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News

Plutonic grants GE right to provide CAN $500 Million for Hydroelectric project in British Columbia

AZDEL : 22 August, 2007  (Company News)
VANCOUVER, British Columbia & STAMFORD, Plutonic Power Corporation announced today that it has granted a Canadian affiliate of GE Energy Financial Services the exclusive right to provide CAN$100 million of project equity as well as lead a CAN $400 million debt financing for construction of the East Toba/Montrose Creek run-of-river hydroelectric project located 190 kilometres northwest of Vancouver.
In return for the CAN $100 million equity investment, Plutonic will provide GE with a 49% equity and 60% economic interest in the East Toba/Montrose Project. Following a 35 year term, the economic interests of GE will convert to 49%. GE will also have the right to match any equity investment offer that Plutonic receives for a second hydroelectric project, Rainy River.

The 196 megawatt East Toba River and Montrose Creek Project is located at the headwaters of the Toba Inlet north of Powell River in British Columbia and is expected to produce enough electricity to meet the annual energy needs of over 75,000 homes. The 15 MW Rainy River Project is located in Howe Sound, 10 km north of Vancouver, and could produce enough electricity for over 5,000 homes.

Another GE Energy Financial Services affiliate has provided Plutonic with $2.5 million of credit support for the East Toba River/Montrose Creek project. In consideration of the credit support, Plutonic has issued to the Canadian affiliate of GE Energy Financial Services 375,000 two-year common share purchase warrants with an exercise price of $2.50 per share (the 'Warrants').

'This agreement with Plutonic helps pave the way for us to achieve our goal of investing more than $3 billion in renewable energy globally by 2008,' said Kevin Walsh, Managing Director and leader of GE Energy Financial Services' renewable energy team. 'In addition, this project aligns nicely with GE's ecomagination initiative to expand the company's cleaner energy products and reduce greenhouse gas emissions, and it reinforces our portfolio in Canada.'

The credit support was issued to BC Hydro as part of performance security aggregating $12.66 million, required to back 35-year Energy Purchase Agreements for the East Toba/Montrose Creek and Rainy River projects. To supplement the credit support and its own treasury, Plutonic has issued debt instruments totaling $9.70 million with a private group of investors (the 'Investors'). The Investors will be issued 150,000 Warrants per million dollars received. GE and the Investors will be paid an annual interest rate of 10% for the first 60-day period and 12% thereafter.

'The agreement with GE Energy Financial Services provides Plutonic with a very strong partner,' said Donald McInnes, President of Plutonic Power Corporation. 'It will allow us to focus on the execution of a fixed-price engineering, procurement and construction contract, and finalize permitting and First Nation relationships. The agreement also paves the way to complete a debt package for construction financing of the East Toba/Montrose Creek project as well as to work towards a debt and equity package for Rainy River.' Plutonic expects to achieve these milestones this year, allowing for construction to begin in early 2007.

The East Toba River/Montrose Creek and Rainy River projects require an estimated $550 million in capital (including interest) and will create more than 300 full-time construction jobs over three years. This represents the largest single private sector renewable energy investment in the history of British Columbia, generating enough green electricity to meet the needs of more than 80,000 homes, along with $60 million - $70 million annually in revenue.

'Plutonic was the largest capacity bidder in BC Hydro's 2006 request for proposals for power projects in the province. With the support of financial partners such as GE, we expect to continue to aggressively develop our next generation of projects for future BC Hydro tenders,' said McInnes.

Plutonic Power is committed to working cooperatively with First Nations in their traditional territories to provide jobs, training and economic benefits not just in the construction phase, but also over the lifetime of these projects. Discussions with First Nations concerning the development of the projects are ongoing.
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