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

Northland Power Income Fund

May 14, 2008 11:09 ET

Northland Power Income Fund Provides $35 Million Funding Commitment to Jardin d'Eole Wind Farm Development

TORONTO, ONTARIO--(Marketwire - May 14, 2008) -

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Northland Power Income Fund (the "Fund") (TSX:NPI.UN)(TSX:NPI.DB) and Northland Power Inc. announced today that financing for the $268 million Jardin d'Eole wind farm has been arranged. The Fund has committed to provide a $35 million loan to Saint-Ulric Saint-Leandre Wind L.P./Eoliennes Saint-Ulric Saint-Leandre S.E.C. (SUSL), the developer and owner of the Jardin d'Eole project. SUSL is owned by Northland Power Inc., the owner of the Manager of the Fund.

The Fund's $35 million loan will be subordinated to the senior secured project debt, with recourse limited to the assets of SUSL. The senior secured debt financing of $153 million is being provided by a consortium of insurance companies led by The Manufacturers Life Insurance Company and including Sun Life Assurance Company of Canada and The Great-West Life Assurance Company. Northland Power Inc. is the project sponsor and has provided the required equity.

The Fund's loan will accrue interest and fees during the expected 18 month construction period of the project. The Fund will have an option to acquire a 50% equity ownership interest once the project is in full commercial operation for $35 million. The Fund will finance the subordinated loan commitment under its existing line of credit.

The Jardin d'Eole project will be located on leased land, primarily agricultural, on the south shore of the St. Lawrence River close to the municipalities of Saint-Ulric and Saint-Leandre. SUSL signed a contract with Hydro-Quebec in February 2005 for the supply of up to 150 megawatts (MW) of electricity from the Jardin d'Eole wind farm that expires 20 years after commencement of commercial operations. SUSL also expects to receive payments under the federal government's EcoEnergy program. SUSL has a contract with GE Wind Inc. and General Electric Canada for the delivery of 85 GE 1.5sle wind turbines, equivalent to 127.5 MW. The Jardin d'Eole wind farm may be expanded at a later date to the full 150 MW. Construction will be commenced this summer by Borea, a joint venture of Pomerleau Inc. and D. H. Blattner and Sons, with completion scheduled for December 2009. The wind farm will be operated and maintained on behalf of SUSL by a subsidiary of Northland Power Inc.

This will be the fourth wind farm in which the Fund is involved; it owns the 54 MW Mont Miller wind farm in the Gaspesie, which has been operating for close to 3 years, and two wind farms totaling 21 MW of capacity in Germany. This commitment to "Green" wind power is complemented by the Fund's ownership of interests in 460 MW of "Clean" natural-gas-fired cogeneration projects and its loan to the 265 MW Thorold cogeneration project that is under construction. In addition, the Fund has supported Northland Power Inc.'s pre-qualification in an upcoming Ontario Power Authority request for proposals related to a 350 MW gas-fired peaker facility to be built north of Toronto.

"The contractual structure of the Jardin d'Eole wind farm is designed to ensure predictable, stable and sustainable cash flows over a minimum 20-year period subject, of course, to the natural variability of the wind resource" stated John Brace, CEO of the Fund's Manager. "The long-term contract with Hydro-Quebec, together with the wind turbine supply agreement and the fixed price construction contract, make the subordinated loan an attractive investment for the Fund. In addition, the Fund is protected from construction risk which is being assumed by Northland Power Inc. Management and the trustees believe that the project represents an advantageous investment opportunity for the Fund in wind power, and provides the Fund with the option to acquire an ownership interest at a fixed price once construction has been successfully completed."

The terms of the Jardin d'Eole subordinated loan and the option agreement were reviewed and unanimously approved by the independent trustees of NPIF Commercial Trust who received independent legal and technical advice concerning the transaction. The transaction conforms to the Fund's investment objective of producing stable and sustainable levels of cash available for distribution to Unitholders from energy-related projects, and meets the Fund's guidelines for permitted investments.

Northland Power Income Fund indirectly owns interests in six power generating facilities: three natural gas-fired combined-cycle cogeneration power plants and three wind farms. Two cogeneration plants located in Ontario are wholly owned by the Fund: the 120 megawatt ("MW") Iroquois Falls facility and the 110 MW Kingston station. Through its 19% equity interest in Panda Energy Corp (PEC) and loan to a PEC subsidiary, the Fund has an interest in the 230 MW Panda-Brandywine cogeneration power plant located just outside Washington, D.C. Electricity produced from the cogeneration plants is sold under long-term power purchase agreements (PPAs) with creditworthy entities to ensure revenue stability, and long-term contracts assure the supply and price of natural gas, which is the Fund's largest cost. The 54 MW Mont Miller wind farm in the Gaspesie region of Quebec supplies electricity to Hydro-Quebec under a long-term PPA while the Fund's two wind farms in Germany, with a combined capacity of 21.5 MW, sell electricity to regional power utilities under the provisions of German renewable energy legislation.

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

This news release contains certain forward-looking statements, including statements regarding expectations concerning distributable cash. Although these forward-looking statements are based upon current expectations and assumptions, they are subject to numerous risks and uncertainties, many of which are beyond the Fund's control, including those that have been disclosed in the Fund's latest annual report and annual information form. No assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of distributions, the Fund and unitholders will derive there from.

Contact Information

  • Northland Power Income Fund Management Inc.
    John Brace
    President & Chief Executive Officer
    (416) 962-6262 x 115
    (416) 962-6266 (FAX)
    or
    Northland Power Income Fund Management Inc.
    Boris Balan
    Director, Communications & Business Development
    (416) 962-6262 x 116
    (416) 962-6266 (FAX)
    or
    Northland Power Income Fund Management Inc.
    Barb Bokla
    Manager, Investor Relations
    (416) 962-6262 x 156
    (416) 962-6266 (FAX)
    Email: info@NPIFund.com
    Website: www.NPIFund.com