SWEF LP Files Second Quarter Financial Results + Provides Update on CRA Audit Process and Tax Indemnity Payment Structure + Files Letter to Unit holders on www.sweflp.com



    TORONTO, Aug. 29 /CNW/ - SWEF LP (formerly SkyPower Wind Energy Fund LP)
(the "Partnership") announces it has filed with Canadian securities regulators
its consolidated financial statements and Management's Discussion and Analysis
for the three month period and six month period ended June 30, 2008. These
documents will be available at www.sedar.com and www.sweflp.com.

    
    Update

    -  During the quarter, the Canada Revenue Agency ("CRA") commenced an
       audit of the Canadian Exploration Expenses ("CEE") incurred by
       Terrawinds and allocated to unit holders in respect of the 2005
       taxation year. As a result, it is possible that a portion of the
       qualifying expenses incurred by Terrawinds and allocated to unit
       holders will decrease as CEE could be disallowed. We are working
       closely with CRA in an effort to expedite this process but do not know
       when the Terrawinds audit will be completed. The Terrawinds audit must
       be completed before CRA proceeds with individual unit holder
       reassessments.

    -  Management has filed a Letter to Unit holders dated August 28, 2008
       that contains important information for all unit holders with respect
       to the payment of taxes owing for 2005 as a result of the loss of
       deductions.

    -  On April 29, 2008, the escrow agent released the full amount of the
       $5.0 million placed in escrow at the time of closing. Terrawinds will
       hold these funds until the CRA audit of the CEE is completed. If the
       audit confirms the CEE amounts claimed, the full $5 million ($0.65 per
       unit) will be promptly distributed to unit holders.

    -  On March 10, 2008 and April 29, 2008 management provided instructions
       to unit holders regarding the process for submitting tax indemnity
       claims (refer to www.sweflp.com). Distributions of the $24.5 million
       held in trust by the Payment Agent are expected to commence when CRA
       completes the audit of the CEE incurred by Terrawinds (as noted above)
       and then provides unit holders individual reassessments for the 2005
       tax year which are required to make their tax indemnity claims.
       Further information pertaining to administration of the tax indemnity
       payment process as well as registration instructions are available on
       the Payment Agent website - www.terida.com/paymentagent.

    -  The Partnership is expected to be wound up in the fourth quarter of
       2008, rather than second quarter of 2008 as previously announced.
       Details regarding the winding up process are set out in the Management
       Information Circular dated November 29, 2007, a copy of which is
       available at www.sedar.com.

    -  Upon winding up of the Partnership, the Partnership will apply to
       cease to be a reporting issuer under applicable securities laws.

    -  Terrawinds will be wound up once the tax indemnity claims payments
       have been completed. It is anticipated that this will take more than a
       year to complete.

    -  Any portion of the cash held by the Partnership or Terrawinds, which
       is not required to fund obligations of the Partnership or Terrawinds,
       will ultimately be distributed to unit holders.

    -  Unit holders are encouraged to regularly visit www.sweflp.com to
       obtain up-to-date information on the status of SWEF LP and the tax
       indemnity process.
    

    This Update section is based on management's assumptions and expectations
that management considers reasonable at the date hereof. There can be no
assurance that these assumptions and expectations will be accurate. See
"Forward Looking Statements".

    The Transaction

    On December 28, 2007, Terrawinds Resources Corp. ("Terrawinds") completed
a transaction (the "Transaction") by which it sold certain assets relating to
its wind power project (the "Project") to SkyPower Corp. ("Skypower") for
proceeds of $77,240,830, net of the assumption by SkyPower of certain
liabilities amounting to $221,002,135. The result of the transaction is that
the Partnership has divested all of its beneficial ownership interest in the
Project and underlying liabilities.
    A distribution of $5.28 per unit was made to limited partners of SWEF LP
(the "unit holders") on January 16, 2008.
    $5,000,000 of the total gross proceeds was placed into escrow for a
period of four months from the closing date to be available to SkyPower in the
event certain unforeseen claims were made against it or the assets it
purchased. As no claims were made, the escrow amount was distributed to
Terrawinds on April 29, 2008. On January 4, 2008, Terrawinds entered into a
tax indemnity payment agent agreement with a tax indemnity payment agent (the
"Payment Agent") whereby $24,490,816 of the total gross proceeds was paid to
the Payment Agent to be held in trust. These funds will be used to indemnify
unit holders 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 unit holders expected to receive for their 2005 taxation year. Any trust
balance not required to indemnify unit holders will be returned to Terrawinds.
The tax indemnity payment agreement has a term of thirty months from closing
and expires on June 30, 2010 and is extendable at the option of the Board.
    On closing, Terrawinds and the Partnership set aside a portion of the
purchase price as a reserve to pay transaction expenses, liabilities not
assumed by SkyPower, and ongoing expenses of the Partnership and Terrawinds
that will be incurred during the period until all amounts available for
distribution to unit holders have been distributed and the Partnership and
Terrawinds have been dissolved. The amount of the reserve was $7 million. If
the amount of the reserve is insufficient, some or all of any balance of the
tax indemnity amount or the escrow amount may be added to the reserve and used
to meet expenses and liabilities. Any portion of the tax indemnity amount,
escrow amount or reserve not required for the foregoing purposes will
ultimately be distributed pro rata to unit holders as soon as possible.
    The Transaction significantly impacts the comparison of operating results
for the three and six month periods ended June 30, 2008 to the same respective
period ended June 30, 2007.

    CRCE Phase Deductions

    As a result of Terrawinds being unable to complete the CRCE Phase by
December 31, 2006, Terrawinds had received an administrative concession from
the CRA and Revenue Québec in March 2007 that they would not re-assess, at
that time, unit holders who deducted CEE in respect of the Partnership in
their 2005 tax returns on the basis that Terrawinds continued to work to
complete the CRCE Phase of the Project in 2007.
    Terrawinds did not incur sufficient CEE in 2007. As a result, CRA and
Revenue Québec (if applicable) are expected to initiate the process of
preparing a reassessment of each unit holder's 2005 taxation year. Unit
holders are expected to receive a Notice of Reassessment directly from CRA and
Revenue Québec (if applicable) indicating the incremental Federal and
Provincial income tax payable for their 2005 income tax year. Interest will
generally only accrue from May 1, 2007 on the incremental income tax based on
each unit holder's share of the amount of CEE that Terrawinds failed to incur
before the end of 2007.
    As a result of the Transaction, Terrawinds has placed in trust
approximately $24.5 million of proceeds to indemnify the unit holders against
reassessments by CRA and/or Revenue Québec. The CRA has advised that, prior to
proceeding with the reassessment of unit holders, it intends to audit the CEE
incurred and renounced by Terrawinds in respect of the 2005 taxation year. The
results of this audit may increase the amount that unit holders are entitled
to claim. Accordingly, unit holders will not be able to complete the indemnity
claims process prior to the completion of the CRA audit. The CRA audit of
Terrawinds has commenced. However, we do not know when the audit will be
completed or when the Notices of Reassessment will be issued by the CRA. Unit
holders who are residents of the Province of Québec will also receive a Notice
of Reassessment from Revenue Québec. Based on discussions with Revenue Québec,
we expect that reassessments of unit holders for Québec income tax purposes
will commence shortly as Revenue Québec has indicated that it does not intend
to audit Terrawinds. Accordingly, residents of Québec may file an indemnity
claim at any time upon receipt of a Notice of Reassessment from Revenue Québec
in respect of that portion of their claim.

    Results of Operations

    Net loss for the three months ended June 30, 2008 was an insignificant
amount compared to a net loss of $0.1 million for the same period in 2007. The
reduction in net loss of $0.1 million is primarily due to the fact that the
Partnership earned more interest income as a result of having more cash on
hand, and incurred fewer expenses as a result of the cessation of development
activities and related to the ongoing process of winding up the affairs of the
Partnership.
    Net loss for the six months ended June 30, 2008 was $0.1 million compared
to a net loss of $0.5 million for the same period in 2007. The reduction in
net loss of $0.4 million is primarily due to the fact that the Partnership
earned more interest income as a result of having more cash on hand, and
incurred fewer expenses as a result of the cessation of development activities
and related to the ongoing process of winding up the affairs of the
Partnership.
    Interest income for the three months ended June 30, 2008 was $0.2 million
compared to $0.1 million for the same period in 2007. The increase of
$0.1 million is due to the Partnership having significantly more cash and
restricted cash on hand to invest as a result of the Transaction.
    Interest income for the six months ended June 30, 2008 was $0.5 million
compared to $0.2 million for the same period in 2007. The increase of
$0.3 million is due to the Partnership having significantly more cash and
restricted cash on hand to invest as a result of the Transaction.
    Administrative costs for the three months ended June 30, 2008 were
$0.3 million compared to an expense of $0.3 million for the same period in
2007. The similarity is coincidental as the nature and reasons for incurring
various types of expenses has changed substantially. During the three month
period ended June 30, 2008, the Partnership incurred higher professional fees
related to the winding up of its affairs, and also incurred a foreign exchange
loss related to the payment of certain costs of the Transaction. During the
three month period ended June 30, 2007 the Partnership incurred fewer
professional fees, but paid management fees to SkyPower under the
Administrative Services Agreement, and incurred more miscellaneous
administrative costs, commensurate with administering the ongoing development
activities.
    Administrative costs for the six months ended June 30, 2008 were
$0.6 million compared to an expense of $0.6 million for the same period in
2007. The similarity is coincidental as the nature and reasons for incurring
various types of expenses has changed substantially. During the six month
period ended June 30, 2008, the Partnership incurred higher professional fees
related to the winding up of its affairs, and also incurred a foreign exchange
loss related to the payment of certain costs of the Transaction. During the
six month period ended June 30, 2007 the Partnership incurred fewer
professional fees, but paid management fees to SkyPower under the
Administrative Services Agreement, and incurred more miscellaneous
administrative costs, commensurate with administering the ongoing development
activities.
    Capital tax expense for the three months ended June 30, 2008 is an
insignificant amount compared to an expense of $0.2 million for the same
period in 2007. Capital tax estimates have been updated in the three month
period ended June 30, 2008 to reflect estimated capital taxes that will be
owed for fiscal 2008.
    Capital tax expense for the six months ended June 30, 2008 is an
insignificant amount compared to an expense of $0.3 million for the same
period in 2007. Capital tax estimates have been updated in the six month
period ended June 30, 2008 to reflect estimated capital taxes that will be
owed for fiscal 2008.

    Forward Looking Statements

    Certain statements contained in this Press Release constitute forward
looking statements within the meaning of the Securities Act (Ontario)
regarding the future performance of the Partnership based on assumptions the
management of SWEF GP Inc the General Partner of the Partnership, considered
reasonable at the time it was prepared as at August 26, 2008. All
forward-looking statements are inherently uncertain and actual results may
differ materially from the assumptions, estimates or expectations reflected or
contained in the forward looking statements. We consider the assumptions on
which these forward looking statements are based to be reasonable, but caution
the reader that these assumptions regarding future events, many of which are
beyond our control, may ultimately prove to be incorrect. These forward
looking statements involve a number of risks, uncertainties and assumptions,
including the risk of future tax assessments, litigation or other
unanticipated expenses.
    The Partnership disclaims any intention or obligation to update or revise
any forward looking statements whether as a result of new information, future
events or otherwise, except as required by law. These 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. These cautionary
statements expressly qualify all forward looking statements attributable to
the Partnership.




For further information:

For further information: W. Judson Martin, Chairman SWEF GP Inc,
judsonmartin@sweflp.com

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