Hydro Facilities Financing Closed

On August 12, 2002, Exploits River Hydro Partnership (a partnership between Abitibi-Consolidated Company of Canada and Central Newfoundland Energy Inc.), Clarica Life Insurance Company, Sun Life Assurance Company of Canada, Industrial-Alliance Life Insurance Company and The Maritime Life Assurance Company closed the $65 million senior, limited recourse project financing for the expansion of Abitibi’s hydro generation facilities at Grand Falls-Windsor and Bishop’s Falls in Newfoundland and Labrador.

The structure of the project financing was complex, in addition to recourse of the lenders being limited to the partnership’s assets, including amounts payable by Newfoundland and Labrador Hydro under a long-term power purchase agreement, the facilities enhancements owned by the partnership will form, and will be operated by Abitibi as an integrated part of Abitibi’s existing facilities.

Abitibi’s existing hydro generating facilities are being enhanced to provide additional energy for Abitibi’s own use and also to sell power to Newfoundland and Labrador Hydro. Based on hydrology tests, feasibility studies and projections, it is expected that the facility will be repaid 25 years following completion of the construction of the facilities enhancements.

The partnership was represented by Colm Seviour, Maureen Ryan and Janie Bussey of Stewart McKelvey Stirling Scales in St. John’s. Abitibi was represented by in-house counsel Sylvain Aird; by Marc Dorion, Q.C., Denis Roy and Kim Thomassin of McCarthy Tétrault LLP (transaction counsel to Abitibi and special advisor to both the partnership and Abitibi with respect to the legal structure of the project); and by Marc Barbeau, Kevin Kyte and Geneviève Lavertu of Stikeman Elliott in Montreal (corporate matters for Abitibi). Fortis, Inc. (the parent of Central Newfoundland Energy) and Central Newfoundland Energy were represented by Aubrey Bonnell of Curtis, Dawe in St. John’s.

Clarica Life Insurance acted as agent and underwriter and was represented, along with the other lenders, by Ogilvy Renault in Toronto, with a team comprised of Jacques Demers, Merie-Anne Beavis and David Amato, along with John Baker of White, Ottenheimer & Baker in St. John’s acting as special Newfoundland and Labrador counsel to the lenders.