Northland Power Income Fund
TSX : NPI.UN
TSX : NPI.DB

Northland Power Income Fund

May 14, 2009 12:56 ET

Northland Power Income Fund Announces Results for the First Quarter of 2009

TORONTO, ONTARIO--(Marketwire - May 14, 2009) -

Not for distribution to U.S. newswire services or for dissemination in the United States or its possessions. Any failure to comply with this restriction may constitute a violation of U.S. securities law.

Northland Power Income Fund (the "Fund") (TSX:NPI.UN)(TSX:NPI.DB) reported its financial results today for the quarter ended March 31, 2009.



FINANCIAL AND OPERATING HIGHLIGHTS

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3 Months Ended March 31
2009 2008
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FINANCIAL (thousands, except per unit amounts)
Sales $52,877 $52,351
Net income $16,913 $15,722

Standardized distributable cash $22,605 $21,638
Distributable cash $22,515 $23,271

Distributions declared to Unitholders $16,835 $16,835

Units Outstanding at Quarter End 62,353 62,352
Average Number of Units Outstanding - basic 62,353 62,352
Average Number of Units Outstanding - diluted 65,405 64,916

Per Unit - basic
Standardized distributable cash $0.3625 $0.3470
Distributable cash $0.3611 $0.3732
Distributions declared to Unitholders $0.2700 $0.2700
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OPERATIONS
Electricity sales volume (megawatthours) 371,628 385,572
Steam sales volume (thousands of pounds) 367,289 380,993
Fuel consumption (thousands of gigajoules) 2,926 3,057
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Consolidated sales and net income for the quarter of $52.9 million and $16.9 million, respectively, exceeded the first quarter of 2008 largely due to higher electricity sales at the Fund's gas-fired cogeneration facilities and increased natural gas resales at the Kingston facility. Also contributing to higher net income was increased investment income as well as non-cash gains on foreign exchange translation and the fair value of the Kingston's facility's interest rate swap.

First quarter gross profit at the Iroquois Falls plant was down slightly from last year primarily due to a retroactive adjustment to 2008 electricity revenue under the facility's power purchase agreement ("PPA") and a reopener on the price under one natural gas contract, while gross profit from the Kingston facility was up due to increased electricity and natural gas sales. Production at both the Mont Miller and German wind farms was down due to lighter winds than last year.

Distributable cash as determined by the Fund was $22.5 million during the quarter and exceeded distributions declared to Unitholders by $5.7 million. Distributable cash per unit for the quarter was $0.36, compared to $0.37 in 2008.

Cash and cash equivalents of $41.7 million at March 31st decreased by $3.8 million from December 31, 2008 as $2.6 million of investing activities and by $23.9 million of financing activities were not fully offset by $22.7 million of cash generated by operations.

Distributions to Unitholders declared for the quarter totalled $0.27 per unit.

In April 2009, Kingston CoGen LP ("Kingston LP") was given formal notice that its steam host, INVISTA (Canada) Company ("INVISTA"), will permanently close its Millhaven facility in October 2009. Kingston LP provides steam to the Millhaven facility under an energy services agreement that expires in 2017, and receives several water-related ancillary services under agreements that expire in 2018. The INVISTA agreements provide Kingston LP with 'step-in rights' to operate and maintain the pertinent INVISTA infrastructure, with Kingston LP manpower and at Kingston LP's cost. The Manager expects that, over the long term, the reduction in steam revenue will be largely offset by additional gas resales.

On April 16, 2009, the parent of the Iroquois Falls facility's steam host, AbitibiBowater Inc. ("AbitibiBowater") and its subsidiaries filed for court protection in the United States and on April 17, 2009 filed under the Companies' Creditors Arrangement Act ("CCAA") in Canada to implement restructuring for the long term and to allow AbitibiBowater to continue normal business operations. AbitibiBowater's subsidiary continues to operate its pulp and paper mill in Iroquois Falls and to purchase steam from the Fund's Iroquois Falls facility.

On April 23, 2009 it was announced that the parent of the Manager, Northland Power Inc. ("NPI"), and the Fund had entered into an agreement to merge through the acquisition by the Fund of all of the issued and outstanding shares of NPI (the "Acquisition"). NPI is a leading Canadian developer of renewable and clean electricity projects which was established in 1987. NPI established the Fund in 1997 and, through its wholly-owned subsidiary, has provided administrative and management services to the Fund since the Fund's inception as well as to all but one of the facilities owned by the Fund. NPI has also developed a number of clean and renewable projects which have been acquired by the Fund or to which the Fund has made subordinated loans. NPI is indirectly owned by James C. Temerty, the Chair of the Fund. The completion of the Acquisition and related transactions is subject to approval of the Fund's Unitholders at the Annual and Special Meeting to be held on June 22, 2009. The Acquisition and all related transactions are described in detail in the Notice of Annual and Special Meeting and Management Information Circular dated May 1, 2009 that has been mailed to all Unitholders and is available on the Fund's website at www.NPIFund.com and at www.SEDAR.com.

Subsequent to quarter end, the Fund and its subsidiary, Iroquois Falls Power Corp., renewed their $95 million credit facility until May 20, 2011 at higher rates reflecting current market conditions.

Outlook

The following discussion on the outlook relates to the Fund's existing assets.

Management expects the Fund's 2009 distributable cash to be lower than 2008, which included the one-time payments from the Panda-Brandywine-related transactions. It is anticipated that selling prices under Iroquois Falls Power Corp.'s PPA, which are indirectly related to the wholesale cost of electricity in Ontario, will be subject to upward pressure in the long term due to the entry into commercial operation of new power plants and wind farms contracted by the Ontario Power Authority as well as Ontario Power Generation's success in having its administered rates increased. Selling prices under Kingston LP's PPA will also be subject to upward pressure as, among other factors, TCPL's transportation tariff increases during 2008 have been partially passed through to Kingston's 2009 rates.

Margins on natural gas sales at Kingston should remain favourable as the Manager locked in a large portion of the Kingston facility's 2009 gas resales last year when market prices were higher. While the Jardin d'Eole wind farm and the Thorold Cogeneration facility are not expected to make a significant contribution to distributable cash in 2009, both facilities are expected to be in commercial operation late in 2009 or early in 2010 and will then start making cash interest payments.

Distributions to Unitholders in 2009 are expected to be at the level of $1.08 per unit.

ABOUT THE FUND

Northland Power Income Fund is a Canadian income trust that indirectly owns equity interests in six power projects, which efficiently and cleanly produce electricity and steam for sale under long-term contracts. The Fund's natural-gas-fired power plants and wind farms are located in Canada, the United States and Germany. The Fund is also providing $30 million as subordinated debt to Northland Power Inc.'s 265 MW Thorold Cogeneration Project that is under construction near Thorold, Ontario and $35 million as subordinated debt to the Jardin d'Eole wind project under construction near Matane, Quebec.

The Fund's trust units and convertible debentures, which trade on the Toronto Stock Exchange under the symbols NPI.UN and NPI.DB respectively, are qualified investments for RRSPs and DPSPs under the Canadian Income Tax Act. The Fund has in place a distribution re-investment plan that allows Unitholders who are residents of Canada to automatically have their monthly cash distributions reinvested in additional units. Participants do not pay any costs associated with the plan, including brokerage commissions. For further information or to join the plan, contact your financial advisor or broker.

FORWARD LOOKING STATEMENTS

Certain statements in this News Release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Fund's and its subsidiaries' current expectations. Forward-looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, priorities, ongoing objectives, strategies and outlook of the Fund's and its subsidiaries' for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could". This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including the perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. Although these forward-looking statements are based upon the Fund's Manager's current reasonable expectations and assumptions, they are subject to numerous risks and uncertainties, including those set out in the management's discussion and analysis section of the Fund's 2008 annual report and in the Fund's Annual Information Form dated March 13, 2009, certain of which are beyond the Manager's control. The Fund's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or what benefits, including the amount of distributions, the Fund and Unitholders will derive therefrom.

The forward-looking statements contained in this press release are made as of the date hereof for the purpose of providing readers with the Fund's expectations for the coming year. The forward-looking statements may not be appropriate for other purposes. Other than as specifically required by law, the Fund undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Contact Information

  • Northland Power Income Fund Management Inc.
    Barb Bokla
    Manager, Investor Relations
    (416) 962-6262 x156
    (416) 962-6266 (FAX)
    or
    Northland Power Income Fund Management Inc.
    Boris Balan
    Director of Communications
    (416) 962-6262 x116
    (416) 962-6266 (FAX)
    info@NPIFund.com
    www.NPIFund.com