Algonquin Power Positions the Fund for Future Growth

    OAKVILLE, ON, Oct. 20 /CNW/ - Algonquin Power Income Fund (the "Fund" or
"Algonquin Power") (TSX: APF.UN) is taking steps to better position the Fund
for future growth and to maximize unitholder value in the current business
    The changes result from a comprehensive strategic review that was
undertaken over the past several months by the Board of Trustees of the Fund
and Algonquin Power Management Inc., the manager (the "Manager") of the Fund.
    The strategic review was initiated in order to assess Algonquin Power's
competitive strengths, organic growth potential and strategic acquisition
opportunities, while taking into account the current business and capital
market environments.
    As a result of the strategic review, the Manager has recommended and the
Board of Trustees has approved three primary value enhancement initiatives.

    First, the Fund will make strategic adjustments to be consistent with the
business environment in which Algonquin Power operates:
    -   the tax efficient income trust structure will be preserved until 2011
        for the benefit of unitholders;
    -   the management team will be internalized to be consistent with
        industry standards; and,
    -   the distribution level will be established at a sustainable level to
        allow Algonquin Power to more aggressively pursue growth strategies,
        while maintaining healthy unitholder returns.

    Second, the renewable power and clean energy generation business of the
Fund will be managed with an increased emphasis on growth through the
development of green-field projects and the expansion of opportunities within
the Fund's existing portfolio.
    Lastly, the Utility Division will be re-positioned to refine Algonquin
Power's internal and external business focus and to surface unrealized
investor value within the division.
    The Board of Trustees and Manager believe these initiatives will enhance
the value of the Fund's trust units.

    Strategic Changes to Build on a Solid Record of Achievement

    The Manager and the Board of Trustees have established a strategic plan
to position the Fund for robust future growth. Algonquin Power makes these
strategic adjustments upon a foundation of ten years of solid growth. With a
strong portfolio of core businesses in the power and utility sectors,
Algonquin Power has total assets of approximately $1 billion, annual revenues
approaching $200 million and EBITDA in excess of $85 million annually. The
Board of Trustees believe this critical mass of high quality assets, together
with the expanding pipeline of exciting development opportunities and the
Fund's highly experienced management team can deliver an attractive investor
value proposition.
    The strategic review was commenced with the objective of developing a
plan to address the internal and external realities that Algonquin Power faces
in today's business environment, the most notable of which include the change
in taxation policies facing income trusts in 2011, the pressure on
distributable cash from the continuing volatility in the foreign exchange
environment, and the turbulence evident in the financial markets.
    As a result of the strategic review, the Manager and Board of Trustees
have concluded that Algonquin Power's assets will continue to provide robust
earnings and that the expanding pipeline of growth opportunities continues to
be a key element of the Algonquin Power value proposition. However, it is felt
that the market price of the Fund's trust units does not adequately reflect
the value of the Fund's unique portfolio of assets or growth prospects. As
such, the Board of Trustees is committed to the following initiatives:

    Adjust Business to Enhance Value

    To maximize tax efficiency, the Board of Trustees has elected to maintain
the trust structure until 2011 at which time the new taxation policies
affecting income trusts are scheduled to come into effect. The Manager
believes that the 'normal growth' limitations that could trigger an earlier
application of the new taxation are not a concern. The 'normal growth' policy
provides ample scope for Algonquin Power to continue to execute on its growth
strategy (up to an additional $650 million in equity would be possible prior
to 2011 without triggering such application).
    In order to align the management structure with its corporate peers, the
Manager and the Board of Trustees are mutually endorsing the internalization
of management.
    To strengthen Algonquin Power's financial position and support its growth
initiatives, the Board of Trustees has approved a reduction in the cash
distributions payable to Algonquin Power's unitholders to $0.24 per unit per
annum commencing in October, 2008. It is believed this decision positions
Algonquin Power to create greater unitholder value. In particular, it allows
Algonquin Power to:

    -   more aggressively pursue accretive growth opportunities;
    -   internally fund growth in the face of uncertain capital markets;
    -   retain cash to provide the Fund the ability to meet the anticipated
        tax policy changes scheduled for 2011; and,
    -   mitigate the impact of continued foreign exchange volatility on
        distributable cash

    Under the revised distribution policy, commencing with the distribution
to unitholders of record on October 31, 2008, the Fund plans to pay monthly
distributions of $0.02 per unit. In addition, instead of the usual forty-five
(45) day payment cycle the Fund will begin paying monthly distributions
approximately fifteen (15) days following the record date for each month.
Therefore, unitholders of record on October 31, 2008 will receive payment on
November 17, 2008. Unitholders of record on September 30, 2008 will also
receive payment for the month of September on November 17, 2008. Therefore,
unitholders of record for both the months of September and October will
receive a total distribution payment of $0.0966 per unit on November 17, 2008.
    The Manager and Board of Trustees are confident in Algonquin Power's
ability to create unitholder value through funding of project development
initiatives, exploiting organic growth opportunities, pursuing accretive
acquisitions, and exercising operational flexibility in today's challenging
business environment.

    Increased Focus on Project Development and Opportunity Exploitation

    Algonquin Power is committed to being a successful competitor in the
independent power generation marketplace and believes that this refined
business focus will allow it to capitalize on the growing demand for
environmentally sustainable sources of electrical generation.
    With respect to realizing such growth, Algonquin Power has a dedicated
and experienced management team with extensive expertise in developing
renewable power and clean energy projects in North America. It is the
Manager's and Board of Trustees' belief that there are excellent opportunities
to deliver accretive growth through investment in development projects.
    In addition, the revised distribution policy supports a capital structure
that will improve Algonquin Power's financial flexibility in order to exploit
emerging opportunities that are anticipated to result from the turbulence of
today's business environment.

    Improve Business Focus by Re-Positioning Utility Division

    The Manager believes there is substantial value within the Utility
Division that has not been surfaced in the current income trust environment.
Algonquin Power seeks to improve its internal and external business focus by
re-positioning the Utility Division as an independent subsidiary. A dedicated
management team for the division has already been established. This team is
well positioned to complete several pending applications for rate increases
and to pursue continued organic growth and accretive utility infrastructure
acquisitions to gain economic scale. Algonquin Power will consider
establishing a separate capital structure to permit new sources of capital
into the Utility Division if the capital demands from the growth program
outpace the funding capabilities of the Fund.
    "The strategic review revealed that the most effective way to create
investor value is through a business focus that emphasizes project
development, organic growth and accretive acquisitions. The Manager
anticipates capitalizing on a new stream of opportunities made possible
through the financial flexibility afforded by a strengthened balance sheet and
a distribution policy consistent with growth prospects and strategies,"
commented Dave Kerr, Executive Director of Algonquin Power. "As a result of
the strategic review and subsequent recommendations, the Board of Trustees and
the Manager believe that Algonquin Power is now well positioned to deliver
value through predictable earnings from the existing portfolio of long lived,
renewable and clean energy assets, accretive growth through investment in the
strong pipeline of renewable project development and exploitation of organic
expansion opportunities".
    Algonquin Power Income Fund will hold a conference call and webcast on
October 20, 2008, hosted by Trustees, Ken Moore, Chris Ball, and George
Steeves, and Executive Directors, Chris Jarratt, David Kerr and Ian Robertson
and the Fund's CFO, David Bronicheski. The call and webcast are scheduled to
begin at 5:15 p.m. eastern time.

    Connection details are as follows:

    Date: Monday, October 20, 2008
    Start Time: 5:15 p.m. eastern

    To access the live and archived audio and web cast please click the
following link:

    To access the voice portion of the call only:
    Phone Number: Toll free within North America: 1-800-732-9303 or local
    Conference ID No.: 21286628

    For access to the archived voice portion of the call, a digital recording
will be available for replay two hours after the call by dialing
1-877-289-8525 or 416-640-1917 access code 21286628 followed by the number
sign from October 20, 2008 until October 27, 2008.
    To access a copy of the slides in pdf format, please visit Algonquin
Power's home page by following this link:

    Forward-looking statements

    Certain written and oral statements contained in this presentation and
information release are forward-looking within the meaning of certain
securities laws and reflect the views of Algonquin Power Income Fund (the
"Company") and its manager with respect to future events, based upon
assumptions relating to, among others, the performance of the Company's
assets, the business realities facing the Company, the impact of laws and
regulations and the state of financial and credit markets. These forward
looking statements include, among others, statements with respect to the
expected performance of the Company, its future plans and its distributions to
unitholders. Statements containing expressions such as "believes",
"anticipates", "continues", "could", "expect", "may", "will", "project",
"estimates", "intend", "plan" and similar expressions generally constitute
forward-looking statements.
    Since forward-looking statements relate to future events and conditions,
by their very nature they require us to make assumptions and involve inherent
risks and uncertainties. We caution that although we believe our assumptions
are reasonable in the circumstances, these risks and uncertainties give rise
to the possibility that our actual results may differ materially from the
expectations set out in the forward-looking statements. Material risk factors
include the continued volatility of world financial markets; the impact of
movements in exchange rates and interest rates; the effects of changes in
environmental and other laws and regulatory policy applicable to the energy
and utilities sectors; decisions taken by regulators on monetary policy and
the taxation of income funds; and the state of the Canadian and the US economy
and accompanying business climate. We caution that this list is not
exhaustive, and other factors could adversely affect our results. Given these
risks, undue reliance should not be placed on these forward-looking
statements, which apply only as of their dates. Except as required by law, the
Company and its manager do not intend to update or revise any forward-looking
statements, whether as a result of new information, future developments or

    About Algonquin Power

    Algonquin Power is an open-ended investment trust that owns and has
interests in a diverse portfolio of renewable power generation and sustainable
infrastructure assets across North America, including 42 renewable energy
facilities, 11 thermal energy facilities, and 17 water distribution and
waste-water facilities. Algonquin Power was established in 1997 to provide
stable earnings through a diversified portfolio of renewable energy assets.
Algonquin Power's units and convertible debentures are traded on the Toronto
Stock Exchange under the symbols APF.UN, APF.DB & APF.DB.A and units are
included in the S&P/TSX Composite Index.

    %SEDAR: 00009265E

For further information:

For further information: Ms. Kelly Castledine or Mr. David Kerr,
Algonquin Power Income Fund, 2845 Bristol Circle, Oakville, Ontario, L6H 7H7,
Telephone: (905) 465-4500, Web Page:

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