Northland Power Income Fund

Northland Power Income Fund

March 23, 2006 12:16 ET

Northland Power Income Fund Raises $175 Million; Trust Units to be Exchanged for Subscription Receipts

TORONTO, ONTARIO--(CCNMatthews - March 23, 2006) - Northland Power Income Fund (TSX:NPI.UN)(TSX:NPI.DB) ("Northland Power" or the "Fund") is pleased to announce the closing of an offering of Subscription Receipts pursuant to a prospectus dated March 16, 2006. As a result, 11,560,000 Subscription Receipts were issued at $15.15 per Subscription Receipt to raise gross proceeds of $175,134,000. The offering was underwritten by a syndicate led by CIBC World Markets Inc. The gross proceeds from the offering (the "Escrowed Funds") were deposited with a Subscription Receipt Agent to be held in escrow.

The Fund also announced that the conditions to the release of the Escrowed Funds have been satisfied and accordingly (1) the Escrowed Funds have been released and (2) Trust Units of the Fund will be issued to the holders of the Subscription Receipts on a one-for-one basis as of 5:00 p.m. (Toronto time) today through the facilities of the Canadian Depository for Securities Limited.

Approximately US $110 million (about $127 million) of the proceeds from the offering are being used today by the Fund for the purchase of all of the issued and outstanding shares of AES Kingston ULC, the owner of the remaining 50% of the 110 megawatt (MW) Kingston cogeneration facility that the Fund did not previously own, from a subsidiary of The AES Corporation, bringing the Fund's ownership of the Kingston facility to 100%. Approximately $33 million of the balance of the net proceeds from the offering will be used to retire the debt owed to Ontario Electricity Financial Corporation, pursuant to the levelization mechanism in the power purchase agreement for the Kingston facility. The balance of the net proceeds from this offering will be used by the Fund for acquisitions or for other general purposes of the Fund.

The acquisition of the balance of the Kingston facility, including the rights to its management, further increases the size and enhances the diversification of the Fund. Liquidity in the Fund's trust units is expected to increase and the Manager of the Fund expects the acquisition to be accretive to cash distributions by approximately 3%, although there can be no assurance that such increase will be realized.

Northland Power Income Fund indirectly owns interests in four power projects: three natural gas-fired combined-cycle cogeneration power plants that efficiently and cleanly produce electricity and steam for sale and one wind power project. Two cogeneration plants are located in Ontario: the 120 MW Iroquois Falls facility, which has been wholly-owned by the Fund since its inception in 1997, and the 110 MW Kingston facility, of which the Fund owns 100% as a result of the closing of the transaction with a subsidiary of The AES Corporation. 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 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 project in the Gaspesie region of Quebec supplies electricity to Hydro-Quebec under the terms of a 21-year PPA.

The Fund's trust units and convertible debentures, which trade on the Toronto Stock Exchange under the symbols NPI.UN and NPI.DB, respectively, and the Subscription Receipts 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.



The above disclosure contains certain forward-looking statements including, in particular, the Manager's expectation that the Kingston acquisition is expected to increase liquidity in the Fund's trust units and be accretive to cash distributions. 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, as well as additional risks and uncertainties that are disclosed in the prospectus qualifying the offering of subscription receipts. 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 therefrom.

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