Northland Power Income Fund has acquired a 54-megawatt wind power project to be constructed in the Gaspe region of Quebec.
Northland Power intends to finance the construction phase of the project in part through an offering of convertible unsecured subordinated debentures.
The Miller Mountain Project is located near the town of Murdochville, Quebec.
Vestas A/S, through its Canadian subsidiary, will supply 30, 1.8-megawatt Vestas V80 wind turbines to the project, will be responsible for its construction under a fixed price engineering, procurement and construction contract, and will provide an extended warranty for the wind turbines, including availability and power performance, as well as maintenance services for the first five years of operations.
The project is scheduled to start construction immediately and be operational in March 2005.
When construction is complete, the project will sell all the electricity it produces to Hydro-Quebec pursuant to the terms of a 21-year power purchase agreement under which the initial price escalates at 1.5% a year.
The project is expected to qualify for payments under the federal government's Wind Power Production Incentive program, of which Hydro-Quebec will receive half.
The total cost to the fund of acquiring and constructing the project will be approximately $95 million.
The transaction is expected to be financed using the proceeds of the offering and a $40 million non-recourse construction and term loan with a major Canadian financial institution.