Countryside Power Income Fund

Countryside Power Income Fund

February 01, 2007 16:59 ET

Countryside Power Income Fund Announces U.S. Court Approval of USEB Settlement

Fund declares January 2007 distribution

LONDON, ONTARIO--(CCNMatthews - Feb. 1, 2007) -


Countryside Power Income Fund (TSX:COU.UN) (the "Fund") today announced that The United States Bankruptcy Court in the Southern District of New York ("U.S. Court") has held a hearing and stated it will approve the previously disclosed settlement 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. subject to its review and approval of the final documentation (the "USEB Settlement").

USEB Settlement

The USEB Settlement, 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) inclusive of all principal, pre- and post-petition interest, charges, premiums, penalties, make-whole amounts, attorneys' fees and expenses and expert fees and expenses accrued or incurred by the Lender through and including January 31, 2007, secured by all the liens and security interests and other rights granted under the USEB loan documents.

The outstanding principal amount of the allowed secured claim had been reduced to US$96,000,000 from receipt of a US$3,000,000 payment from USEB as at January 31, 2007, in accordance with a U.S. Court order entered on January 17, 2007. Further, the outstanding amounts of the allowed secured claim shall be deemed over secured for purposes of adequate protection and the use of cash collateral in the USEB bankruptcy cases and shall bear cash interest at a rate of 10% per annum commencing February 1, 2007, payable monthly in U.S dollars to the Lender.

The USEB Settlement also provides for installment cash payments of US$30,000,000 on or before March 31, 2007, and the remaining balance on or before maturity at May 31, 2007. The parties will work together to pursue a "take-out" financing before the final installment date of May 31, 2007. Mutual general releases will be exchanged among the parties involved and will cover individuals affiliated with the Fund who have been threatened with lawsuits arising out of their prior employment by USEY. USEB filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on November 29, 2006.

The USEB Settlement shall become effective when the approval order has been entered by the Bankruptcy Court which is expected shortly and either (i) has become a final and non-appealable order under applicable law or (ii) has become effective in accordance with its terms or Federal Rules of Bankruptcy Procedure 6004(h) and 7062 and Federal Rule of Civil Procedure 62(a), whichever is earliest, and no stay pending appeal of such order has been entered and is effective.

January 2007 Distribution

The Fund also declared that its January 2007 distribution of $0.8630 per unit will be paid on February 28, 2007, to unitholders of record as at February 8, 2007. The Fund's policy is for unitholders of record on the last business day of a calendar month to receive distributions on or about the 30th day of the following month. Holders of units who are non-residents of Canada will be required to pay all applicable withholding taxes payable in respect of any distributions by the Fund.

The Fund also closed on its waiver and amendment to its existing credit facility agreement with its lending sydicate on January 30, 2007 which provides for, among other things, permission to make unitholder distributions through the four month waiver period, ending May 31, 2007, subject to ongoing compliance with financial covenants.

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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