EPCOR Power L.P. announces $125 million Offering of 4.85% Cumulative Redeemable Preferred Shares
EDMONTON, Alberta - May 7, 2007 (TSX: EP.UN) - EPCOR Power L.P. (collectively with its subsidiaries, the "Partnership") announced today that its subsidiary, EPCOR Power Equity Ltd. (the "Issuer" or the "Corporation"), has entered into a "bought deal" agreement with Scotia Capital Inc., on behalf of a syndicate of underwriters (including Scotia Capital Inc., CIBC World Markets Inc. and TD Securities Inc. as co-book runners). Under the agreement, the underwriters have agreed to purchase 5,000,000 4.85% Cumulative Redeemable First Preference Shares, Series 1 (the "Series 1 Shares") at a price of $25.00 per Series 1 Share for aggregate gross proceeds of $125 million (the "Offering").
"The addition of preferred shares to our capital structure provides the Partnership with lower cost equity thus reducing our cost of capital," said Stuart Lee, CFO, EPCOR Power Services Ltd. "We continue to review the alternatives available to refinance the balance of the Primary Energy Ventures LLC ("PEV") acquisition financing on a permanent basis including the issue of Partnership units and long-term debt."
The Issuer has also granted the underwriters an over-allotment option, exercisable at any time up to 30 days following closing of the Offering, to acquire an additional 750,000 Series 1 Shares at the issue price of $25.00 per Series 1 Share. If the option is fully exercised, it would increase the total gross proceeds of the Offering to $143.75 million. The offering is expected to close on or about May 25, 2007, subject to certain conditions, including conditions set forth in the underwriting agreement.
The Series 1 Shares will pay cumulative dividends of $1.2125 per share per annum, yielding 4.85% per annum, payable quarterly on the last business day of March, June, September and December of each year. The first quarterly dividend of $0.42305 per share is expected to be paid on September 28, 2007.
The Series 1 Shares will not be redeemable by the Issuer before June 30, 2012. On or after this date, the Series 1 Shares will be redeemable by the Issuer in whole or in part, at the Issuer's option, on at least 30 and not more than 60 days prior notice.
The Partnership will fully and unconditionally guarantee the payment of dividends, as and when declared, the amounts payable on a redemption of the Series 1 Shares for cash and the amounts payable in the event of the liquidation, dissolution and winding up of the Issuer.
Net proceeds resulting from the sale of the Series 1 Shares of the Issuer will be paid by the Issuer to the Partnership as a return of capital and used by the Partnership to repay outstanding bank debt incurred in conjunction with the Partnership's acquisition of PEV in November 2006.
The Series 1 Shares will be offered for sale by way of a short form prospectus of the Issuer and the Partnership in all provinces and territories of Canada. Only persons who are residents of Canada, or if partnerships are Canadian partnerships, in each case for purposes of the Income Tax Act (Canada), may purchase Series 1 Shares under the Offering.
These securities have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States of America or to U.S. persons. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in the United States.
About EPCOR Power Equity Ltd.
The Corporation was incorporated under the laws of the Province of Alberta on June 26, 1998 and is a wholly-owned subsidiary of the Partnership. The Corporation operates as a holding company and indirectly holds all of the Partnership's business and power generation and other assets in the United States, including the Partnership's Castleton, Curtis Palmer, Manchief, Frederickson, Naval Station, North Island, Naval Training Center, Oxnard, Greeley, Kenilworth, Roxboro and Southport power generating facilities. These facilities have a total generating capacity of approximately 977 megawatts (representing approximately 75% of the total generating capacity of the Partnership's assets) and approximately three million pounds per hour of thermal energy (representing 100% of the total thermal energy capacity of the Partnership's assets). In addition, the Corporation holds, through a wholly-owned subsidiary, the Partnership's overall 15.4% equity interest in Primary Energy Recycling Holdings LLC ("PERH").
About EPCOR Power L.P.
Established in 1997, EPCOR Power L.P. is a limited partnership organized under the laws of the Province of Ontario. The Partnership, directly and through subsidiaries, including the Issuer, wholly owns and operates a portfolio of 20 power generation assets in Canada and the United States with total net generating capacity of 1,287 megawatts and more than three million pounds per hour of thermal energy. The Partnership, through the Corporation, also owns a 15.4 per cent interest in PERH. PERH wholly owns four recycled energy assets in the United States with in aggregate generation capacity of 284 megawatts and nearly two million pounds per hour of thermal energy, and holds a 50 per cent interest in a pulverized coal facility. PEV, a wholly owned subsidiary of the Partnership, manages and operates these facilities for PERH. The Partnership's web-site is www.epcorpowerlp.ca.
FORWARD-LOOKING INFORMATION
Certain information in this news release is forward-looking and related to anticipated financial performance, events and strategies. When used in this context, words such as "will", "anticipate", "believe", "plan", "intend", "target", "expect" or similar words suggest future outcomes. By their nature, such statements are subject to significant risks, assumptions and uncertainties, which could cause the Corporation's and the Partnership's actual results and experience to be materially different than the anticipated results. Such risks, assumptions and uncertainties include, but are not limited to, the ability of the Corporation and the Partnership to successfully integrate and realize the financial benefits of acquisitions, the ability of the Corporation and the Partnership to implement their strategic initiatives and whether such strategic initiatives will yield the expected benefits, the availability and price of energy commodities, plant availability, waste heat availability and water flows, regulatory and government decisions, the renewal and terms of power purchase contracts, competitive factors in the power industry, the current and future economic conditions in North America and the performance of contractors and suppliers.
Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements. Except as required by law, the Corporation and the Partnership disclaim any intention and assume no obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason.
For more information, please contact:
Media Inquiries: Michael Gibbs (780) 412-8877
Shareholder and analyst inquiries: Randy Mah (780) 412-4297 | Toll Free: (866) 896-4636