$80 million private equity fund

Case Studies: a selection

Sector: Gas-Fired Cogeneration

Investment Date: 2007

Equity: $15.425 million

CFI Fund I Ownership: 25%

East Windsor Cogeneration LP

Company Overview:

The East Windsor cogeneration project is a natural gas fuelled 84MW combined heat and power facility that sells process steam to Ford. This cogeneration facility results in significant improvements in the thermal and operational efficiency of the Ford facility. Two gas turbines operate and sell electricity to the Ontario Power Authority under a 20 year combined heat and power contract to 2029.

Transaction Description:

In 2007, CFI Fund I invested $15.425 million in Pristine Asset LP (the CFI Fund owned 50% of Pristine Asset LP, and 49% of the related GP) as an equity contribution for the underlying East Windsor cogeneration project. Pristine Asset LP owned 50% of the East Windsor cogeneration project. The East Windsor plant cost approximately $212 million to build and was financed with equity from CFI I Fund and its partner, together with approximately $180 million of 20-year fixed-rate senior debt.

In late 2011, an agreement was reached to sell the CFI Fund I ownership stake back to Veresen Inc. (the $2 billion market capitalization energy company that owned the other 50% of Pristine Asset LP, and a direct 50% interest in the East Windsor project).

CFI Role:

The developers of this project were known to CFI, and CFI executives played a role in sourcing this opportunity. James McBride was involved in all aspects of the transaction evaluation, deal structuring and legal closing. Kevin Andrews served on the Board of Directors.

Investment Thesis:

Given the long-term agreement with the Ontario Power Authority, it was expected that the project would generate attractive returns for CFI Fund I. The transaction also provided an opportunity to build a relationship with the developer and to partner on additional projects.

Sector: Waste-Heat Plants

Investment Date: 2008

Equity: $3.9 million

CFI Fund I Ownership: 25%

Enpower Green Energy Generation Projects

Company Overview:

The Enpower energy recovery generation projects consisted of two sites located near Kamloops, British Columbia and 150 Mile House, British Columbia. Each site had 5.89MW of installed capacity. Energy generation is from the recovery of waste heat from two separate Spectra Energy compressor stations. The electricity was sold to BC Hydro under separate 20-year electricity purchase agreements expiring in 2028.

Transaction Description:

In 2008, the CFI Fund I invested $3.9 million in Pristine Asset LP (CFI Fund I owned 50% of Pristine Asset LP, and 49% of the related GP) as an equity contribution for the underlying Enpower Green Energy Generation plants. Pristine Asset LP owned 50% of the Enpower projects. The Enpower plants cost approximately $32 million to build and were financed with equity from CFI Fund I and its partner, together with approximately $24 million of 10-year fixed-rate senior debt. CFI Fund I did not make its equity investment in these plants until construction was complete. Accordingly, CFI Fund I viewed this as a lower risk opportunity.

In late 2011, an agreement was reached to sell the CFI Fund's ownership stake back to Veresen Inc. (the $2 billion market capitalization energy company that owned the other 50% of Pristine Asset LP, and a direct 50% interest in the Enpower projects).

CFI Role:

The developers of this project were known to CFI, and David Bell played a role in sourcing this opportunity. David Bell and James McBride were involved in all aspects of the transaction evaluation, deal structuring and legal closing. Kevin Andrews and David Bell served on the Board of Directors.

Investment Thesis:

Given the long-term agreements with BC Hydro, it was expected that the project would generate attractive returns for CFI Fund I. Given the lack of construction risk, this investment represented a lower risk opportunity for CFI Fund I. The transaction also provided an opportunity to build a relationship with the developer and to partner on additional projects.

Sector: Run-of-River Hydro

Investment Date: 2008

Equity: $4.2 million

CFI Fund I Ownership: 50%

Fries Creek Hydro Limited Partnership

Company Overview:

The Limited Partnership has obtained a 40-year power purchase agreement from BC Hydro, and has essentially completed the work required for permits and approvals in order to undertake a 10MW hydro project in Fries Creek, British Columbia. The developer continues to work with the local First Nations in order to get their support for the project. As a result, construction has not yet started.

Transaction Description:

CFI Fund I has entered into a Partnership Agreement whereby we agreed to invest $4.2 million in return for a 50% ownership stake in the Fries Creek Hydro Limited Partnership and a 50% ownership stake in the related general partner. Greengen Holdings (a private developer based in B.C.) owns the other 50% of the Project. Once the First Nations support is achieved, the project will be financed with equity and long-term fixed rate senior debt.

CFI Role:

This transaction was sourced by Chris Ball and the marketing / origination efforts in British Columbia. David Bell and James McBride were involved in all aspects of the transaction evaluation, deal structuring and legal closing. Kevin Andrews and David Bell will serve on the Board of Directors.

Investment Thesis:

Generate attractive returns for CFI Fund I by investing in a project in a unique location well suited for a small hydroelectric site. The project benefits from having a long-term (40 year) power purchase contract with BC Hydro. The developer is attempting to get the support of the local First Nations community.

Sector: Waste-Water / Bio-Solids

Investment Date: 2008

Equity: $10.0 million

CFI Fund I Ownership: 100%

N-Viro Systems Canada LP

Company Overview:

The Limited Partnership's primary business activity is the long-term management of municipal and industrial bio-solids treatment facilities and sales of the resulting by-products. The company has entered into long-term contracts with municipalities across Canada, and is currently pursuing contracts with additional municipalities.

Transaction Description:

In 2008 CFI Fund I acquired a 100% ownership position in N-Viro Systems Canada LP (and a 50% ownership position in the Niagara Biosolids LP), in return for a net payment of $10.0 million. The company has municipal contracts with Halifax, Sarnia, Leamington, Niagara (50% interest), Banff and certain other large municipalities.

CFI Role:

This transaction originally came in to Kevin Andrews. David Bell and James McBride were involved in all aspects of the transaction evaluation, deal structuring and legal closing. Kevin Andrews, and David Bell continue to serve on the Board of Directors of N-Viro.

Investment Thesis:

Generate attractive returns by investing in a company with a proven technology and potential significant upside that can act as a platform for future expansion in the municipal sector. Generally, the business model is supported by contracts with strong municipal credits. Further, the company will benefit from the landfill restrictions and current political opposition to land application of untreated sludge.

This asset has been sold.

Sector: Run-of-River Hydro

Investment Date: 2006

Equity: $13.3 million

CFI Fund Ownership: 50%

Zeballos Lake Hydro Limited Partnership

Company Overview:

The Limited Partnership developed and operates a 22MW hydroelectric facility located on Zeballos Lake in British Columbia. The water rights to Zeballos Lake are being leased from the Province of British Columbia and a twenty-year Electricity Purchase Agreement was signed with British Columbia Hydro and Power Authority, which runs until June 2029. The Project started commercial operation in 2009, with certain work at the lake site currently being finalized.

Transaction Description:

The CFI Fund has invested $13.3 million in return for a 49% ownership stake in the Zeballos Lake Hydro Limited Partnership and a 50% ownership stake in the related general partner. Pacific Rim (a private developer based in B.C.) also owns 49% of the LP and 50% of the GP. The local First Nations band owns 2% of the LP. The project was financed with equity and subordinated debt, together with $43.6 million of 25 year, fixed rate senior debt.

CFI Role:

This transaction was sourced by CFI's origination / marketing staff, along with assistance from the independent engineer. David Bell and James McBride were involved in all aspects of the transaction evaluation, deal structuring and legal closing. Kevin Andrews and David Bell continue to serve on the Board of Directors.

Investment Thesis:

Generate attractive returns for CFI Fund I by investing in a project in a unique location well suited for a small hydroelectric site. The project benefits from having a long-term water lease and a power purchase contract in place with the Province of British Columbia and BC Hydro, respectively. It also benefits from having the support of the local First Nations community, who are a partner in the project. The project has been certified under the Ecologo Program and receives ecoEnergy incentive payments from the Federal Government.

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