Calpine Power Income Fund
TSX : CF.UN

Calpine Power Income Fund

January 23, 2007 06:01 ET

Calpine Power Income Fund Provides Update on Court Process

CALGARY, ALBERTA--(CCNMatthews - Jan. 23, 2007) - The Board of Trustees of Calpine Commercial Trust, on behalf of Calpine Power Income Fund (TSX:CF.UN), today announced that the Honourable Madam Justice B.E.C. Romaine of the Court of Queen's Bench of Alberta in Calgary declined to approve the proposed settlement agreement with Calpine Canada Power Ltd. ("CCPL"), which acts as manager of the Fund and operator of certain of its facilities.

Madam Justice Romaine instead ordered an auction process for CCPL's 30% subordinated ownership interest (also known as the "B" units") in Calpine Power, L.P. a limited partnership in which the Fund has a 70% priority ownership interest and for the management agreements of the Fund. Calpine Power, L.P. owns the 300-megawatt Calgary Energy Centre in Alberta and the 240-megawatt Island Cogeneration Facility in British Columbia. In the court-ordered process, bids are due Thursday, a monitor's report will be issued on Friday that compares the bids, and a court hearing will be held next Tuesday, January 30th, to consider any bids.

The proposed settlement agreement requires the agreement be approved by the court on or before January 23, 2007, before the next scheduled court hearing. The Board of Trustees has decided that the proposed settlement agreement will not be extended and will be terminated.

The Board of Trustees is considering Madame Justice Romaine's decision and whether to submit the same or some other bid.

Madam Justice Romaine also ordered disclosure of the proposed financial terms of the settlement agreement by the court-appointed monitor, no later than noon (Calgary Time) on January 23, 2007. The Fund expects the monitor will make the terms generally available to the public.

The Fund believes that the settlement agreement was superior to a revised bid for the B units and management agreements announced yesterday by Harbinger Capital Partners. The settlement agreement would have allowed the Fund to terminate CCPL as manager of the Fund, and would have settled certain issues related to claims by the Fund and affiliates against CCPL and affiliates. In addition, under the settlement agreement the Fund would have acquired the "B" units" from CCPL.

About Calpine Power Income Fund

Calpine Power Income Fund is an unincorporated open-ended trust that invests in electrical power assets. The Fund indirectly owns interests in power generating facilities in British Columbia, Alberta and California. In addition, the Fund owns a participating loan interest in a power plant in Ontario and has made a loan to Calpine Canada Power Ltd. The Fund is managed by Calpine Canada Power Ltd., which is headquartered in Calgary, Alberta. The Fund has 61,742,288 Trust Units outstanding.

The Calpine Power Income Fund units are listed on the Toronto Stock Exchange under the symbol CF.UN. For further information on the Fund, please visit its website at www.calpinepif.com.

Forward-Looking Information Disclaimer

This news release may contain forward-looking information as defined under applicable Canadian securities laws. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. Such forward-looking information is based on the Fund's current internal expectations, estimates, projections, assumptions and beliefs and the Fund believes the expectations reflected in such forward-looking information are reasonable. However, no assurance can be given that these expectations will prove to be correct and the forward-looking information included in this news release should not be unduly relied upon. Such forward-looking information speaks only as of the date of this (news release) and none of the Fund, the Trustees or the Manager undertakes any obligation to publicly update or revise any forward looking information contained in this news release, except as required by applicable laws.

In particular, among other forward-looking information, this news release may contain forward-looking information pertaining to the following:

- future cash flows generated by the Fund and its subsidiaries from their contracts and other assets and operations and the related amount of future cash distributions made by the Fund to unitholders of the Fund ("Unitholders");

- the value of the claims that the Fund and its subsidiaries have against Calpine Corporation and its affiliates in connection with Calpine Corporation's insolvency and reorganization proceedings and the amount that the Fund and its subsidiaries may collect under such claims or the sale of such claims;

- the future trading prices of the trust units of the Fund ("Trust Units");

- potential alternative transactions involving the Fund and/or its subsidiaries that may produce superior value to Unitholders;

- future levels of power production capacity, availability and utilization of such capacity and actual production by the Fund's indirectly owned facilities and assets; and

- the continued operation and performance by counterparties under the means the power and steam off-take agreements or tolling agreements for the Fund's indirectly-owned power generation facilities ("PPAs") and the creditworthiness of such counterparties.

The actual results and outcomes of such matters could differ materially from those anticipated in the forward-looking information contained in this news release as a result of both known and unknown risks, including the risk factors set forth below:

- volatility in market prices for electricity, power and natural gas;

- changes or fluctuations in power production capacity, availability and utilization of such capacity and actual production levels;

- changes in capital and other expenditure requirements and debt service requirements;

- breach or non-performance by the counterparties to the PPAs relating to the business of the Fund's subsidiaries;

- changes in financial markets, foreign currency exchange rates and interest rates and changes in general economic, market and business conditions in Canada, North America and worldwide;

- the timing of the resolution, and the actual outcome, of the insolvency and reorganization proceedings involving Calpine Corporation, including the amount of funds ultimately available to satisfy the claims of the Fund and its subsidiaries against Calpine Corporation;

- the inability of the Fund to negotiate and conclude an alternative transaction to the Harbinger Offer that provides superior value to Unitholders; and

- actions by governmental or regulatory authorities including changes in income tax laws (including those relating to mutual fund trusts or investment eligibility).

Additional risk factors regarding the forward-looking information set forth above, the business and affairs of the Fund and its subsidiaries and an investment in the Trust Units are contained in the Fund's annual information form dated April 19, 2006, the Fund's management's discussion and analysis for both the year ended December 31, 2005 and the fiscal quarters ended March 31, 2006, June 30, 2006 and September 30, 2006, and the material change report of the Fund dated November 14, 2006, copies of which are available through the internet on the Fund's SEDAR profile at www.sedar.com. Readers are also referred to the risk factors contained in other documents the Fund files from time to time with securities regulatory authorities, copies of which are also available through the internet on the Fund's SEDAR profile at www.sedar.com.

The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement.

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