AirSource Develops Manitoba Wind Farm

On November 12, 2004, AirSource Power Fund I LP acquired all of the shares of St. Leon Wind Energy GP Inc. (St. Leon GP) and all of the limited partnership interests of St. Leon Wind Energy LP (St. Leon LP) from Bison Wind Inc., Sequoia Energy LP and Global Renewable Energy Partners Inc. (collectively, the vendors). St. Leon GP and St. Leon LP are developing a 99 MW wind energy generating facility near St. Leon, Manitoba (the facility) at a cost of approximately $210 million. Algonquin Power (St. Leon) Inc. and GreenWing Energy, Inc. were the promoters of AirSource.
The facility will be constructed in two phases. The first phase will consist of 12 wind turbines and is scheduled for completion in May 2005. The majority of the construction costs for the first phase are anticipated to qualify as Canadian Renewable Conservation Expenses under the Income Tax Act (Canada). After successful completion of a 120-day test period for the wind turbines from the first phase, construction of the second phase, consisting of 51 wind turbines, will commence. The second phase is scheduled for completion by the end of 2005.
St. Leon GP and St. Leon LP have entered into a long term power purchase agreement with the Manitoba Hydro-Electric Board, whereby Manitoba Hydro will purchase all electricity produced by the facility.
Vestas Canadian Wind Technology, Inc. has been engaged to manufacture the wind turbines and to construct the facility.
AirSource completed an initial public offering of 6,500,000 limited partnership units at $10 per unit for gross proceeds of $65 million. The syndicate of agents for the offering was led by BMO Nesbitt Burns Inc. and National Bank Financial Inc., and included CIBC World Markets Inc., RBC Dominion Securities Inc., Scotia Capital Inc., TD Securities Inc., Canaccord Capital Inc., Desjardins Securities Inc., First Associates Investments Inc., HSBC Securities (Canada) Inc., Raymond James Ltd., Berkshire Securities Inc., Bieber Securities Inc. and Wellington West Capital Inc. Proceeds of the offering will be used in part to finance construction of the facility.
In addition, AirSource has arranged subordinated debt financing in the aggregate amount of approximately $76 million from an affiliate of Algonquin Power Income Fund (APIF) and Algonquin Power Venture Fund Inc. (APVFI).
AirSource was represented by Blake, Cassels & Graydon LLP with a team consisting of Ken Pearce, Ian Goldberg, Les Wong, and Graham McLeod. Special Manitoba counsel to AirSource was Pitblado LLP with a team comprised of Ned Brown, Randall Gray, Thomas Kormylo, Scott Ransom, David Ramsay and Cameron Funk.
The vendors were represented Fillmore Riley LLP with a team that included Ron Ade, Parker Fillmore and Christine Klassen.
The agents were represented by Stikeman Elliott LLP with a team that included Darin Renton, John Lorito and Jeffrey Elliott.
Manitoba Hydro was represented by James Ferguson, E. Wells Peever, Q.C., Colin Pewarchuk and Lucia Stuhldreier of Aikins, MacAulay & Thorvaldson LLP.
Vestas was represented by Tim Callahan and Joanna Horsnail of Mayer, Brown, Rowe & Maw.
In connection with the subordinated debt financing, APIF was represented by Ian Binnie, Nathan Cheifetz and Martin Herman at Blakes, and APVFI was represented by Samantha Horn of Stikeman Elliott. GreenWing was represented by Al Hudec of Davis & Company.