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Press release from CNW Group

INNERGEX ANNOUNCES THE ACQUISITION OF STARDALE SOLAR PROJECT

Wednesday, April 06, 2011

INNERGEX ANNOUNCES THE ACQUISITION OF STARDALE SOLAR PROJECT08:00 EDT Wednesday, April 06, 201127 MWAC (33.2 MWDC) solar photovoltaic farm in Ontario, CanadaExpected to be accretive to free cash flows per share starting in 2012 EBITDA forecasted to be $15 million during the first full year of operation Attractive Risk Sharing MechanismsFurther diversifies Innergex energy sources20-year PPA with rate of $420 per MWh as per RESOP contracts with OPAHigh credit worthy electricity off taker (OPA: Aa1 rated by Moody's)LONGUEUIL, QC, April 6 /CNW Telbec/ - Innergex Renewable Energy Inc. (TSX:INE) ("Innergex"") announces that it has entered into a share purchase agreement with Enfinity NV ("Enfinity"), to acquire all of the issued and outstanding shares of the entity owning the rights to develop Enfinity's 27-MWAC Stardale Photovoltaic ("PV") Solar Project (the "Stardale Project"), located in Ontario, Canada. The consideration to be paid to Enfinity under the share purchase agreementis approximately $11.1 M, subject to certain price adjustments.Mr. Michel Letellier, President and Chief Executive Officer of Innergex, shared his enthusiasm for this first investment in solar energy for the renewable energy producer, saying "We have been studying the solar industry for quite some time now. The solar technology is proven, reliable and simple, and we believe the construction and operational risks are minimal. In addition, the sun provides for a very stable and predictable resource which Innergex believe will result in the Stardale Project generating a stable stream of cash flows for the next 20 years and beyond."Mr. Rafael Dobrzynski, Chief Executive Officer of Enfinity Americas, spoke about the transaction with Innergex, commenting "We are developing the Stardale Project with the highest degree of care for the neighbouring communities, the environment and all the stakeholders. With its knowledge of the Ontario market, its development philosophy and financing capabilities, Innergex is the ideal partner to bring the Stardale Project through the finish line. We are also very pleased to continue our association with Innergex, acting as its engineering, procurement and construction ("EPC") contractor and long-term operations and maintenance ("O&M") provider for the Stardale Project."Construction of the Stardale Project began in November 2010, and is expected to be completed by February 2012. The Stardale project is being developed on two parcels of land totalling 300 acres, located in East-Hawkesbury, in the Russell County of Ontario, Canada. The Stardale Project consists of a ground-mounted PV array system, which is to include a total of approximately 144,060 SolarWorld SW 230 polycrystalline PV modules and 54 inverters, for a total installed capacity of 27 MWAC (33.2 MWDC). The forecast electric output is estimated at 39 GWh, enough to provide electricity to approximately 2,600 homes.All of the energy, which will be delivered by the Stardale Project, will be sold pursuant to three Renewable Energy Standard Offer Program Contracts ("RESOP Contracts") with the Ontario Power Authority ("OPA"). The electricity rate payable under the RESOP Contracts is fixed at $420 per MWh. The RESOP Contracts have 20 -year terms which commence on the commercial operation date of the Stardale Project.Enfinity to act as the EPC contractor and O&M providerConcurrently with the acquisition of the Stardale Project, Innergex will retain Enfinity to act as the EPC Contractor for the construction of the Stardale Project. The EPC Contract value is approximately $118.9 million, subject to certain adjustments. Enfinity will also act as O&M provider to the Stardale Project under a fixed price long-term contract.Regarding Enfinity, Mr. Letellier said "It was essential for us to work with an experienced and reputable firm such as Enfinity. During our due diligence process, Enfinity demonstrated its ability to deliver a high quality solar project. Retaining them as EPC Contractor and O&M provider is therefore expected to mitigate unnecessary risks from the transaction."Risk sharing mechanismsThe leaders of the negotiation team, Mr. Jean Trudel, Vice President Finance & Investor Relations of Innergex and Mr. Wim Goethals, Chief Financial Officer of Enfinity Americas explained that the share purchase agreement and EPC Contract also provide for risk sharing mechanisms. The consideration payable under the share purchase agreement is to be adjusted upwards or downwards, at such time when certain estimated input variables upon which the purchase price was based will become known, in order for Innergex to benefit from a minimum threshold internal rate of return on the Stardale Project. The main input variables for the purchase price payable under the share purchase agreement are the financial terms and conditions of the long-term non-recourse project financing, the long term swap rate and operating expenses. The consideration payable under the EPC Contract will be adjusted upwards or downwards based upon the actual performance of the project and annual energy generation as verified by an independent engineer one year following commercial operation date.The consideration payable pursuant to the share purchase agreement will be paid upon the project achieving certain milestones. The first payment in an amount of $1.5 million will be paid at closing. The second payment for an amount equal to 50% of the remaining consideration will be payable upon the receipt by the Stardale Project of an executed long-term financing offer from financial institutions having terms and conditions not less favourable than certain thresholds established by the parties. The third payment (25% of the remaining consideration) will be payable at financial closing of that same financing and the last payment (25% of the remaining consideration) will be payable upon final completion of the Stardale Project.Transaction Financing Total development costs are expected to be approximately $140 million which amount includes the $11.1 million consideration to be paid under the share purchase agreement, the $118.9 million EPC Contract value and other owner's costs and transactional expenses. Innergex intends to secure a long-term non-recourse project financing in an amount of approximately $103 million which represents approximately 73% of total development costs. The remaining portion of the development costs of approximately $37 million will be financed with a combination of cash on hand and drawings under Innergex's corporate revolving line of credit.Conditions to ClosingThe acquisition has been unanimously approved by the Board of Directors of Innergex and is subject to regulatory approvals and other customary closing conditions. Closing of the transaction is expected to occur within the next 30 days.Enfinity NVwas founded in2005 andis an established leader in commercial solar photovoltaic (PV) energy, with operations in North America, Europe and Asia-Pacific. The company finances, develops and builds solar PV projects and also owns its own portfolio of renewable energy installations. Enfinity has been selected to build some of the largest solar energy projects across the globe, with 200 MW installed and operational worldwide. The company recently announced three solar projects for municipalities in California.Innergex Renewable Energy Inc. is a leading developer, owner and operator of run-of-river hydroelectric facilities and wind energy projects in North America, and a developer of solar photovoltaic installations. Innergex's management team has been involved in the renewable power industry since 1990. Innergex owns a portfolio of projects which consists of: i) interests in 23 operating facilities with an aggregate net installed capacity of 401 MW; ii) interests in 10 projects under development or under construction with an aggregate net installed capacity of 279 MW for which power purchase agreements have been secured; and iii) prospective projects of more than 2,800 MW (net).Non-GAAP MeasuresSome indicators referred to in this press release are not recognized measures under Canadian GAAP, and therefore may not be comparable to those presented by other issuers. Innergex believes that these indicators are important, as they provide management and the reader with additional information about its production and cash generation capabilities and facilitate the comparison of results over different periods.Forward-Looking Information This press release contains forward-looking information within the meaning of applicable securities laws. All information and statements other than statements of historical facts contained in this press release are forward-looking information. Such statements and information may be identified by looking for words such as "about", "approximately", "may", "believes", "expects", "will", "intend", "should", "plan", "predict", "potential", "project", "anticipate", "estimate", "continue" or similar words or the negative thereof or other comparable terminology. Such forward-looking information includes, without limitation, statements with respect to: the anticipated closing of the acquisition, the benefits which may accrue to Innergex and its shareholders as a result of the acquisition, cash flows, dividends, power generation, growth prospects, business strategy and plans, and objectives of or involving Innergex.The forward-looking information is based on certain key expectations and assumptions made by Innergex, including expectations and assumptions concerning satisfaction of all conditions of closing, the timing, and availability of capital resources and performance of operating facilities. Although Innergex believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information since no assurance can be given that they will prove to be correct. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, failure to close the acquisition, failure to secure project financing, potential undisclosed liabilities associated with the acquisition, failure to realize the benefits of the acquisition, energy generation and other risks generally attributable to the business of Innergex.  For additional information with respect to risks and uncertainties, refer to the Annual Information Form of Innergex filed by Innergex with the Canadian securities commissions.For further information: Mr. Jean Trudel, MBA Vice President - Finance and Investor Relations Innergex Renewable Energy Inc. Tel: (450) 928-2550, ext. 252jtrudel@innergex.com Ms. Edith Ducharme, LL.L. Director - Financial Communications and Investor Relations Innergex Renewable Energy Inc. Tel: (450) 928-2550, ext. 222educharme@innergex.com Innergex website:  www.innergex.com Enfinity website:  www.enfinity.ca