TORONTO — Canadian Press Published on Monday, Feb. 26, 2007 9:50AM EST Last updated on Tuesday, Mar. 31, 2009 10:09PM EDT
Algonquin Power Income Fund is offering $208-million in stock and cash to buy Clean Power Income Fund in a move that is expected to minimize the impact of income trust tax changes.
The offer values each Clean Power unit at $5.88 and includes the issuance of 0.6152 Algonquin units plus 27 cents cash for each Clean Power unit.
“The acquisition of Clean Power is highly complementary to Algonquin Power Income Fund and represents an important step in the execution of Algonquin Power Income Fund ‘s continuing strategy to acquire high quality, long-lived assets that generate stable and sustainable cash flows,” stated Ian Robertson, a senior manager of Algonquin.
“The acquisition enables Algonquin to minimize the impact of the proposed changes to taxation policies for income trusts beyond 2011, reduces Algonquin's foreign-exchange exposure and results in a longer average power purchase agreement life for the combined portfolio.”
Clean Power's board of trustees has recommended that unitholders accept the offer.
Billions of dollars were wiped off the value of income trusts last fall after federal Finance Minister Jim Flaherty announced that existing trusts would be taxed like regular corporations by 2011.
John Fox, chairman of the special committee, said the proposed merger “represents the best outcome for Clean Power unitholders and culminates a lengthy and exhaustive unitholder value enhancement process undertaken over the course of the past year.”
The deal, he said, will provide Clean Power unitholders “ongoing participation in a stronger, larger and more liquid combined entity.”
Algonquin Power Income Fund has a diverse portfolio of power generating and infrastructure assets across North America, including 47 hydroelectric facilities, five natural gas-fired cogeneration facilities, 17 alternative fuels facilities and 17 water supply and waste-water facilities.
Clean Power is invested in 15 power-generating facilities in Quebec, Ontario, Alberta, British Columbia and four U.S. states with a total capacity of 303 megawatts.
On the TSX early Monday morning, Algonquin units were up 6.7 cents to $9.10 while units in Clean Power fell 37.2 cents, or 6.1 per cent, to $5.69 .
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