TransAlta and Canadian Hydro Developers reach agreement on acquisition at $5.25 cash per share

CALGARY, ALBERTA, Oct 05 (MARKET WIRE) --
TransAlta Corporation (TSX: TA)(NYSE: TAC) and Canadian Hydro Developers,
Inc. (TSX: KHD) have entered into a definitive pre-acquisition agreement
(the "Agreement") pursuant to which TransAlta's wholly-owned subsidiary
will amend its existing offer (the "Amended Offer") to acquire all of the
issued and outstanding common shares of Canadian Hydro. The Amended Offer
will provide for $5.25 per share in cash. The Amended Offer, which has a
total value of approximately $1.6 billion, has the unanimous support of
the Boards of Directors of both companies.

A notice of variation and extension of the existing offer is expected to
be mailed to security holders of Canadian Hydro by the end of this week
with an initial expiry date of October 20, 2009.

TransAlta President and Chief Executive Officer Steve Snyder said, "We
are very pleased to have the support of the Canadian Hydro Board of
Directors for this transaction. Together, our two companies will have
unparalleled operational and development expertise, a robust growth
portfolio, a strong balance sheet and will be well positioned as a North
American leader in renewable energy. We believe this transaction delivers
certain and fair value to Canadian Hydro shareholders while providing
TransAlta shareholders with both near and long-term value. It also
accelerates the expansion of TransAlta's renewable portfolio and will
open the door to new and exciting opportunities for employees of both
companies."

On a combined basis, TransAlta and Canadian Hydro will have net
generation capacity of 8,657 MW in operation. The renewables portfolio
will include 1,900 MW in operation, or 22 per cent of the combined
portfolio. In addition, there are 543 MW under construction and nearly
500 MW in advanced-stage development.

Canadian Hydro Board Chair Dennis Erker said, "Over the past two months,
the Canadian Hydro Board and its advisors have conducted a thorough
process to review and consider the full range of options for enhancing
shareholder value, including alternative proposals. We believe the
revised offer from TransAlta provides our shareholders with a premium and
liquidity, and we are encouraging our shareholders to accept this offer."

The Amended Offer is subject to certain conditions, including the
acquisition by TransAlta of at least 66 2/3 per cent of the outstanding
Canadian Hydro common shares.

The Canadian Hydro Board of Directors has received verbal opinions from
its financial advisors, FirstEnergy Capital Corp. and Societe Generale,
that the consideration under the Amended Offer is fair, from a financial
point of view, to Canadian Hydro's shareholders. Upon the recommendation
of its special committee, the Canadian Hydro Board of Directors has
unanimously determined that the Amended Offer is in the best interest of
Canadian Hydro and recommends that shareholders accept the Amended Offer.
TransAlta has also entered into lock-up agreements with each of the
directors and officers of Canadian Hydro. Under the lock-up agreements,
each locked-up shareholder has agreed to tender all of his or her
Canadian Hydro common shares to the Amended Offer.

The Agreement provides that Canadian Hydro's Board of Directors will
issue a notice of change to its directors' circular that will contain its
favourable recommendation to Canadian Hydro shareholders, together with
the fairness opinions provided by FirstEnergy Capital Corp. and Societe
Generale. Canadian Hydro expects to issue and mail the notice of change
with TransAlta's notice of variation and extension in connection with the
Amended Offer. The Agreement contains, among other things, provisions for
a $25 million break fee payable by Canadian Hydro to TransAlta in certain
circumstances, for non-solicitation of competing offers, and for
notification by Canadian Hydro to TransAlta of the receipt of any
alternative proposals from third parties and a right on the part of
TransAlta to match any such proposal.

The transaction will be funded initially with new committed bank
facilities fully underwritten by Royal Bank of Canada, which, along with
existing credit facilities and internally generated cash, will provide
ample funding to take up and pay for all the outstanding Canadian Hydro
shares. This initial funding will be replaced with permanent long-term
funding in the debt capital markets, underpinned by raising $350 - $400
million of equity. The transaction will not impact TransAlta's dividend
policy.

Goldman Sachs and RBC Capital Markets are TransAlta's financial advisors.
Burnet, Duckworth & Palmer is TransAlta's legal advisor. FirstEnergy
Capital Corp. and Societe Generale are Canadian Hydro's financial
advisors. Blake, Cassels & Graydon is Canadian Hydro's legal advisor.

Canadian Hydro shareholders who have questions about the Amended Offer
are encouraged to contact Georgeson Shareholder Communications Canada
Inc. at 1-866-783-6752 (North American Toll Free Number) or
1-212-806-6859 (Bank, Brokers and collect calls).

About TransAlta

TransAlta is a power generation and wholesale marketing company focused
on creating long-term shareholder value. TransAlta maintains a low to
moderate risk profile by operating a highly contracted portfolio of
assets in Canada, the United States, and Australia. TransAlta's focus is
to efficiently operate its diversified fleet of geo-thermal, wind, hydro,
natural gas and coal-fired facilities in order to provide its customers
with a reliable, low-cost source of power. For nearly 100 years,
TransAlta has been a responsible operator and a proud contributor to the
communities where it works and lives. TransAlta is recognized for its
leadership on sustainability by the Dow Jones Sustainability North
America Index, the FTSE4Good Index and the Jantzi Social Index.

About Canadian Hydro Developers

"Recognized as one of Jantzi/Maclean's Top 50 Responsible Corporations in
Canada"

Canadian Hydro is committed to Building a Sustainable Future(R). The
company is the largest and most diversified developer, owner, and
operator of 21 renewable energy generation facilities in Canada totaling
net 694 MW of capacity in operation, 160 MW in and nearing construction,
and 6,060 MW in development. The renewable generation portfolio is
diversified across three technologies (water, wind, and biomass) in the
provinces of Alberta, British Columbia, Ontario, and Quebec. This
portfolio is unique in Canada as all facilities are certified, or slated
for certification, under Environment Canada's EcoLogo(M) Program.

Reader Advisory

This joint news release contains statements that constitute
"forward-looking information" or "forward-looking statements"
(collectively "forward-looking information") within the meaning of
applicable securities legislation. More particularly, and without
limitation, this joint news release contains forward-looking information
concerning: timing of mailing of the notice of variation and extension in
connection with the Amended Offer and the notice of change to Canadian
Hydro's directors' circular and the combined entities' net generation
capacity and renewables portfolio. This forward-looking information is
subject to numerous risks and uncertainties, certain of which are beyond
TransAlta's and Canadian Hydro's control including, without limitation,
uncertainty related to the completion of the Amended Offer to acquire
Canadian Hydro and the effects of the transaction in the event it is
completed on TransAlta, the impact of legislative or regulatory
developments, competition, global capital markets activity, changes in
prevailing interest rates, currency exchange rates, inflation levels and
general economic conditions in geographic areas where TransAlta and
Canadian Hydro operate. Readers are cautioned that the foregoing list of
risk factors is not exhaustive. Additional information on these and other
factors that could affect TransAlta's and Canadian Hydro's results are
included in reports on file with the Canadian and United States
securities regulatory authorities. TransAlta's and Canadian Hydro's
actual results, performance or achievements may differ materially from
those expressed in, or implied by this forward-looking information and,
accordingly, no assurance can be given that any events anticipated by the
forward-looking information will transpire or occur, or if any of them do
so, what benefits that TransAlta and Canadian Hydro will derive
therefrom. Forward-looking information is based on the estimates and
opinions of TransAlta's and Canadian Hydro's management at the time the
information is released and TransAlta and Canadian Hydro do not undertake
any obligation to update publicly or to revise any of the forward-looking
statements, whether as a result of new information, future events or
otherwise, except as may be required by applicable securities laws.

This news release does not constitute an offer to sell or the
solicitation of an offer to buy any securities. No offering of securities
will be made absent registration under, or an exemption from the
registration requirements of, applicable securities laws.

Note: All financial figures are in Canadian dollars unless noted
otherwise.

Contacts:
TransAlta Corporation - Media inquiries
Michael Lawrence
Manager, External Relations
(403) 267-7330
michael_lawrence@transalta.com

TransAlta Corporation - Investor inquiries
Jennifer Pierce
Vice President, Communications & Investor Relations
1-800-387-3598 in Canada and U.S or (403) 267-7622
jennifer_pierce@transalta.com

TransAlta Corporation - Investor inquiries
Jess Nieukerk
Manager, Investor Relations
(403) 267-3607
jess_nieukerk@transalta.com
Website: www.transalta.com

Canadian Hydro Developers, Inc. - Investor Relations
Kathy Boutin
Chief Financial Officer
(403) 298-0256
KBoutin@canhydro.com

Canadian Hydro Developers, Inc. - Media Relations
Darryl Warren
Manager, Marketing & Communications
(403) 806-8143
DWarren@canhydro.com

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