Creststreet Power plans to wind down

awillis

Globe and Mail Blog Post

Posted on Wednesday, April 23, 2008 4:58PM EDT

Here's an easy decision: Do the owners of Creststreet Power & Income Fund want $6.63 in cash for each unit of their trust, or do they want to own an “orphan dwarf?”

The choice needs to be made following Creststreet's decision this week to ask for unitholder approval on a wind-down of the trust. Its assets - wind farms in Nova Scotia and Quebec - are being sold for $121-million to FPL Energy, a leading U.S. wind power company.

Creststreet wants to use part of this cash to redeem outstanding debentures, then hand the rest of the money back to unitholders - an estimated $6.63 a unit - and quietly fold its tent.

If unitholders turn the plan down, but the FPL Energy sale goes through, Scotia Capital analyst Tony Courtright coined the “orphan dwarf” phrase to describe the shell of a company that Creststreet would become. Obviously, Mr. Courtright recommends unitholders opt for the cash, not the dwarf.

The federal government's move to eliminate the trust sector's tax advantages in 2011 effectively spelled the end of Creststreet, as it could no longer make the acquistions needed to grow. Converting to a common stock company just didn't seem the right answer, given the premium price FPL Energy is offering. CIBC World Markets, the dealer that served as midwife to many trusts, is playing undertaker to Creststreet by advising on this demise.

With private equity no longer snapping up these companies, and more than 20 trusts engaged in strategic reviews similar to the one Creststeet began last November, watch for more wind-ups to play out over the next three years.

http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/creststreet-power-plans-to-wind-down/article659618/

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This isn't new news but its a story that would have backed up what we were saying three years ago when Creststreet - the actual owners of the Pubnico wind farm - was selling the project off to Florida Light and Power. We were still on dial-up here in '08 and online research was quite the challenge!

The question is now - seeing as Creststreet is out of the wind business, their subsidiary EarthFirst went belly up almost immediately after it was formed - where is the investment money coming from for Pugwash?