Spectra Energy Income Fund

Spectra Energy Income Fund

March 04, 2008 17:57 ET

Spectra Energy Income Fund Enters into Agreement to be Taken Private at CDN$11.25 per Unit in Cash

CALGARY, ALBERTA--(Marketwire - March 4, 2008) - Spectra Energy Income Fund (TSX:SP.UN) (the "Fund") announced today that it has entered into an agreement with an affiliate of the Fund's sponsor Westcoast Energy Inc. (the "Sponsor"), by which the Sponsor has agreed to purchase (either by a direct purchase or through a redemption by the Fund) all of the outstanding units of the Fund at a purchase price of CDN $11.25 per unit, payable in cash (the "Consideration").

The Consideration represents a 12.5% premium over the Fund's units' closing price on the TSX on March 4, 2008, and a 17.9% premium over the Fund's units' prior 20 trading day volume weighted average closing price on the TSX as of March 4, 2008.

Subsequent to the Fund's receipt of Spectra Energy Corp's ("Spectra Energy") non-binding proposal to acquire the Fund in early January, the Fund established an independent committee of the board of trustees of Spectra Energy Commercial Trust ("CT") comprised of trustees independent of Spectra Energy and its affiliates (the "Independent Committee") for the purpose of considering the proposal and the related transaction. The Independent Committee and the independent members of the board of trustees of CT have unanimously determined that the proposed transaction is fair to the Fund's unitholders other than Spectra Energy and its affiliates and is in the best interests of the Fund. RBC Capital Markets ("RBC"), the independent financial advisor retained by CT to provide financial advice to the Independent Committee, has provided the Independent Committee with a formal valuation with respect to the outstanding Fund units, concluding that the fair market value of the Fund's units is in the range of $11.00 to $12.25 per unit, and an opinion that the Consideration to be received by the Fund's unitholders other than Spectra Energy and its affiliates is fair from a financial point of view. Based upon this valuation, this opinion and other factors, the independent members of the board of trustees of CT unanimously recommend that the Fund's unitholders vote in favour of the special resolution to be put before the Fund's unitholders approving the proposed transaction.

"The Fund has achieved positive results for its unitholders since its creation in 2005," said Doug Haughey, president and chief executive officer of the Fund's manager. "We believe the proposed transaction represents fair value to the Fund's public unitholders and considers the Fund's current growth prospects and the current Canadian income trust environment."

A special meeting of the Fund's unitholders to consider the proposed transaction is expected to be held in April 2008. The closing of the proposed transaction will require the approval of at least a majority of the Fund's units held by persons other than Spectra Energy and its affiliates, voted at the special meeting in person or by proxy. The proposed transaction is also subject to certain other conditions set out in the agreement among the Fund, CT and the Sponsor, including receipt of required regulatory approvals.

If the proposed transaction is approved by the Fund's unitholders, the transaction is expected to close in the second quarter of 2008. Unitholders will also be paid the Fund's regular monthly cash distribution until closing, including a pro rata amount of the regular monthly cash distribution if the transaction closes on a day other than the last day of a month.

Further details regarding the proposed transaction will be available in an information circular that is expected to be mailed to the Fund's unitholders within the next several weeks. The information circular will contain RBC's valuation report and fairness opinion and other relevant information concerning the proposed transaction. Unitholders should consult their financial, legal or other professional advisors with respect to the proposed transaction.

TD Securities Inc. is acting as the financial advisor and McCarthy Tetrault LLP is acting as the legal advisor to Spectra Energy in connection with the proposed transaction. RBC Capital Markets is acting as the financial advisor and Burnet, Duckworth & Palmer LLP is acting as the legal advisor to the Independent Committee in connection with the proposed transaction.

Conference Call and Webcast:

A conference call to discuss this proposed transaction will take place at 7 a.m. MT (9:00 a.m. ET), Wednesday, March 5. The call will be hosted by Doug Haughey, president and ceo of the Fund's manager. Also participating in the call from the Fund's manager will be Tim Curry, vice president, finance and accounting; Duane Rae, vice president; and Bob Bissett, director, business development and investor relations. Following management's presentation, there will be a question and answer session for analysts and institutional investors.

To participate in the conference call, please dial 416-644-3420 or 1-800-731-6941. A webcast of the call will be available at www.spectraenergyfund.com. A replay of the conference call will be available as of 11 a.m. ET the same day until 12 a.m. on March 12, 2008. To access the replay, dial 416-640-1917 or 1-877-289-8525 followed by the passcode 21263269#.

Forward-Looking Statements:

This news release includes statements that do not directly or exclusively relate to historical facts, referred to as "forward-looking statements." You can typically identify forward-looking statements by the use of forward-looking words, such as "may", "will", "could", "should", "project", "believe", "anticipate", "expect", "estimate", "continue", "potential", "plan", "forecast" and other similar words. The forward-looking statements reflect management's current intentions, plans, expectations, beliefs and assumptions about future events, including the outlook for general economic trends, industry trends, commodity prices, capital markets, and the governmental, legal and regulatory environment. Forward-looking statements relate to, among other things, anticipated financial performance, business prospects, strategies, regulatory developments, new services, market forces, commitments and technological developments. Forward-looking statements also relate to the proposed transaction described in this news release, including the terms and conditions of that transaction and the anticipated timing for closing. These statements are subject to various known and unknown risks and uncertainties that are outside our control and could cause actual results to differ materially from the results expressed or implied by the forward-looking statements. Those risks and uncertainties include market and general economic conditions, future costs, treatment under government regulatory, tax and environmental regimes and the other material risks discussed in the Fund's Annual Information Form dated March 15, 2007, under "Risk Factors" and in the management's discussion and analysis of the Fund and Spectra Energy Facilities LP under the headings "Risk Profile" contained in the Fund's Annual Report for the year ended Dec. 31, 2006. Risks and uncertainties relating to the proposed transaction include risks that the parties will not proceed with the transaction or that the transaction will not be completed for any reason (including the failure to obtain the required unitholder approval or necessary regulatory approvals. Undue reliance should not be placed on this forward-looking information, which is given as of the date of this release, and the Fund undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise.

About Spectra Energy Income Fund

Spectra Energy Income Fund is an unincorporated open-ended trust established under the laws of the Province of Alberta and owns a 53.8 percent indirect interest in Spectra Energy Facilities LP ("SEF LP") which owns 100 per cent of Spectra Energy Midstream Corporation ("Spectra Midstream"). Spectra Energy indirectly owns the remaining 46.2 percent interest of SEF LP and is the sponsor of the Fund. Spectra Midstream is one of the largest independent midstream operations in the Western Canadian Sedimentary Basin ("WCSB") with interests in thirteen natural gas processing plants with a net processing capacity of 924 mmcf/d and over 1,600 kilometres of natural gas gathering pipelines located throughout natural gas prone areas in the western extent of the WCSB. More information on Spectra Energy Income Fund can be found at: http://www.spectraenergyfund.com.

Spectra Energy Corp (NYSE:SE) is one of North America's premier natural gas infrastructure companies serving three key links in the natural gas value chain: gathering and processing, transmission and storage and distribution. For close to a century, Spectra Energy and its predecessor companies have developed critically important pipelines and related energy infrastructure connecting natural gas supply sources to premium markets. Based in Houston, Texas, the company operates in the United States and Canada approximately 18,000 miles of transmission pipeline, 265 billion cubic feet of storage, natural gas gathering and processing, natural gas liquids operations and local distribution assets. Spectra Energy Corp also has a 50 percent ownership in DCP Midstream, one of the largest natural gas gatherers and processors in the United States. Visit www.spectraenergy.com for more information.

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