Gaz Métro and Valener complete reorganization

October 1, 2010 - Financial releases

Valener closes a financing and announces the implementation of a dividend reinvestment plan while Gaz Métro announces a private placement


Montréal, October 1, 2010 – Gaz Métro Limited Partnership (“Gaz Métro”) and Valener Inc. (“Valener”) (TSX: VNR) are pleased to announce that the plan of arrangement providing for the reorganization of Gaz Métro’s public ownership structure into a new dividend-paying publicly listed corporation named “Valener Inc.” (the “Reorganization”) has been completed, effective September 30, 2010 at 11:59 p.m. (the “Effective Time”).

Pursuant to the Reorganization, all of the units held by public unitholders of Gaz Métro immediately prior to the Effective Time were exchanged, on a one-for-one basis, for common shares of Valener. Consequently, former public unitholders of Gaz Métro retain, indirectly through Valener, their proportionate economic interest of approximately 29% in Gaz Métro.
 
“We are enthusiastic about the creation of Valener which is built on solid foundations. We look forward
to going further and building on those foundations, to the benefit of our shareholders”, said Mr. Pierre Monahan, Chairman of the Board of Directors of Valener.

“Today is an important day in the history of Gaz Métro. Valener’s shareholders can rest assured that Gaz Métro’s management team will pursue its objective of creating value for its investors with the same energy and motivation as before”, said Sophie Brochu, President and Chief Executive Officer of Gaz Métro.

In order to receive their common shares of Valener, registered unitholders of Gaz Métro must deposit with CIBC Mellon Trust Company a duly completed letter of transmittal together with the certificates representing their units of Gaz Métro, in accordance with the instructions contained in the letter of transmittal provided to them in August 2010 along with Gaz Métro’s management information circular. Unitholders who hold their units of Gaz Métro through a broker or other intermediary do not need to submit a letter of transmittal and do not need to take any action to exchange their units of Gaz Métro for common shares of Valener.

The units of Gaz Métro were delisted from the Toronto Stock Exchange as at the Effective Time, and Gaz Métro has applied to cease to be a reporting issuer in all provinces and territories of Canada in which it is currently a reporting issuer (or the equivalent). Information concerning Gaz Métro will be disclosed as part of the continuous disclosure documents of Valener.

Trading of the common shares of Valener on the Toronto Stock Exchange will commence today, at the opening of markets, under the symbol “VNR”.

Closing of Financing of Valener

Concurrently with the closing of the Arrangement, Valener has completed a financing in the form of a $75,000,000 committed revolving credit facility (the “Credit Facility”) made pursuant to a credit agreement dated September 30, 2010, entered into among Valener, as borrower, a Canadian chartered bank, as administrative agent, and a syndicate of lenders. The Credit Facility has a term of five years, is secured by the units of Gaz Métro owned by Valener and will be used by Valener for general corporate purposes (including the funding of energy-related project development costs and investments in Gaz Métro and project vehicles) as well as bridging cash distributions to its shareholders. The Credit Agreement contains usual and customary covenants and requires Valener to meet certain financial ratios.

Implementation of Dividend Reinvestment Plan

As previously announced, Valener has implemented a dividend reinvestment plan (“DRIP”) pursuant to which shareholders of Valener may elect to have all or part of their cash dividends reinvested in additional common shares of Valener. The Board of Directors of Valener has approved a share price discount of 2% to be applied initially to shares newly issued from treasury. The documents relating to the DRIP will be available in the fall of 2010 on Valener’s website at www.valener.com.

Private Placement by Gaz Métro

On October 1, 2010, Gaz Métro delivered an issue notice to Gaz Métro inc. (“GMi”) and Valener announcing a proposed equity offering, by way of private placement, of 5,885,816 new units of Gaz Métro, at a price of $16.99 per unit, to GMi and Valener, pro rata based on their respective share of units outstanding, for aggregate gross proceeds of approximately $100 million (the “Private Placement”). Valener and GMi both exercised, on the same date, their pre-emptive right under the Limited Partnership Agreement of Gaz Métro, with the view to maintaining their pro rata economic interests in Gaz Métro of approximately 71% for GMi and 29% for Valener. Valener will finance its subscription of new units by way of a drawdown under the Credit Facility in the amount of approximately $29 million. GMi will finance its subscription of new units by way of issuance of common shares to Noverco Inc. for gross proceeds of approximately $71 million.

The Private Placement is being made in order to, as previously announced, bring the capital structure of Gaz Métro (namely its debt/total capitalization ratio) in line with its historical level following the acquisition of Green Mountain Power Corporation in April 2007 which was financed entirely with debt. The gross proceeds of the Private Placement will be used by Gaz Métro for the repayment of existing debt. The closing of the Private Placement is expected to occur on or about October 7, 2010.

Recent Changes to the Board of Directors of GMi

Gaz Métro also announces that three new directors, namely Eric Lachance, Macky Tall and
J. Richard Bird, have joined the Board of Directors of GMi, Gaz Métro’s general partner, in replacement of Cyrille Vittecoq, Josée Tremblay and Stephen J. J. Letwin.

Valener Overview

Valener is a new publicly listed corporation which holds an economic interest of approximately 29% in Gaz Métro. Valener therefore has a stake in the energy industry and benefits from the diversified profile of Gaz Métro, both geographically and by business segment. Valener has also been granted an option to acquire a 24.5% indirect interest in the wind power projects jointly developed by Gaz Métro Éole Inc. and Boralex Inc. on the private property of the Seigneurie de Beaupré. Valener may also pursue its own development projects and acquisition strategies, subject to a non-competition undertaking in favour of Gaz Métro and to applicable limitations under the Credit Facility. Valener’s common shares are listed on the Toronto Stock Exchange under the symbol “VNR”. www.valener.com

Gaz Métro Overview

With over $3.6 billion in assets, Gaz Métro is Québec’s leading natural gas distributor. Operating in this regulated industry for over 50 years, Gaz Métro has become the trusted energy provider to some 180,000 customers in Québec and 136,000 customers in Vermont while developing the skills and expertise needed to diversify beyond natural gas. Gaz Métro’s prudent growth strategy has been marked by the successful entry into electricity distribution in Vermont and development of wind power projects in Québec. Offering historically strong and stable distributions and showing a competitive spirit, Gaz Métro is committed to its customers, Partners, employees and the community.

Cautionary note regarding forward-looking statements

Certain statements contained in this press release may be forward-looking pursuant to applicable securities laws. Such forward-looking statements reflect the intentions, plans, expectations and opinions of the management of Gaz Métro inc., Gaz Métro’s general partner, also acting as manager of Valener pursuant to an administration and management support agreement entered into between Valener and Gaz Métro on September 30, 2010, and are based on information currently available to management and assumptions about future events. Forward-looking statements involve known and unknown risks and uncertainties and other factors outside management’s control. A number of factors could cause actual results of Gaz Métro and Valener to differ materially from the current expectations as expressed in the forward-looking statements.

Although these forward-looking statements are based upon what management believes to be reasonable assumptions, management cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this press release, and management assumes no obligation to update or revise them to reflect new events or circumstances, except as required pursuant to applicable securities laws. You are cautioned not to place undue reliance on these forward-looking statements.

The complete version of the cautionary note regarding forward-looking statements as well as a description of the risk factors likely to affect Gaz Métro’s and Valener’s actual results are included in the Management Information Circular of Gaz Métro dated July 28, 2010. This document is available on SEDAR at www.sedar.com and on Gaz Métro’s website at www.gazmetro.com.

For additional information:  
  
Investors and analysts
Caroline Warren 
Investor Relations 
514-598-3324 

Media 
Marie-Noëlle Cano 
Media and Public Relations 
514-598-3449 

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