Protectron Inc., Montreal, Quebec, the second largest electronic security company in Canada, has been acquired by a subsidiary of Union Energy LP for $135 million.

Currently owned by Wellspring Capital Management LLC, Protectron, which was founded in 1988, will continue its Canada-wide development by taking advantage of significant synergies with its new owner, announced Daniel Demers, Protectron’s president and CEO.

“Wellspring Capital Management successfully carried out its business plan, and the time had come for it to realize a return on its investment,” Demers stated. “Together, we have made Protectron a key national player, and for this we are grateful to them. With the takeover by Union Energy LP, we enter a second phase of rapid expansion and gain priority access to more than 30 percent of our residential target market in Ontario.

“As for our customers, suppliers and business partners, there are no foreseeable changes, since our existing Protectron personnel will continue to execute our current national business plan,” Demers explained. “We are very excited to be working with Union Energy, which has an impeccable reputation in the financial markets as well as a clear focus towards quality of service.”

Union Energy LP, a subsidiary of UE Water Heater Income Fund, Toronto, Ontario, rents and services more than 1 million residential water heaters in Ontario under the Union Energy and Ontario Hydro Energy brand names. With more than 1 million customers, Union Energy LP owns and operates the second largest portfolio of rental water heaters. Complementing these activities, Union Energy LP, which was launched in 1960, also offers rental, financing and servicing of heating, ventilation and air conditioning systems.

With more than 500 employees protecting 175,000 subscribers located primarily in Quebec, Ontario and British Columbia. Protectron sells, rents, finances, installs and services security systems. It offers residential remote monitoring services and a wide range of commercial, industrial and institutional products and services. Its monitoring stations are located in Montreal, Quebec City, Ottawa and Vancouver.

Protectron also outsources remote monitoring services through its “Security 24” division, and vehicle theft detection and tracking services through its partnership with VIGIL GPS.

Since 1999, Protectron has experienced a compound annual growth rate in its subscriber base of approximately 10 percent, the company reported. For the year ended March 31, 2005, Protectron had revenues of approximately $64 million and EBITDA of approximately $18 million.

UE Water Heater Income Fund has entered into an agreement to sell to a syndicate of underwriters led by CIBC World Markets Inc., on a bought deal basis, 7,720,000 subscription receipts at a price of $13.60 per subscription receipt, for gross proceeds of approximately $105 million. Holders of the subscription receipts are entitled to receive, for no additional consideration, one unit of the fund upon closing of the acquisition.

The subscription receipts have not been and will not be registered under the United States Securities Act of 1933 and may not be offered or sold in the United States except under exemptions from those laws and applicable state securities laws.