UE Waterheater Income Fund
TSX : UWH.UN

UE Waterheater Income Fund

June 29, 2005 07:57 ET

UE Waterheater Income Fund Announces Acquisition of Protectron Holdings Inc. and Offering of Subscription Receipts

TORONTO, ONTARIO--(CCNMatthews - June 29, 2005) - NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES.

UE Waterheater Income Fund (the "Fund") (TSX:UWH.UN) is pleased to announce that its operating entity, Union Energy Limited Partnership ("Union Energy LP"), has entered into an agreement to purchase Gestion Protectron Inc. / Protectron Holdings Inc. ("Protectron"), Canada's largest privately-held security monitoring and installation company, for approximately $135 million (the "Acquisition"). The transaction will be financed through an offering of subscription receipts and bank credit facilities.

Founded in 1988 and headquartered in Montreal, Quebec, Protectron is the second largest security monitoring company in Canada and amongst the ten largest in North America by number of subscribers. Protectron is engaged in the business of marketing, selling, installing, servicing and monitoring electronic security systems for approximately 176,000 residential, commercial and wholesale subscribers located primarily in Quebec, Ontario and British Columbia. Since 1999, Protectron has experienced a compound annual growth rate in its subscriber base of approximately 10%. For the year ended March 31, 2005, Protectron had revenues of approximately $64 million and EBITDA of approximately $18 million.

Protectron offers subscribers a full suite of security and related monitoring products and services, including intrusion, smoke detector, personal and medical emergency, and environmental monitoring as well as other specialized services. Protectron provides monitoring services from its four monitoring stations located in Montreal, Quebec City, Ottawa and Vancouver.

"We're expanding our already large base of customers, who are increasingly looking to us for additional products and services," says Roger Rossi, UE Waterheater Income Fund President and CEO, adding, "our acquisition of Protectron is expected to be immediately accretive to distributable cash and is consistent with our business objectives of leveraging our base of approximately one million customers, continuing to grow our portfolio of customers, and maximizing operational efficiency."

Protectron President and CEO Daniel Demers adds, "consistent with UE Waterheater Income Fund's existing operations, Protectron is well-suited to be part of an income fund. It is a solid, stable business with growth opportunities in both residential and commercial sectors, an experienced management team and a strong focus on customer service supported by an internal sales and service team."

The Protectron acquisition offers the following strategic advantages for Union Energy:

Leveraging the Base of Approximately One Million Customers: The Fund's water heater and HVAC rental portfolio has grown to include approximately one million customer relationships with sizeable market share of 40% in Ontario. The Fund's management intends to actively leverage its relationships with these customers to cross-sell and bundle a range of home comfort services including home security systems.

Growing the Portfolio of Customers: Protectron is a major platform in the security monitoring and installation industry with approximately 176,000 subscribers and being the second largest security monitoring company in Canada by number of subscribers. As of March 31, 2005, Protectron generated $3.8 million of recurring monthly revenue from these subscribers. Average recurring monthly revenue per subscriber for Protectron is substantially higher than Union Energy's current average monthly revenue per customer.

Maximizing Operational Efficiency: Protectron has made significant investments to develop its sales, service, monitoring and installation infrastructure in key markets. Management believes that it will be able to leverage both companies' existing infrastructure and brands to grow the customer base and target new markets.

Financing of the Transaction

The Fund has entered into an agreement to sell, to a syndicate of underwriters led by CIBC World Markets Inc., on a bought deal basis, 7,720,000 Subscription Receipts at a price of $13.60 per Subscription Receipt, for gross proceeds of approximately $105 million. Holders of the Subscription Receipts are entitled to receive, for no additional consideration, one Unit of the Fund upon closing of the Acquisition. The Subscription Receipts will be offered by way of a short form prospectus to be filed in all provinces and territories of Canada.

Closing of the Offering is expected to occur on or about July 15, 2005. The closing of the Acquisition is expected to occur on or before July 29, 2005. The net proceeds of the Offering, combined with bank credit facilities, will fund the Acquisition.

If the closing of the Acquisition is completed on or before August 31, 2005, holders of the Subscription Receipts will be eligible, provided they hold the Units received pursuant to the Subscription Receipts, for the monthly distribution expected to be paid to Unitholders on the last day of August.

The Subscription Receipts have not been and will not be registered under the United States Securities Act of 1933 and may not be offered or sold in the United States. except under exemptions from those laws and applicable state securities laws.

About UE Waterheater Income Fund

UE Waterheater Income Fund is an unincorporated, open-ended, limited purpose trust established under the laws of the Province of Ontario, created to indirectly acquire and hold, through the UE Waterheater Operating Trust, the water heater rental business of Union Energy LP and its related commercial activities. Each Unit of the Fund represents an indirect ownership interest in Union Energy LP, which operates the Union Energy business.

Union Energy LP's main business is the rental and service of a portfolio of more than one million residential water heaters in Ontario, under the Union Energy and Ontario Hydro Energy brand names. Union Energy LP owns and services Canada's second largest portfolio of rental water heaters in a program that was initiated in the 1960s. In addition, Union Energy LP has related commercial activities that complement the water heater rental business, being the retail sale, rental, servicing and financing of heating, ventilation and air conditioning equipment.

For more information on the UE Waterheater Income Fund, visit the web site at www.ueincomefund.com.

Contact Information