Tonbridge Power Inc.
TSX VENTURE : TBZ

Tonbridge Power Inc.

October 27, 2009 11:52 ET

Tonbridge Power and MATL Close $161M Construction and Term Facility With Western

TORONTO, ONTARIO--(Marketwire - Oct. 27, 2009) - Tonbridge Power Inc. (TSX VENTURE:TBZ) ("Tonbridge Power" or the "Company") announces that, together with its Montana Alberta Tie Ltd. ("MATL") and MATL LLP subsidiaries, as financees, it has executed final documentation for the previously announced US$161 million financing with Western Area Power Administration ("Western"). The financing will be used to fund the construction of the MATL transmission line (the "Project") and is provided by Western under the U.S. Department of Energy through the borrowing authority provided by the American Recovery and Reinvestment Act ("ARRA"). This facility is the first project financed by Western using the US$3.25 billion ARRA authority transmission appropriation budget to finance qualified projects.

The Western financing provides sufficient funding to complete the Project.

The financing contemplates two phases: construction financing and term financing. During the Project's construction, advances under the construction financing will bear interest at an annual rate of 2%, accruing quarterly. The construction financing will be drawn in monthly advances in accordance with pre-conditions customary in project finance, based on work completed and monitored through a monthly project schedule and budget. The first stage of the construction plan is expected to commence by year end 2009 and continue for approximately 18 months.

Once construction has been completed and the line is commercially operational, the amount outstanding on the construction financing (including accrued interest) will convert to a 30-year term financing, bearing interest at an annual rate equal to the 30-year U.S. Treasury cost of funds passed through by Western to the financees. That rate (which was 4.37% yesterday) will be determined at the time of conversion to term financing. Term conversion will occur after the financees satisfy customary conditions precedent including, among other things, that the Project is substantially completed and the transmission customers have made initial capacity payments and are otherwise in material compliance with their transmission service rights agreements. It is expected that term conversion will take place as early as the first quarter of 2011. Payments of principal and interest are to be made on a quarterly basis commencing not later than three months following term conversion. Payments are calculated over a 30-year term with the entire principle amortizing by maturity.

The term financing is to be repaid in full on the 30th anniversary of term conversion and may be shortened by any mandatory or optional prepayment. The financees have the option to prepay any part of the financings on 30 days notice.

The financees have agreed to use operating cash flow received from the Project and its operations in a certain priority sequence (the "Distribution Waterfall") and to maintain certain bank accounts for the purposes of the construction and operations of the Project. As part of the Distribution Waterfall, the financees may, following the commercial operation date of the Project, make annual distributions to the Company equal to 15% of the average audited book value of the Company's direct and indirect investment in the Project but subject to certain debt service coverage and maintenance reserves. Distributions made to the Company are to repay any and all amounts outstanding under its existing fully funded US$31 million credit facility with Anchorage Capital Master Offshore III, Ltd. ("Anchorage"). These distributions continue to be available to the Company after the Anchorage facility is retired. Western is entitled to an annual mandatory prepayment of any remaining operating cash flow received from the Project after all other payments are made under the Distribution Waterfall.

The construction and term financing are secured by the shares of the financees and their respective subsidiaries and affiliates owning an interest in the Project as well as over all of the present and future Project assets owned by them. Such security is a first ranking security except for the shares of MATL owned by Tonbridge Power, which are subject to a security interest in favour of Anchorage.

The financees and Western have entered into a joint ownership, operations and maintenance agreement (the "Joint Ownership Agreement") with respect to the Project. Pursuant to the Joint Ownership Agreement, the financees will transfer to Western on term conversion: (a) the first unencumbered17.83 miles of the Project immediately north of the Great Falls 230 kV switchyard (being 1/12th of the total length of the transmission line); (b) the ownership rights in perpetuity in 50 MW of southbound capacity in the Project (being 1/12th of the total capacity); and (c) a right to own the first 50 MW of northbound transmission resulting from the upgrade expansion capacity in the Project when and if such additional capacity becomes available.

The resulting percentage ownership of the Project once term conversion has occurred will be a 1/12th share in favour of Western and an 11/12ths share in favour of the financees. The financees and Western will pay their proportionate share of fees to any operators as well as property taxes and costs of operations, maintenance and capital improvements. These arrangements will be governed through an owners committee that will be comprised of one member appointed by Western and one appointed by the financees. Western will generally have rights of approval on these expenditures, such approval not to be unreasonably withheld or delayed.

Montana Governor Brian Schweitzer commented: "Not only will the MATL line bring in over US$100 million in investment, provide good-paying jobs for Montanans and annual tax revenues of more than US$1 million, but this project also allows for greater wind energy development and reduces our dependence on foreign energy supplies."

Tonbridge Power Chief Executive Officer, Johan van't Hof, remarked, "This has been a huge and very rewarding effort for us at MATL. We are delighted to have closed this transaction with Western and thank them for their diligent and responsive efforts over the past few months. We look forward to building on our relationship with such tremendous partners as we grow our business in the years ahead."

Western is a power marketing agency of the U.S. Department of Energy. For more information, please go to www.wapa.gov.

Tonbridge Power Inc. is a Toronto-based developer of electrical transmission assets, whose principal asset is a 100% interest in MATL.

Forward-Looking Information

This news release contains "forward-looking information", within the meaning of applicable Canadian securities legislation, concerning the business, operations and financial performance and condition of the Company. Forward-looking information includes, but is not limited to, statements with respect to financing arrangements and related matters. Generally, this forward-looking information can be identified by the use of forward-looking terminology such as "proposed", "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "should", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is based on the opinions and estimates of management at the date the information is made, and is based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Many of these assumptions are based on factors and events that are not within the control of the Company and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking information include, but are not limited to: risks related to the financing or construction of the transmission line and the substation; risks related to the performance of parties contracting for transmission capacity; delays in obtaining governmental approvals, permits or project financing or in the completion of development or construction activities, requirements for additional capital, government regulation, environmental risks as well as those factors discussed in the section entitled "Risk Factors" in the Company's Annual Information Form for the year ended December 31, 2008 and its management's discussion & analysis for the period ended June 30, 2009, available on www.sedar.com. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information that is included herein, except in accordance with applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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