OAK BROOK, IL, Feb. 11 /PRNewswire-FirstCall/ -- Primary Energy Recycling Corporation (TSX: PRI.UN) is providing an update to the status of negotiations regarding its Harbor Coal contract and related impact to senior debt provisions.
John Prunkl, President of EPCOR USA Ventures LLC (formally known as Primary Energy Ventures LLC), the Manager said, "We continue to work proactively with our customer on completing the proposed coal tolling amendment to the Harbor Coal agreement. There remains strong interest on both sides to complete the amendment and recent discussions have been productive and in good faith. Currently, there remains a single open item to resolve and the tolling amendment documentation is otherwise complete. Based on recent dialog and the customer's senior management review we remain optimistic that an amendment will be completed that will greatly simplify our partnership relationship. The amendment we have proposed provides unitholders with predictable cash flow by eliminating commodity pricing volatility and inventory adjustments. In addition, the amendment contemplates a long term extension to the agreement."
Mr. Prunkl further reported, "The other facilities continue to perform in accordance with expectations. North Lake has operated well since the unplanned outage in early 2007. Portside's overhaul has proven successful. Cokenergy and Ironside are both operating normally."
If the Harbor Coal amendment is not in effect on February 29, 2008 the terms of the senior debt agreement may or may not, depending on the Company's operational results, require an increase in interest costs and the introduction of mandatory quarterly principal repayments equal to a portion of excess cash flow during the period (the "Cash Sweep"). Even if the increased interest cost and Cash Sweep provisions come into effect and assuming normal operations for the four recycled energy facilities and nominal performance from Harbor Coal, Management anticipates that there will be no adverse impact on the Company's distribution policy. Moreover, once the Harbor Coal amendment is completed, even if after February 29, 2008, these provisions would cease to apply.
Michel Lavigne, Chair of the Board of the Company said "While we remain optimistic that the amendment to the Harbor Coal agreement will be completed, we did explore options to replace the senior debt with new financing but determined the turbulence in the lending markets makes our current credit package more advantageous to unitholders than a new market based package. Therefore, we will explore refinancing once the Harbor Coal amendment is complete and the markets improve. It is the Company's intent to utilize existing cash balances to meet the obligations of increased interest costs and cash sweep, if any, and maintain current distribution levels."
The Issuer owns a majority interest in Primary Energy Recycling Holdings LLC ("Primary Energy"). Primary Energy, headquartered in Oak Brook, Illinois, indirectly owns and operates four recycled energy projects and a 50% interest in a pulverized coal facility (collectively, the "Projects"). The Projects have a combined electrical generating capacity of 283 megawatts and a combined steam generating capacity of 1.8 MMlbs/hour. Primary Energy creates value for its customers by capturing and recycling waste energy from industrial and electric generation processes and converting it into reliable and economical electricity and thermal energy for its customers' use. For more information, please visit us at http://www.primaryenergyrecycling.com/.
Forward-Looking Statements
When used in this news release, the words "anticipate", "expect", "project", "believe", "estimate", "forecast" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions pertaining, but not limited, to operating performance, regulatory parameters, weather and economic conditions and the factors discussed in the Company's public filings available on SEDAR at http://www.sedar.com/. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect new events or circumstances.
