Countryside Power Income Fund

Countryside Power Income Fund

June 30, 2005 08:00 ET

Countryside Acquires California Power Generation Assets for $117 Million

LONDON, ONTARIO--(CCNMatthews - June 30, 2005) -

Not for distribution in the United States or over United States wire services

Strategic acquisition will be accretive to cash flow

Countryside Power Income Fund (TSX:COU.UN) today announced that it has acquired the holding company of Ripon Cogeneration LLC ("Ripon"), a California-based power generation company, for CDN$117 million based on current exchange rates.

The principal assets acquired consist of two gas-fired cogeneration plants in California powered by General Electric combustion turbines.

- The Ripon Cogeneration Facility, located near San Francisco in Ripon, California, has been in operation since 1988 and has a generation capacity of 51 megawatts. It has a power purchase agreement to 2018 with Pacific Gas & Electric Company, the principal utility operating subsidiary of PG&E Corp (PCG:NYSE), the largest electric utility in California, and also sells steam to a local paper company.

- The San Gabriel Cogeneration Facility, located near Los Angeles in Pomona, California, has been in operation since 1986 and has a generation capacity of 44 megawatts. It has a power purchase agreement to 2016 with Southern California Edison Company, the principal utility operating subsidiary of Edison International (EIX:NYSE), the second-largest electric utility in California, and also sells steam to a local newsprint producer.

The two facilities posted combined revenues of US$50 million and EBITDA(i) of approximately US$10.5 million for the period from January 27, 2004 to December 31, 2004.

"This acquisition is an ideal strategic fit for the Fund," said Goran Mornhed, President and Chief Executive Officer of Countryside U.S. Power Inc. "Countryside has acquired quality power generation assets whose structure, technology and fuel type is favoured by income trust investors. In addition, we expect the acquisition to be accretive to the Fund's cash flow, and by increasing asset diversification, we further reduce the Fund's risk profile."

Edward M. Campana, the Fund's Executive Vice President and Chief Financial Officer, noted that Ripon's well structured commercial and financing arrangements generally insulate the Fund from commodity price and interest rate risk.

"Ripon's electricity is being sold to large, investment-grade utilities and steam to local, and economically important, industrial buyers under long-term contracts," said Mr. Campana. "These plants have a long and stable operating performance history with predictable cash flow streams."

In the transaction, Countryside, through an indirect subsidiary, acquired a 100 per cent controlling interest in the indirect owner of the two facilities for US$35.8 million in cash plus the assumption of non-recourse Ripon debt of US$59.5 million for a total of US$95.3 million, or approximately CDN$117 million based on current exchange rates.

The Fund financed the acquisition with its amended revolving credit facility provided by Toronto-Dominion Bank and plans to follow with an equity offering aimed at refinancing the acquisition-related bank debt. The Fund also intends to implement a foreign exchange hedging program on the Ripon cash flows to protect unitholder distributions from fluctuating currency exchange rates.

About Countryside Power Income Fund

The Fund owns indirect investments in 22 renewable power and energy projects and two district energy systems. The renewable power and energy projects, located in the United States, currently have approximately 51 megawatts of electric generation capacity and sold approximately 750,000 MMBtus of boiler fuel in 2004. The district energy systems are located in Charlottetown, Prince Edward Island and London, Ontario, and together have approximately 122 megawatts of thermal and electric generation capacity. The Fund's indirect investments consist of loans to, and a convertible royalty interest in, U.S. Energy Biogas Corp. and the ownership of the district energy systems.

Further information can be found in disclosure documents filed by the Fund to Canadian securities regulatory authorities, available at

(i) Non-GAAP Measures
Earnings before interest, income taxes, unrealized interest rate swap gains and losses, and depreciation and amortization ("EBITDA") is not a measure under Canadian GAAP and there is no standardized measure of EBITDA and therefore, it may not be comparable to similar measures presented by other funds or companies. Management uses EBITDA as a key measure of operating performance. EBITDA can be calculated from the Fund's GAAP statements as operating income, plus depreciation and amortization.

Forward-Looking Statement

This news release contains 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 disclosure documents filed with the Canadian securities regulatory authorities. 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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