O'Leary Funds Management LP

June 23, 2010 18:42 ET

O'Leary Funds Management LP Will Not Tender Units of Boralex Power Income Fund (BPT.UN) Under the Offer Made by Boralex Inc.

MONTREAL, QUEBEC--(Marketwire - June 23, 2010) - O'Leary Funds Management LP ("O'Leary Funds") confirms it will not accept the offer by Boralex Inc. ("Boralex") for all of the issued and outstanding trust units ("BPT.un") of Boralex Power Income Fund (the "Fund"), and will not tender BPT.un (of which the funds we manage now hold in aggregate over 4 million units, representing approximately 8.87% of BPT.un), because we believe that:

  1. the offer made by Boralex is not in the best interests of the Fund's investors,

  2. an open process to sell the Fund would generate greater value than the current offer,

  3. Boralex could likely improve its offer, and

  4. the status quo is better than the proposed offer.

Connor O'Brien, CEO of O'Leary Funds and Chief Investment Officer of Stanton Asset Management Inc. ("Stanton", the portfolio advisor to O'Leary Funds) said "We are one of the largest holders of BPT, and we are pleased with the value and cash yield of our investment, however we prefer to own the Fund in its current form, rather than accept the offer made by Boralex. The reason for this is clear and simple: in our view, under the proposed terms, the Fund's investors would suffer a substantial 45% reduction of their after tax cash yield, with no increase of investment value, and not much chance of selling their investment for fair value. We believe greater value for the Fund's investors could be generated by an open process to sell the assets or equity of the Fund, because BPT cash flow is mostly from its excellent hydro power assets that buyers in an open process would value up to 13 times operating cash flow, yet we see the Boralex offer as an attempt to buy BPT for only 6.7 times the 2009 operating cash flow and 7.3 times the 2010 estimated operating cash flow. As an alternative, Boralex may revise its offer to more fully value the Fund and to pay for the acquisition with cash or securities that investors could sell for full fair value. We believe the combination of Boralex and the Fund could be very attractive, however the terms need to be made attractive for BPT investors. We expect the current offer process will soon fail, allowing us to hold the Fund for its attractive value and cash yield, perhaps until a more attractive offer is made".

Kevin O'Leary, Chairman of O'Leary Funds, explained his view saying "I would never tender under these terms. The proposed terms are bad for BPT investors and do not meet my value and yield metrics. In our investment mandates, we place a high priority on investment value and cash yield for investors in our funds, and I am a significant investor in the funds we manage. Although I am pleased with our investment in BPT, the proposal by Boralex is not attractive for BPT investors, and not acceptable at this time."

Contact Information

  • O'Leary Funds Management Inc.
    Connor O'Brien
    Chief Executive Officer
    (514) 849-0064 ext 224
    Stanton Asset Management Inc.
    Connor O'Brien
    Chief Investment Officer
    (514) 849-0064 ext 224