Toronto-headquartered SkyPower Wind Energy Fund (WEF) has entered into a nonbinding letter of intent to sell its Terrawinds Wind Energy Facility near Riviere-du-Loup, Quebec, and related assets to SkyPower Corp. for $77.2 million. If the proposed sale is completed, unitholders in the fund are expected to receive approximately C$10 per unit.
In December 2005, the partnership raised gross proceeds of approximately C$77.2 million through the public offering and sale of approximately 7.7 million limited partnership units of the SkyPower WEF for C$10 per unit. The net proceeds of that offering were invested in shares of Terrawinds Resources Corp., which used the funds, together with borrowed funds, to acquire wind turbines and other assets to develop and construct the facility. The purchasers of units were expected to be able to claim certain deductions from income for Canadian federal and provincial income tax purposes, as well as own an ongoing interest in the facility through SkyPower WEF's holding of Terrawinds shares.
SkyPower WEF says that unforeseen delays and the need to make extensive revisions to the layout, engineering and construction plan for the facility reduced the facility's projected energy output and increased costs. Furthermore, SkyPower WEF has been unable to secure the accommodations, amendments and revisions to key agreements required in order for the facility to be economically viable. Consequently, unitholders will not be entitled to claim expected deductions and will be subject to reassessment by Canadian federal and provincial income tax authorities, the organization says.
