Canadian Hydro Developers, Inc.

Canadian Hydro Developers, Inc.

November 21, 2007 15:55 ET

Canadian Hydro Announces Strategic Acquisition of Le Nordais Wind Plant in Quebec and a $55 Million Bought Deal Financing

CALGARY, ALBERTA--(Marketwire - Nov. 21, 2007) -


Canadian Hydro Developers, Inc. ("Canadian Hydro" or the "Company") (TSX:KHD) announced today that it intends to acquire the 99 MW Le Nordais Wind Plant ("Le Nordais"), located on the Gaspe Peninsula in the province of Quebec (the "Acquisition") for an aggregate purchase price of approximately $120.75 million, including assumption of certain existing debt of $6.3 million, plus costs related to the transaction. The Company anticipates closing the Acquisition on or before February 28, 2008.

"As part of our strategic plan, we have identified Quebec as an area for our future expansion," said John Keating, CEO of Canadian Hydro. "With its long history of operations, acquiring Le Nordais should provide us with a smooth entrance into the Quebec market, along with an immediate opportunity for growth. We're excited about our strategic arrival into Quebec along with the future opportunities this acquisition brings us."

Le Nordais has been in operation for over 8 years with its power being sold to Hydro-Quebec under a long-term power purchase agreement ("PPA") that expires on December 17, 2033. Based on long-term average forecasts, Le Nordais is expected to generate 165 GWh of green power per year and has annually generated approximately $9 million in EBITDA since commencing production in 1999. The Acquisition also provides a potential expansion at the existing site by up to an additional 70 MW. The expansion is at various stages of regulatory approvals, and the electricity provided as a result of the expansion is anticipated to be sold under the terms of the existing PPA. The expansion, if it proceeds, is projected to be completed in 2010 following the receipt of the necessary regulatory approvals and is anticipated to generate an estimated 190 GWh of green power per year for Canadian Hydro.

Completion of the Acquisition is subject to execution of definitive agreements, receipt of the consent of Hydro-Quebec to the extent required by the PPA and the receipt of all necessary regulatory approvals.

In conjunction with the Acquisition, Canadian Hydro has entered into an agreement with a syndicate of Canadian underwriters led by Scotia Capital Inc. (as sole-bookrunner) and FirstEnergy Capital Corp., and including Canaccord Capital Corp., RBC Capital Markets, Cormark Securities Inc., GMP Securities L.P., National Bank Financial and TD Securities Inc. (collectively, the "Underwriters"). The Underwriters have agreed to purchase for resale to the public, on a bought deal basis, 8,800,000 common shares via subscription receipts of Canadian Hydro (the "Subscription Receipts") at a price of $6.25 per Subscription Receipt for aggregate gross proceeds of $55 million (the "Offering"). The Company has granted the Underwriters an over-allotment option to purchase up to an additional 880,000 Subscription Receipts, on the same terms, for up to 30 days from closing of the Offering.

Each Subscription Receipt represents the right to receive one common share of Canadian Hydro, without the payment of additional consideration, on the closing of the Acquisition. The proceeds from the Offering will be deposited in escrow pending the closing of the Acquisition. If the Acquisition closes on or before February 28, 2008, the net proceeds from the Offering will be released to Canadian Hydro and used to pay a portion of the Acquisition price. In the event that the Acquisition does not close prior to 5:00 p.m. (Toronto time) on February 28, 2008, or if the share purchase agreement relating to the Acquisition is terminated prior to such time, the holders of Subscription Receipts will be entitled to receive an amount equal to the full subscription price thereof plus their pro rata share of the interest earned or income generated on such amount.

The Offering is subject to certain conditions including the receipt of normal regulatory and stock exchange approvals. The Subscription Receipts will be offered in Canada by way of short form prospectus. The closing of the Offering is expected to occur on or about December 14, 2007. This news release shall not constitute an offer to sell or the solicitation of an offer to buy the Subscription Receipts in any jurisdiction. The Subscription Receipts offered will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to a U.S. person, absent registration, or an applicable exemption therefrom.

As part of the Acquisition, Canadian Hydro anticipates signing a commitment letter for a 12-month, unsecured bridge facility for $72 million of the Acquisition price with its syndicate of corporate lenders co-led by the Toronto-Dominion Bank and the Bank of Nova Scotia (the "Syndicate"). It is anticipated that the bridge facility will be repaid on or before maturity through the issuance of senior unsecured debentures; however, no arrangements have yet been made with respect to the same. In addition, it is anticipated that the Syndicate will also provide a three-month equity bridge for $42 million. Provided that the Offering closes before the Acquisition, the equity bridge may not be utilized.

Canadian Hydro is committed to Building a Sustainable Future®. The company is a developer, owner, and operator of 19 power generation facilities totaling net 265 MW of capacity in operation and has an additional 403 MW nearing construction. The renewable generation portfolio is diversified across three technologies (water, wind, and biomass) in the provinces of British Columbia, Alberta, and Ontario. This portfolio is unique in Canada as all facilities are certified, or slated for certification, under Environment Canada's EcoLogo(M) Program.

Note respecting EBITDA

"EBITDA" is a financial measure that does not have any standardized meaning prescribed by Canadian generally accepted accounting principles ("GAAP") and may not be comparable to similar measures presented by other companies. EBITDA is a measure of Le Nordais' operating profitability. EBITDA provides an indication of the results generated by Le Nordais 'principal business activities prior to how these activities are financed, assets are amortized or how the results are taxed in various jurisdictions. EBITDA is calculated from the Consolidated Statements of Earnings and Retained Earnings and is calculated as net earnings plus or minus interest expense, income taxes, depreciation and amortization, stock based compensation, gains or losses on disposal and foreign exchange gains or losses. Average EBIDTA, with respect to the Acquisition, has been calculated based on the audited financial statements of KW Gaspe and Company, Limited Partnership, since commencement of commercial operations.

Advisory Respecting Forward-Looking Statements:

This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "confident", "might" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this news release contains forward-looking information and statements pertaining to the following: (i) the completion of the Acquisition and the benefits anticipated to be achieved by the Company thereby, including the continuation of the PPA; (ii) the obtaining of all necessary permits and regulatory approvals in order for the potential Le Nordais expansion to proceed; (iii) the successful completion of financing necessary to complete the Acquisition, including the Offering and the bank financing; (iv) the ability for the Company to issue senior unsecured debentures to repay the bridge facility on terms acceptable to the Company; and (v) other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release.

The forward-looking information and statements contained in this news release reflect several material factors, expectations and assumptions including, without limitation: (i) commodity prices, foreign currency exchange rates and interest rates; (ii) supply and demand for electricity; (iii) expectations regarding the Company's ability to raise capital and to increase its power generation capability through acquisitions and construction; (iv) schedules and timing of certain projects and the Company's strategy for growth; (v) the Company's future operating and financial results; (vi) treatment under governmental regulatory regimes and tax, environmental and other laws; (vii) the timing of the delivery of power generation assets under construction contracts; and (vii) the expected long-term average generation of Le Nordais.

The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements. Such information and statements involve 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 or statements.

The Company cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information and statements contained in this news release speak only as of the date of this news release, and the Company assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.

Common shares outstanding: 132,943,723

The Toronto Stock Exchange has neither reviewed nor approved this press release.

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