Countryside Power Income Fund

Countryside Power Income Fund

January 26, 2007 13:43 ET

Countryside Power Income Fund Announces Lender Approval of USEB Settlement

Lenders Extend Waiver Period and Reinstate Access to Credit Facility

LONDON, ONTARIO--(CCNMatthews - Jan. 26, 2007) -


Countryside Power Income Fund (TSX:COU.UN) (the "Fund") today announced that its lending syndicate has approved the previously disclosed settlement agreement among the Fund's subsidiary, Countryside Canada Power Inc. (the "Lender"), U.S. Energy Biogas Corp. ("USEB") and its parent, U.S. Energy Systems, Inc.

The USEB Settlement Agreement, reached on January 13, 2007, provides, among other things, for the Lender to have an allowed secured claim of US$99,000,000 (approximately CAD$116,500,000 at the current exchange rate) in the bankruptcy proceedings of USEB and its subsidiaries. The USEB Settlement Agreement has been approved by the respective company boards and remains subject to the approval of The United States Bankruptcy Court in the Southern District of New York overseeing USEB's Chapter 11 reorganization case, scheduled for February 1, 2007.

As of January 25, 2007, the Fund's lending syndicate approved both the terms of the USEB Settlement Agreement and an extension of the prior waiver of the cross-default provisions of the credit agreement to May 31, 2007. The cross-default provisions were triggered by both USEB's filing for reorganization and its non-payment of debt service on November 29, 2006. The terms of the current waiver extension and amendment will primarily grant the Fund immediate access to its credit facility commitment (subject to certain restrictions) and permits the Fund, at its sole discretion, to make monthly distribution payments to unitholders during the waiver period. In consideration for the waiver extension and amendment, the Lender will pledge, among other things, its direct ownership interests and secured note held in Countryside U.S. Holding Corp., which is the primary holding company of the Fund's California cogeneration assets (Ripon Cogeneration LLC). The closing of the waiver extension and amendment to the Fund's credit agreement is expected to occur on or before January 30, 2007.

During the extended waiver period, the Fund will seek a long-term financing arrangement that reflects the expected monetization of the USEB secured claim under the USEB Settlement Agreement and provides the Fund with sufficient credit capacity to meet its growth commitments, including the full funding of construction of the new London cogeneration facility scheduled to be completed in 2008. There can be no assurance as to the outcome of these discussions with the lenders or that the expected monetization will occur.

Forward-Looking Statements

This press release may contain forward-looking statements relating to expected future events and financial and operating results of the Fund that involve risks and uncertainties. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including market and general economic conditions and the risks and uncertainties detailed from time to time in the Fund's annual information form dated March 31, 2006, and available on SEDAR. Due to the potential impact of these factors, the Fund disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

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