Fort Chicago announces $75 million offering of convertible debentures


Trading Symbol: FCE.UN

Exchange: TSX

CALGARY, June 28 /CNW/ - Fort Chicago Energy Partners L.P. ("Fort Chicago") announced today a public offering, on a bought deal basis, of $75 million aggregate principal amount of 5.75% convertible unsecured subordinated debentures, Series C (the "Series C Debentures") at a price of $1,000 per Series C Debenture. The Series C Debentures will pay interest semi-annually in arrears on January 31 and July 31 each year commencing on January 31, 2011, and will have a maturity date of July 31, 2017. The Series C Debentures will be convertible, at the option of the holder, at any time into fully paid Class A limited partnership units of Fort Chicago ("Class A Units") at a conversion price of $14.60 per Class A Unit (the "Conversion Price").

The offering is being made through a syndicate of underwriters co-led by Scotia Capital Inc., CIBC and TD Securities Inc. Fort Chicago has also granted the underwriters an over-allotment option (the "Over-Allotment Option") to purchase up to an additional $11.25 million principal amount of Series C Debentures at the same offering price, exercisable in whole or in part for a period of 30 days following closing of the offering. If the Over-Allotment Option is fully exercised, the total gross proceeds to Fort Chicago from the sale of the Series C Debentures will be approximately $86.25 million.

The Series C Debentures will be direct unsecured obligations of Fort Chicago, subordinated to Fort Chicago's existing credit facilities, and will rank equally with all other unsecured and subordinated indebtedness of Fort Chicago including the 6.75% convertible unsecured subordinated debentures, Series B (the "Series B Debentures"). The Series C Debentures may be redeemed by Fort Chicago, in certain circumstances, in whole or in part from time to time after July 31, 2013.

The net proceeds of the offering will be used by Fort Chicago to repay a portion of Fort Chicago's outstanding indebtedness under its credit facilities, to finance future acquisition and development opportunities and for general corporate purposes.

As previously disclosed, Fort Chicago intends to complete a conversion to a corporation on or prior to January 1, 2011. Upon the conversion of Fort Chicago to a corporation, the Series C Debentures will become debentures of the continuing corporation having substantially the same terms as the Series C Debentures without the consent of any holders of the Series C Debentures, and such debentures will be convertible into securities of the continuing corporation.

The Series C Debentures will be offered by Fort Chicago under a short form prospectus to be filed in each of the provinces of Canada. The offering is subject to normal regulatory approvals, including the approval of the TSX, and is expected to close on or about July 19, 2010.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any of the securities of Fort Chicago within the United States. The Series C Debentures to be offered, including Class A Units issuable on conversion, redemption or maturity of the Series C Debentures, have not been and will not be registered under the United States Securities Act of 1933 or any state securities laws and may not be offered, sold or delivered in the United States to or for the account of a "U.S. person" as defined in the regulations thereunder.

Fort Chicago

Fort Chicago is a publicly traded limited partnership based in Calgary, Alberta, that owns and operates energy infrastructure assets across North America. Its Class A Units are listed on the TSX under the symbol FCE.UN and the Series B Debentures are listed on the TSX under the symbol FCE.DB.B. Fort Chicago is engaged in three principal businesses: a pipeline transportation business comprised of interests in two pipeline systems, the Alliance Pipeline and the Alberta Ethane Gathering System; an NGL extraction business which includes an interest in a world-class extraction facility near Chicago; and a power business with power facilities in Ontario, New York, Colorado and California, district energy systems in Ontario and Prince Edward Island, and waste heat power facilities along the Alliance Pipeline. Fort Chicago and each of its pipeline, NGL extraction and power businesses are also actively developing a number of greenfield investment opportunities that will be a key source of future growth. In the normal course of its business, Fort Chicago and each of its businesses regularly evaluate and pursue acquisition and development opportunities.

                     Class A Unit Ownership Restrictions

Fort Chicago is organized in accordance with the terms and conditions of a limited partnership agreement which provides that no Class A Units may be held by or transferred to, among other things, a person who is a "non-resident" of Canada, a person in which an interest would be a "tax shelter investment" or a partnership which is not a "Canadian partnership" for purposes of the Income Tax Act (Canada). This restriction will not apply to the securities of Fort Chicago following the conversion of Fort Chicago into a corporation.

Certain information contained herein relating to, but not limited to, Fort Chicago and its businesses and the offering of the Series C Debentures, constitutes forward-looking information under applicable securities laws. All statements, other than statements of historical fact, which address activities, events or developments that Fort Chicago expects or anticipates may or will occur in the future, are forward-looking information. Forward-looking information typically contains statements with words such as "may", "estimate", "anticipate", "believe", "expect", "plan", "intend", "target", "project", "forecast" or similar words suggesting future outcomes or outlook. Forward-looking statements in this news release include, but are not limited to, statements with respect to the timing of completion of the offering, the use of the proceeds of the offering and the conversion of Fort Chicago to a corporation. Additional information on risks, uncertainties and factors that could affect Fort Chicago's operations or financial results is included in its filings with the securities commissions or similar authorities in each of the provinces of Canada, as may be updated from time to time. Readers are also cautioned that such additional information is not exhaustive. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these factors are independent and management's future course of action would depend on its assessment of all information at that time. Although Fort Chicago believes that the expectations conveyed by the forward-looking information are reasonable based on information available on the date of preparation, no assurances can be given as to future results, levels of activity and achievements. Undue reliance should not be placed on the information contained herein, as actual results achieved will vary from the information provided herein and the variations may be material. Fort Chicago makes no representation that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. Furthermore, the forward-looking statements contained herein are made as of the date hereof, and Fort Chicago does not undertake any obligation to update publicly or to revise any forward-looking information, whether as a result of new information, future events or otherwise. Any forward-looking information contained herein is expressly qualified by this cautionary statement.

SOURCE Veresen Inc.

For further information: For further information: Stephen H. White, President and C.E.O.; Richard Weech, Vice President, Finance and C.F.O.; Fort Chicago Energy Partners L.P., Livingston Place, Suite 440, 222 - 3rd Avenue S.W., Calgary, AB, T2P 0B4, Phone: (403) 296-0140, Fax: (403) 213-3648,

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