Northland Power Income Fund Outlook Revised to Negative on Wind Generation Investment

Northland Power Income Fund Outlook Revised to Negative on Wind Generation Investment

TORONTO (Standard & Poor's) Aug. 5, 2004

TORONTO (Standard & Poor's) Aug. 5, 2004--Standard & Poor's Ratings Services today said it revised its outlook to negative from stable on Northland Power Income Fund following the fund's announcement of a C$95 million investment in a 54 MW Miller Mountain wind project and a proposed offering of up to C$65 million of convertible unsecured subordinated debentures associated with the financing of this transaction. At the same time, Standard & Poor's affirmed its 'SR-2' Canadian stability rating on Northland.

"The revision of the outlook to negative from stable reflects Northland's introduced exposure to some potential construction and performance uncertainties regarding its investment in the wind project and the ability of the investment to affect Northland's distributable cash flows in the near to medium term," said Standard & Poor's credit analyst Lorenzo Sliusarev.

Although Northland's C$95 million investment in the 54 MW Miller Mountain wind project is expected to be cash flow accretive once it becomes operational in early 2005, Standard & Poor's views the transaction as having a mildly negative effect on the stability rating on Northland.

The 'SR-2' stability rating on Northland, an Ontario-based independent power producer, is supported by Northland's long-term revenue stability, its minimized exposure to fuel risk, its proven generation technology, prudent risk management, and fairly conservative financial profile with adequate financial flexibility.

The stability rating, however, is constrained by Northland's increased reliance on considerably leveraged power projects such as the Kingston, Rosemary, and Brandywine plants; its acquisitive profile, which at times could test its ability to manage its exposure to business and financial risks; and its moderate exposure to foreign exchange risk.

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search.

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