Algonquin Power to start exchange offer for 6.2%, 6.65% convertibles

By Jennifer Chiou

New York, June 12 -The trustees of Algonquin Power Income fund announced that the fund will begin an exchange offer for its 6.65% convertible debentures maturing on July 31, 2011 and its 6.2% convertible debentures maturing on Nov. 30, 2016.

Related to the offer, the trustees said that they have entered into a unit-share exchange support agreement to provide the fund's unitholders the opportunity to exchange their trust units, on a one-for-one basis, for the common shares of Algonquin Power Inc.

In exchange for each C$100 of the 6.65% convertible debentures, holders will receive - at their option - either of the following:

• 31.152 common shares in Algonquin Power Inc.; or

• A C$105 7.5% convertible debenture due Nov. 30, 2014 issued by Algonquin Power Inc. Interest will be payable semiannually, and the conversion price is C$4.08 per share, representing a conversion premium of 20% over the most recent closing price of the fund's trust units of C$3.40 on Thursday.

The current conversion price for the 6.65% debentures is C$10.65 for fund trust units.

The fund added that a maximum of C$40 million of common shares will be available under the first option.

In exchange for each C$100 of the 6.2% convertible debentures, holders will receive a C$100 6.35% convertible debenture due Nov. 30, 2016 issued by Algonquin Power Inc. The conversion price will be C$6.00 per share.

The current conversion price for the 6.2% debentures is C$11.00 for fund trust units.

The fund will also pay accrued interest.

"The exchange of fund trust units for shares of Algonquin Power Inc. has positive capital market and competitive environment implications for Algonquin Power and the board of trustees believes that providing an attractive offer to holders of the fund's convertible debentures will allow them to participate in Algonquin Power Inc.'s growth prospects," Ian Robertson, executive director of the fund, said in the release.

Following completion of the unit-share exchange, unitholders will hold common shares in Algonquin Power Inc., which will own 100% of the outstanding trust units of the fund, according to a news release.

Algonquin is an Oakville, Ont.-based investment trust that owns and has interests in power-generating and infrastructure assets. It is the sole beneficiary of Algonquin Power Trust.

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