Tonbridge Power Inc.
TSX VENTURE : TBZ

Tonbridge Power Inc.

March 20, 2006 16:49 ET

Tonbridge Power Inc. Enters into Purchase Agreements to Acquire Remaining 35% Interest of MATL; Will Increase Interest to 100%

TORONTO, ONTARIO--(CCNMatthews - March 20, 2006) - Tonbridge Power Inc. (TSX VENTURE:TBZ) ("Tonbridge") announces that it has entered into share purchase agreements (the "Purchase Agreements") to acquire the remaining 35% interest in Montana Alberta Tie Ltd. ("MATL") that it does not currently own. The acquisitions, which remain subject to the approval of the TSX Venture Exchange, are scheduled to close on the earlier of April 28, 2006 and the date upon which certain tax clearances are issued.

Following the acquisitions, Tonbridge will hold a 100% interest in MATL, which is proposing to construct a transmission line to interconnect the Alberta and US electricity markets through a 300 MW transmission line, scheduled to be operational in 2007.

Pursuant to the Purchase Agreements, Tonbridge will acquire the remaining interest in MATL through the acquisition of Rocky Mountain Power Ltd. and LECTRIX Ltd., each of which is a holding company whose sole asset is a 17.5% interest in MATL. Tonbridge will issue an aggregate of 35,929,000 common shares ("Tonbridge Shares") to the vendors of the two companies. The transaction is valued at approximately $11.856 million based on a share price of $0.33 per share.

In addition, the vendors may receive, in the aggregate, up to 6,000,000 additional Tonbridge Shares if certain conditions relating to construction and completion of the transmission line project are met within specified time periods. Specifically, 2,000,000 Tonbridge Shares would be issued upon the occurrence of each of the following events: (i) the issuance of a "notice to proceed" with construction on or before August 1, 2006; (ii) the transmission line being substantially completed and available to be energized for commercial operation on or before March 1, 2007; and (iii) if the final cost of the transmission line does not exceed 5% of the board's approved control budget.

Tonbridge announced on November 24, 2005 that it had entered into a letter of intent to acquire the remaining interest in MATL.

Rocky Mountain Power is owned by Lorry Wilson, Jose Fernandez and Joe Novecosky, officers of MATL and insiders of Tonbridge, and three other individuals who are not insiders of Tonbridge. Lectrix is owned by companies controlled by Reynold Roeder, a director of MATL and an insider of Tonbridge, and two other individuals who are not insiders of Tonbridge. All of the vendors of each company will receive, collectively, an aggregate of 17,964,500 Tonbridge Shares.

In connection with the proposed acquisitions, the vendors have agreed to enter into a shareholders agreement with Tonbridge, which provides for, among other things, the agreement by the vendors to grant their proxies to the president of Tonbridge to vote their Tonbridge Shares (i) in favour of the board of directors nominated by the nomination committee of Tonbridge's board of directors; and (ii) in favour of certain liquidity events involving Tonbridge as Tonbridge's board may approve from time to time. In addition, the vendors have agreed to tender their Tonbridge Shares in accordance with the board's recommendation in the event of a take-over bid for Tonbridge endorsed by the company's board. The vendors' obligation to vote or tender their Tonbridge Shares continues until the transmission line has achieved substantial completion under the engineering, procurement and construction agreement to be entered into by MATL. Notwithstanding the above, the vendors shall be entitled to vote their Tonbridge Shares in respect of any matter which requires "minority approval" under Ontario Securities Commission Rule 61-501 as well as the corresponding minority approval requirements of Regulation Q-27 of the Authorite des marches financiers, if applicable.

The shareholders agreement also imposes certain restrictions on the vendors' ability to sell any of their Tonbridge Shares issued in connection with the acquisitions. The vendors have agreed that they are only permitted to sell their Tonbridge Shares through a broker approved by Tonbridge until Tonbridge has raised all construction financing for the transmission line. In addition, until such time, any vendor who wishes to sell Tonbridge Shares representing more than 1% of the issued Tonbridge Shares at the time must provide the company with 48 hours notice. During this period, Tonbridge may elect to designate a purchaser of such shares who will be required to pay a purchase price of not less than the floor price specified by the selling vendor.

In connection with the completion of the acquisitions, Lorry Wilson, CEO of MATL, will be appointed as a director of Tonbridge. Senior management of MATL will remain unchanged following the completion of the acquisitions.

Pursuant to the policies of the TSX Venture Exchange, the vendors will enter into an escrow agreement with respect to the 35,929,000 Tonbridge Shares issued in connection with the acquisitions. The agreement will provide for an initial release of 25% of the escrowed shares with 15% of the original number of the shares to be released every six months, in accordance with escrow release schedule applied to the Tonbridge Shares issued pursuant to the company's June 29, 2005 qualifying transaction. In addition, the Tonbridge Shares issued to the vendors will be subject to a four-month hold period following closing.

Tonbridge also announces that it intends to grant Reynold Roeder, as a director of MATL, options to acquire 200,000 Tonbridge Shares. The options would be effective on the second trading day following the announcement of the closing of the acquisitions.

Tonbridge Power Inc. is a Toronto-based investor in power projects, whose principal asset its 100% interest in Montana Alberta Tie Ltd.

Should you wish to receive company news via email, please email info@tonbridgepower.com and specify "company news".

Forward Looking Information

Certain information regarding Tonbridge set forth in this document, including management's assessment of Tonbridge's future plans and operations, contains forward looking statements that involve substantial known and unknown risks and uncertainties. These forward looking statements are subject to numerous risks and uncertainties, some of which are beyond Tonbridge's and management's control, including but not limited to, the impact of general economic conditions, industry conditions, fluctuation of foreign exchange rates, environmental, construction, regulatory and financing risks, debt and cash requirements, industry competition and performance or achievement could differ materially from those expressed in, or implied by, these forward looking statements and, accordingly, no assurance can be given that any of the events anticipated to occur or transpire from the forward-looking statements will provide any benefits.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information