Just Energy Income Fund

Just Energy Income Fund

January 18, 2010 07:30 ET

Just Energy and Home Trust Company Announce Water Heater Financing Agreement

TORONTO, ONTARIO--(Marketwire - Jan. 18, 2010) - Just Energy Income Fund ("Just Energy")(TSX:JE.UN), through its wholly owned subsidiary National Energy Corporation which operates as National Home Services ("NHS"), and Home Trust Company ("Home Trust"), a wholly owned subsidiary of Home Capital Group Inc. (TSX:HCG), today announced that they have entered into a long term financing agreement. The financing agreement will cover current and future water heater installations by National Home Services.

Under the agreement, NHS will receive an amount equal to the five year cashflow from each NHS water heater customer rental contract discounted at an agreed rate. Home Trust will then receive the customer payments on the contracts for the five years. The residual rental payments over the life of the asset will revert to NHS (the expected life of the asset is 15 years).

Home Trust has committed this financing for water heater contracts entered into over the next twelve months. Funding for future years is to be negotiated and both parties have the right to terminate further funding on 180 days notice.

The initial funding, which is expected to close at the end of January, will be for approximately $45 million. The total funding is expected to be approximately $90 million over the initial year.

Gerald M. Soloway, CEO of Home Trust said, "The relationship between Home Trust and National Energy Corporation is an important step in diversifying our product offerings to homeowners. We believe that the financing of water heaters is a low risk business for Home Trust by having both the homeowners' covenant and the collection guarantee of a third party for 99.5% of the billed amount."

Ken Hartwick, CEO of Just Energy said, "This is an important agreement that allows our fast growing water heater business to be self-financing both now and in the future. We have advised our unitholders that National Home Services is a stable and profitable long term addition to our product portfolio and that water heaters can be a freestanding unit of our business. The returns from this arrangement ensure that this will be the case."

"This agreement also ensures that the working capital bank lines needed for our rapidly expanding gas and electricity business will not be constrained by our capital needs to fund water heater installations."

Rebecca MacDonald, Executive Chair of Just Energy said, "This is a very important step in the long term growth of Just Energy. The agreement with Home Trust will allow us to ramp up growth of our water heater business as quickly as possible without the initial capital requirements constraining our working capital lines or limiting our ability to pay our predictable and reliable distributions to our Unitholders. This will also be important as we move toward our conversion to a dividend paying corporation in 2010 as the growth of the water heater business contributes to our goal of paying annual dividends equal to our current $1.24 regular distribution." 

About Just Energy

Just Energy's business involves the sale of natural gas and/or electricity to residential and commercial customers under long-term fixed-price and price-protected contracts. By fixing the price of natural gas or electricity under its fixed-price or price-protected program contracts for a period of up to five years, Just Energy's customers offset their exposure to changes in the price of these essential commodities. Just Energy, which commenced business in 1997, derives its margin or gross profit from the difference between the fixed price at which it is able to sell the commodities to its customers and the fixed price at which it purchases the associated volumes from its suppliers.

Just Energy also offers "green" products through its Just Green program. The electricity Just Green product offers the customer the option of having all or a portion of his or her electricity sourced from renewable green sources such as wind, run of the river hydro or biomass. The gas Just Green product offers carbon offset credits which will allow the customer to reduce or eliminate the carbon footprint for their home or business. Just Energy management believes that these products will not only add to profits, but also increase sales receptivity and improve renewal rates.

In addition, through National Home Services, the Fund sells and rents high efficiency and tankless waterheaters and, through Terra Grain Fuels, produces and sells wheat-based ethanol.

About Home Capital Group Inc.

Home Capital Group Inc. is a holding company, publicly traded on the Toronto Stock Exchange (HCG), operating through its principal subsidiary, Home Trust Company. Home Trust is a federally regulated trust company offering deposit, mortgage lending, retail credit and credit card issuing services. Licensed to conduct business across Canada, Home Trust has offices in Ontario, Alberta, British Columbia, Nova Scotia and Québec


Just Energy's press releases may contain forward-looking statements including statements pertaining to customer revenues and margins, customer additions and renewals, customer attrition, customer consumption levels, distributable cash and treatment under governmental regulatory regimes. These statements are based on current expectations that involve a number of risks and uncertainties which could cause actual results to differ from those anticipated. These risks include, but are not limited to, levels of customer natural gas and electricity consumption, rates of customer additions and renewals, rates of customer attrition, fluctuations in natural gas and electricity prices, changes in regulatory regimes and decisions by regulatory authorities, competition and dependence on certain suppliers. Additional information on these and other factors that could affect the Fund's operations, financial results or distribution levels are included in the Fund's annual information form and other reports on file with Canadian securities regulatory authorities which can be accessed through the SEDAR website at www.sedar.com or through the Fund's website at www.justenergy.com.

From time to time Home Capital Group Inc. (the "Company" or "Home Capital") makes written and verbal forward-looking statements. These are included in the Annual Report, periodic reports to shareholders, regulatory filings, press releases, Company presentations and other Company communications. Forward-looking statements are made in connection with business objectives and targets, Company strategies, operations, anticipated financial results and the outlook for the Company, its industry, and the Canadian economy. These statements regarding expected future performance are "financial outlooks" within the meaning of National Instrument 51-102. Please see the risk factors, which are set forth in detail on pages 28 through 38 of the Company's 2008 Annual Report, as well as its other publicly filed information, which may be located at www.sedar.com, for the material factors that could cause the Company's actual results to differ materially from these statements. Forward-looking statements are typically identified by words such as "will," "believe," "expect," "anticipate," "estimate," "plan," "may," and "could" or other similar expressions.

The Toronto Stock Exchange has neither approved nor disapproved of the contents of this release.

Contact Information

  • Just Energy Income Fund
    Ms. Rebecca MacDonald
    Executive Chair
    (416) 367-2872
    Just Energy Income Fund
    Mr. Ken Hartwick, C.A.
    Chief Executive Officer & President
    (905) 795-3557
    Just Energy Income Fund
    Ms. Beth Summers, C.A.
    Chief Financial Officer
    (905) 795-4206
    Home Capital Group Inc.
    Gerald M. Soloway
    Home Capital Group Inc.
    Martin Reid