a period of four months
       for the purpose of indemnifying SkyPower Corp. against certain
       unforeseen claims, if any, that may be made during that period against
       the purchased assets or against SkyPower Corp. relating to the
       project, the Partnership or Terrawinds (other than claims relating to
       the liabilities assumed by SkyPower Corp.). On or about April 30,
       2008, the escrow agent will release the full amount of the escrow
       (plus accrued interest, and net of expenses and any indemnification
       payments made to SkyPower Corp. and any amounts set aside for claims
       made during the four month period) to Terrawinds and that amount will
       then be distributed pro rata to Unitholders.

    -  At closing, Terrawinds and the Partnership will set aside a portion of
       the Purchase Price as a reserve to pay transaction expenses,
       liabilities not assumed by SkyPower Corp., and ongoing expenses of the
       Partnership and Terrawinds that will be incurred during the period
       until all amounts available for distribution to Unitholders have been
       distributed and the Partnership and Terrawinds have been dissolved.
       The amount of the reserve has not yet been determined but is currently
       expected to be not less than $7 million and could be greater. If the
       amount of the reserve is insufficient, some or all of any excess Tax
       Indemnity Amount or released escrow funds may be used to meet expenses
       and liabilities. Any portion of the reserve not required for the
       foregoing purposes will ultimately be distributed pro rata to
       Unitholders as soon as possible.

    -  The balance of the Purchase Price remaining after the foregoing
       allocations have been made at closing will be used to make an initial
       cash distribution to Unitholders early in January 2008. The amount of
       that distribution has not yet been determined but would be
       approximately $5.28 per Unit assuming a $7 million reserve for
       expenses.
    

    Unitholders will also retain the benefit of certain income tax deductions
previously received by them (approximately $1.34 per Unit, representing
potential tax savings of approximately $0.62 or $0.65 per Unit based on the
highest marginal income tax rate for an individual resident of Ontario or
Québec, respectively, and assuming, in the case of a Québec resident, that the
Unitholder has sufficient investment income to permit the deduction of losses
allocated from the Partnership for Québec income tax purposes) and will obtain
the benefit of certain income tax deductions in future periods. However, as
noted below, interest is accruing on the taxes payable by Unitholders as a
result of the loss of their deductions from May 1, 2007 and will continue to
accrue until those taxes are paid by Unitholders, which will have the effect
of reducing the amounts to be retained by Unitholders. As such interest is not
deductible for tax purposes and no indemnity payment will be made in respect
of such interest, Unitholders should consider paying the additional taxes
payable as soon as possible.
    The following table summarizes the approximate net after-tax payments and
tax savings per Unit that a Unitholder, who is an individual resident of
Ontario and for whom income tax is assessed at the highest marginal rate, is
expected to retain following completion of the Asset Sale, subject to the
qualifications noted above and in the notes to the table.

    
        Tax Indemnity Amount(1)                $3.17
        Escrow Funds                            0.65
        Initial Cash Distribution               5.28
        Previous Tax Savings(1)(2)              0.62
        Future Tax Savings(1)(3)                0.30
        Less: Interest on Unpaid Taxes(1)(4)   (0.30)
                                               ------
        Net Amount                             $9.72(5)(6)
                                               ------
                                               ------

    Notes: (1)  Based on a Unitholder who is an individual resident of
                Ontario and for whom income tax is assessed at the highest
                marginal rate.
           (2)  Represents tax savings in respect of Canadian exploration
                expense ("CEE") of $0.85 per Unit in 2005, and allocations of
                losses of $0.22 per Unit in 2005 and $0.26 per Unit in 2006.
           (3)  Represents tax savings in respect of future allocations to
                Unitholders of losses and deductions for prior Partnership
                financing costs of $0.21 per Unit, to be allocated to
                Unitholders in 2007 and deductible by Unitholders in 2008
                and 2009 (assuming dissolution of the Partnership in 2008).
           (4)  Represents interest payable by Unitholders on unpaid taxes
                accruing at an assumed annual rate of 9% during the period
                from May 1, 2007 to May 1, 2008. Unitholders can stop
                interest from accruing on unpaid taxes by paying the taxes.
                Unitholders are encouraged to consult their personal tax
                advisers.
           (5)  Assumes that Unitholders will realize a capital loss on the
                disposition of their Units in 2008 in an amount sufficient
                to offset the capital gains allocated to Unitholders by the
                Partnership in 2008.
           (6)  Does not reflect the time value of money in respect of
                previous and future deductions.
    

    Unitholders who are residents of Québec and for whom income tax is
assessed at the highest marginal rate are expected to retain approximately
$9.86 per Unit, calculated on the same basis and subject to the same
qualifications noted above and assuming that such Unitholders have sufficient
investment income to permit the deduction of losses allocated from the
Partnership for Québec income tax purposes.

    Unitholders Meeting

    A meeting of Unitholders (the "Meeting") to consider the Asset Sale and
related matters is expected to be held on Friday, December 28, 2007. In the
Partnership's current circumstances, in particular because amounts owing to
lenders may become payable on December 31, 2007, it is desirable for the Asset
Sale to be completed on or before December 31, 2007. Completion of the Asset
Sale is subject to approval by the affirmative votes of at least two-thirds of
the Units voted at the Meeting and the satisfaction or waiver of the other
conditions set out in the Asset Purchase Agreement, including the consents of
Terrawinds' and SkyPower Corp.'s senior lenders. An information circular (the
"Circular") containing notice of the Meeting and setting out the details of
the Asset Sale and the amounts expected to be received by Unitholders
following the Asset Sale is expected to be mailed to Unitholders in early
December 2007.

    About SkyPower Wind Energy Fund LP

    The Partnership has invested in the common shares, including flow-through
shares, of Terrawinds Resources Corp., a Canadian corporation formed for the
purposes of constructing and operating a 166MW wind energy project near
Rivière-du-Loup, Québec which would generate electricity for sale to     
Hydro-Québec pursuant to a 21-year power purchase agreement.

    Certain statements included in this news release constitute
"Forward-Looking Statements" within the meaning of the Securities Act
(Ontario). Such forward-looking statements involve unknown risks,
uncertainties and other factors, including the risk that Unitholders may not
recover some or all of the purchase price of their Units if the Asset Sale is
not completed and the risk that, if the Asset Sale is completed, the net
after-tax payments and tax savings that Unitholders will ultimately retain may
be less than expected. Certain other risks and uncertainties as well as
additional information are outlined in the Partnership's 2006 Annual Report
and other continuous disclosure documents available on www.sedar.com
(http://www.sedar.com/). Those risks 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 the SkyPower Wind Energy Fund LP as at November 26, 2007
and, accordingly, is subject to change after that date. However, SkyPower Wind
Energy 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.





For further information:

For further information: W. Judson Martin, Chairman of SkyPower I GP
Inc., General Partner of SkyPower Wind Energy Fund LP, at
judson_martin@hotmail.com

Organization Profile

SWEF LP

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890