Countryside Power Income Fund

Countryside Power Income Fund

January 18, 2007 09:29 ET

Countryside Power Income Fund Confirms Cash Distribution for December 2006

US$3 million payment from USEB Settlement Approved


Countryside Power Income Fund (TSX:COU.UN) (the "Fund") today announced that it confirms its previously declared distribution of $0.0860 per unit payable on January 31, 2007, to unitholders of record as of December 29, 2006.

The Fund confirms the December 2006 distribution following yesterday's approval by the United States Bankruptcy Court in the Southern District of New York (the "U.S. Bankruptcy Court") of a US$3-million payment to be made on or before January 31, 2007, by U.S. Energy Biogas Corp. ("USEB") to the Fund. The Fund also has received permission from its syndicate of lenders to make the distribution to unitholders. Along with the approved payment from USEB, the U.S. Bankruptcy Court has set February 1, 2007, as the hearing date to make a final ruling on the settlement agreement reached, through mediation, among the Fund's subsidiary, Countryside Canada Power Inc. (the "Lender"), USEB and its parent, U.S. Energy Systems, Inc., on January 13, 2007, that seeks to resolve all outstanding issues between the parties ("USEB Settlement Agreement") -- as disclosed in a press release dated January 15, 2007. In addition to U.S. Bankruptcy Court approval, the USEB Settlement Agreement is also subject to approval by the Fund's syndicate of lenders. The respective boards have approved the USEB Settlement Agreement.

"We are encouraged by the swift progress that has been made to recoup our investment in USEB," said Goran Mornhed, President and Chief Executive Officer of Countryside Ventures LLC. " As we move forward, we will look to expedite the monetization of our secured claim and make a decision on the resulting use of proceeds in the best interest of unitholders."

The Fund is currently in discussions with its lenders regarding an extension of its existing waiver. The objective is to have the USEB Settlement Agreement reflected in a long-term financing solution that will provide the Fund with greater financial flexibility to support ongoing distributions and to meet its growth commitments, including the 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.

2006 United States Income Tax Information

After consultation with its U.S. tax advisors, the Fund believes that its units more likely than not will be properly classified as equity in a corporation, rather than debt, for U.S. federal income tax purposes, and that distributions paid to its individual U.S. unitholders will more likely than not be qualified dividends. As such, the portion of the distributions made during 2006 that are considered dividends should qualify for the reduced rate of tax applicable to certain capital gains. This tax information applies to U.S. resident taxpayers only and has no impact on Canadian resident taxpayers. For more information concerning this matter please refer to the Fund's website at and access Tax Information on "The Fund" page.

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.

Contact Information