CALGARY, ALBERTA, September 6, 2001 — TransAlta Power, L.P. announced that it has entered into an agreement to sell, to a syndicate of underwriters led by CIBC World Markets and Scotia Capital, 4.4 million limited partnership units at a price of $8.50 each for gross proceeds of approximately $37 million on a bought-deal basis. TransAlta Power, L.P. has granted the underwriters an option, exercisable in whole or in part prior to closing, to purchase up to an additional 220,000 units at the same offering price. The units will be issued from treasury and will be sold by way of a short-form prospectus in all provinces of Canada. The offering is expected to close on Sept. 27, 2001.
The net proceeds of the offering will be used to fund the acquisition of additional units of TransAlta Cogeneration, L.P. that in turn will use the funds to partially finance the acquisition of TransAlta’s interest in the Fort Saskatchewan Power Plant. TransAlta currently holds a 60 per cent interest in the 120-megawatt cogeneration facility located at the Dow Chemical facility in Fort Saskatchewan, Alberta. Commissioned in 1999, the plant is currently owned and operated through a joint venture between TransAlta and Air Liquide. Operations of the plant are governed by a utility services agreement with Dow that expires on Nov. 30, 2019. This agreement provides for sale of all steam and electricity output to Dow, a flow-through of fuel and operations and maintenance costs to Dow, and certain performance-based incentives.
“The acquisition of the Fort Saskatchewan Power Plant is expected to provide stable cash flows that will increase annual per unit distributions by approximately $0.02,” said Ian Bourne, president and director. “This transaction fits our strategy of acquiring assets which are accretive to unit holders while maintaining the low risk profile of the limited partnership.”
Cash distributions to date have been fully tax deferred. Following the new issue of units, cash distributions are expected to continue to be fully tax deferred through to at least 2003.
TransAlta Power, L.P. indirectly owns a 49.99 per cent interest in three Ontario cogeneration facilities. TransAlta owns the remaining 50.01 per cent interest and is responsible for the operation and maintenance of the plants. The Mississauga, Ottawa and Windsor plants have a total generating capacity of 250 megawatts of electric power. Electricity from the plants is sold to Ontario Electricity Financial Corporation (formerly Ontario Hydro) under long-term contracts; steam and other thermal energy produced is supplied to manufacturing plants and other facilities.