News Release

Capstone Infrastructure Corporation Reports Third Quarter Results


• Achieved 110% increase in quarterly revenue and 84.7% increase in quarterly Adjusted EBITDA (excluding internalization costs) primarily due to Bristol Water
• Strong overall performance from portfolio partially offset by poor hydrology and wind conditions
• Variance in quarterly and year-to-date AFFO (excluding internalization costs) partly reflected impact of higher debt amortization and preferred share costs, which were lower in 2011
• Successfully refinanced all debt maturing in 2012

TORONTO, ONTARIO (November 13, 2012)Capstone Infrastructure Corporation (TSX: CSE; CSE.DB.A; CSE.PR.A – the “Corporation”) today reported unaudited results for the three and nine months ended September 30, 2012. The Corporation’s Management’s Discussion and Analysis and unaudited consolidated financial statements are available at and on SEDAR at All amounts are in Canadian dollars.

“Overall, our portfolio is operationally sound and our power and utilities businesses are continuing to perform in line with expectations," said Michael Bernstein, President and Chief Executive Officer. "Since the start of 2012, we have taken a number of steps to strengthen our foundation for continuing growth, including refinancing all debt maturing in 2012 and establishing a new dividend policy that offers stable income for shareholders. We are also continuing to work towards a new contract for Cardinal following the expiry of its current power purchase agreement at the end of 2014. Overall, we have a strong, diversified portfolio that represents a solid platform from which to grow."

Financial Review

The Corporation's financial results for the third quarter and first nine months of 2012 primarily reflected the contribution from Bristol Water, which was partially offset by lower production at the Corporation's power facilities due to poor hydrology in Ontario in the third quarter, scheduled outages for maintenance work, and lower production at Erie Shores Wind Farm. In addition, the third quarter is typically the Corporation's seasonally lowest period of the year due to wind and water patterns, the impact of warmer weather on Cardinal's production and the timing of dividends from Bristol Water, which are paid in the second and fourth quarters of the year. These drivers culminated in a 110%, or $44.6 million, increase in consolidated revenue for the quarter, and a 112%, or $138.7 million, increase for the year-to-date period over the comparable periods in 2011.

Total expenses in the third quarter increased by 73.5%, or $21.3 million, over the same period last year, excluding the costs related to the management internalization that occurred in April 2011. For the first nine months of the year, total expenses increased by 79.1%, or $67.0 million, over the same period last year (excluding internalization costs). Higher costs were primarily attributable to Bristol Water, which incurred $23.5 million and $68.5 million in costs in the quarter and year-to-date period, respectively.

Adjusted EBITDA in the third quarter and first nine months of 2012 increased by 84.7%, or $11.3 million, and 104%, or $45.7 million, respectively, over the same periods in 2011 (excluding internalization costs), primarily reflecting the contribution from Bristol Water and lower corporate administrative expenses. During the quarter, these drivers were partially offset by lower interest income from Värmevärden and lower revenue from the power segment attributable to poor hydrology at the Wawatay and Dryden hydro power facilities in Ontario and lower gas sales at Cardinal. For the year-to-date period, the increase in Adjusted EBITDA also reflected the contribution from the Amherstburg Solar Park, which commenced operations on June 30, 2011, and interest income and dividends received from Värmevärden in the first six months of the year.

Adjusted Funds from Operations (“AFFO”) in the third quarter decreased by 43.3%, or $2.6 million, and by 11.3%, or $2.8 million, in the year-to-date period. The variance partly reflected the impact of amortizing debt, which was lower in 2011, and the payment of dividends, including applicable taxes, on the Corporation’s preferred shares, which were issued on June 30, 2011. These factors alone had a $1.7 million impact on AFFO in the third quarter and a $9.1 million impact on AFFO in the first nine months of the year.

Financial Performance Highlights by Segment

Power Infrastructure:

Revenue in the third quarter was 2.4%, or $1.0 million, lower than in 2011 and 4.7%, or $5.9 million, higher in the first nine months of the year compared to the same period last year. Third quarter revenue reflected lower production and revenue at the Wawatay and Dryden hydro power facilities due to poor hydrology, lower gas sales at Cardinal following the expiry of the gas hedge in 2011 and outages for scheduled maintenance compared with the same period last year. These drivers were partially offset by higher revenue at Amherstburg due to increased availability and sunnier conditions. Revenue in the nine-month period primarily reflected the contribution from Amherstburg and higher production at Erie Shores in the first quarter of 2012. In addition, the Whitecourt biomass facility sold approximately $0.2 million and $0.8 million in renewable energy credits (“RECs”) in the quarter and year-to-date periods, respectively, some of which were related to historical production.

Adjusted EBITDA for the quarter decreased by 7.1%, or $1.2 million, over the same quarter last year and increased by 8.1%, or $4.2 million, in the first nine months of the year over 2011. The quarterly variance primarily reflected the lower revenue from the hydro power facilities and Cardinal while the year-to-date variance primarily reflected the contribution of Amherstburg, which commenced operations on June 30, 2011, in the first six months of 2012. AFFO declined by 29.7%, or $2.6 million, and by 16.0%, or $5.6 million, in the quarter and year-to-date periods, respectively, from 2011, reflecting lower revenue, higher maintenance capital expenditures and higher debt service expenses.



The Corporation’s interest in Bristol Water was acquired on October 5, 2011 and so there are no comparative results available for the third quarter and first nine months of 2011. On May 10, 2012, the Corporation sold an interest representing 20% of Bristol Water to a subsidiary of ITOCHU Corporation.

In the third quarter and year-to-date period for 2012, Bristol Water represented approximately 53.6%, or $45.6 million, and approximately 50.5%, or $132.8 million, respectively, of the Corporation’s revenue. Revenue at Bristol Water in the quarter and year-to-date periods reflected higher rainfall and cooler temperatures than usual in the Bristol region, which reduced metered consumption of water.

In the quarter and year-to-date periods, Bristol Water represented approximately 45.1%, or $11.1 million, and approximately 42.9%, or $38.4 million, respectively, of the Corporation’s Adjusted EBITDA.

District Heating

During the third quarter of 2012, Värmevärden paid $0.7 million of interest income to the Corporation compared with $1.7 million of interest income in the third quarter last year. Interest income in the quarter declined from the prior year period because the Corporation repatriated approximately $50 million of capital in March 2012, thereby reducing the balance outstanding on the shareholder loan receivable.

Financial Position
As at September 30, 2012, the Corporation had cash and cash equivalents of $56.9 million, including $14.4 million from the power segment and $40.7 million from Bristol Water, which, along with $111.1 million added in credit capacity during the quarter, will be used to support Bristol Water's capital investment program. Approximately $10.3 million of the Corporation’s total cash and cash equivalents, including $8.5 million from the power segment and $1.8 million at the corporate level, is available for general corporate purposes. As at September 30, 2012, the Corporation’s debt to capitalization ratio was 60.3%, reflecting a 16.3% increase in the common share price since December 31, 2011 and a $220.8 million decrease in the fair value of debt due to the repayment of $112.4 million in debt related to the acquisition of Bristol Water and a $105.6 million adjustment to reflect Capstone's 50% proportionate share of Bristol Water's debt.

The Corporation continues to expect stable operational performance from its portfolio in 2012. The Corporation’s outlook for each of its business segments is provided in its interim financial report on pages 15 to 18. Adjusted EBITDA in 2012 is currently expected to be approximately $110 to $120 million based on the Corporation’s current portfolio and assumptions.

The Corporation’s remaining strategic priorities for 2012 include:

Securing a new PPA for Cardinal.
The Corporation continues to negotiate with the Ontario Power Authority (“OPA”) to achieve a fair outcome on Cardinal that balances value for Ontario ratepayers, value for Cardinal’s industrial partner and value for the Corporation’s shareholders. While the Corporation is striving to complete a new contract in 2012 and remains in negotiations with the OPA, the current political situation in Ontario could affect the timing and terms of a new contract.

Maximizing the performance of its existing businesses.
The Corporation continues to identify and pursue opportunities to improve the operational performance, availability and cash flow of the power infrastructure businesses, including the sale of RECs by Whitecourt.

Continuing to evaluate new investment opportunities.
With a stronger balance sheet, the Corporation has resumed the evaluation and pursuit of new growth opportunities in order to continue to build value for shareholders.

Dividend Declarations
The Board of Directors today declared a quarterly dividend of $0.075 per common share for the quarter ending December 31, 2012 on the Corporation’s outstanding common shares. The dividend will be payable on January 31, 2013 to shareholders of record at the close of business on December 31, 2012.

The Board of Directors also declared a dividend on its Cumulative 5-Year Rate Reset Preferred Shares, Series A (the “Preferred Shares”) of $0.3125 per Preferred Share to be paid on or about January 31, 2013 to shareholders of record at the close of business on January 15, 2013. The dividend on the Preferred Shares covers the period from November 1, 2012 to January 31, 2013.

In respect of the Corporation’s January 31, 2013 common share dividend payment, the Corporation will issue common shares in connection with the reinvestment of dividends to shareholders enrolled in the Corporation’s Dividend Reinvestment Plan. The price of common shares purchased with reinvested dividends will be the previous five-day volume weighted average trading share price on the Toronto Stock Exchange, less a 5% discount.

The dividends paid by the Corporation on its common shares and the Preferred Shares are designated “eligible” dividends for purposes of the Income Tax Act (Canada). An enhanced dividend tax credit applies to eligible dividends paid to Canadian residents.

A distribution of $0.075 per unit will also be paid on January 31, 2013 to holders of record on December 31, 2012 of Class B Exchangeable Units of MPT LTC Holding LP, which is a subsidiary entity of the Corporation.

Dividend Reinvestment Plan
Learn more about the Corporation’s Dividend Reinvestment Plan (“DRIP”) at

Q3 Conference Call and Webcast
The Corporation will hold a conference call and webcast (with accompanying slides) on Wednesday, November 14, 2012 at 8:30 a.m. ET to discuss third quarter results. To listen to the call from Canada or the United States, dial 1-800-319-4610. If calling from elsewhere, dial +1-604-638-5340. A replay of the call will be available until November 28, 2012. For the replay, from Canada or the United States, dial 1-800-319-6413 and enter the code 1385#. From elsewhere, dial +1-604-638-9010 and enter the code 1385#. The event will be webcast live with an accompanying slide presentation on the Corporation’s website at

About Capstone Infrastructure Corporation
Capstone Infrastructure Corporation’s mission is to build and responsibly manage a high quality portfolio of infrastructure businesses in Canada and internationally in order to deliver a superior total return to shareholders by providing reliable income and capital appreciation. The Corporation’s portfolio currently includes investments in gas cogeneration, wind, hydro, biomass and solar power generating facilities, representing approximately 370 MW of installed capacity, a 33.3% interest in a district heating business in Sweden, and a 50% interest in a regulated water utility in the United Kingdom. Please visit for more information.

1 See Notice to Readers

Notice to Readers
Certain of the statements contained within this document are forward-looking and reflect management’s expectations regarding the future growth, results of operations, performance and business of the Corporation based on information currently available to the Corporation. Forward-looking statements and financial outlook are provided for the purpose of presenting information about management’s current expectations and plans relating to the future and readers are cautioned that such statements and financial outlook may not be appropriate for other purposes. These statements and financial outlook use forward-looking words, such as “anticipate”, “continue”, “could”, “expect”, “may”, “will”, “estimate”, “plan”, “believe” or other similar words, and include, among other things, forward-looking statements concerning the Corporations new dividend policy, the outlook for the Corporation's power infrastructure facilities; Swedish district heating business ("Värmevärden") and the UK water utility ("Bristol Water"). These statements and financial outlook are subject to known and unknown risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such statements and financial outlook and, accordingly, should not be read as guarantees of future performance or results. The forward-looking statements and financial outlook within this document are based on information currently available and what the Corporation currently believes are reasonable assumptions, including the material assumptions set out in the management’s discussion and analysis of the results of operations and the financial condition of the Corporation (“MD&A”) for the year ended December 31, 2011 under the heading “Results of Operations”, as updated in subsequently filed interim MD&A of the Corporation (such documents are available under the Corporation’s profile on

Other material factors or assumptions that were applied in formulating the forward-looking statements and financial outlook contained herein include or relate to the following: that the business and economic conditions affecting the Corporation’s operations will continue substantially in their current state, including, with respect to industry conditions, general levels of economic activity, regulations, weather, taxes and interest rates; the contribution from Bristol Water reflecting the Corporation’s reduced ownership interest as at May 10, 2012; a TransCanada Pipelines (“TCPL”) gas transportation toll of approximately $2.24 per gigajoule in 2012; no material change in the level of gas mitigation revenue earned by the Cardinal facility; that there will be no unplanned material changes to the Corporation’s facilities, equipment or contractual arrangements, no unforeseen changes in the legislative, regulatory and operating framework for the Corporation’s businesses, no delays in obtaining required approvals, no unforeseen changes in rate orders or rate structures for the Corporation’s power infrastructure facilities, Värmevärden or Bristol Water, no unfavourable changes in environmental regulation and no significant event occurring outside the ordinary course of business; that there will be no further amendments by the Ontario government to the regulations governing the mechanism for calculating the Global Adjustment (which affects the calculation of the price escalators under each power purchase agreement (a “PPA”) for the Cardinal facility and the hydro power facilities located in Ontario); the accounting treatment for Bristol Water’s business under International Financial Reporting Standards, particularly with respect to accounting for maintenance capital expenditures; no material change to the amount and timing of capital expenditures by Bristol Water; no material change to the Swedish Krona to Canadian dollar exchange rate; no material change to the UK pound sterling to Canadian dollar exchange rate; and that Bristol Water will operate and perform in a manner consistent with the regulatory assumptions underlying its current asset management plan, including, among others: real and inflationary increases in Bristol Water’s revenue, Bristol Water’s expenses increasing in line with inflation, and capital investment, leakage, customer service standards and asset serviceability targets being achieved.

Although the Corporation believes that it has a reasonable basis for the expectations reflected in these forward-looking statements and financial outlook, actual results may differ from those suggested by the forward-looking statements and financial outlook for various reasons, including risks related to: variability and payments of dividends on the Corporation’s common shares, which are not guaranteed; volatile market price for the Corporation’s securities; availability of debt and equity financing; default under credit agreements; credit risk, prior ranking indebtedness and absence of covenant protection for holders of the Corporation’s convertible debentures; dependence on subsidiaries and investees; acquisitions; geographic concentration and non-diversification; foreign exchange risk; reliance on key personnel; insurance; shareholder dilution; derivatives risks; changes in legislation and administrative policy; competition; private companies and illiquid securities; operational performance; PPAs; fuel costs and supply; contract performance; Amherstburg Solar Park technology risk; land tenure and related rights; environmental, health and safety regime; regulatory regime and permits; force majeure; influence of the UK water regulator (“Ofwat”) price determinations; failure of Bristol Water to deliver capital investment programs; failure of Bristol Water to deliver water leakage target; Ofwat’s introduction of the Service Incentive Mechanism and the serviceability assessment; economic environment, inflation and capital market conditions; pension plan obligations; operational risks; competition; default under Bristol Water’s artesian loans, bonds, debentures and credit facility; seasonality and climate change; labour relations; special administration; general risks inherent in the district heating sector; industrial and residential contracts; default under Värmevärden’s bonds; and minority interest. Further information regarding these risk factors is contained in the Corporation’s Annual Information Form (which is available under the Corporation’s profile on

The assumptions, risks and uncertainties described above are not exhaustive and other events and risk factors could cause actual results to differ materially from the results and events discussed in the forward-looking statements and financial outlook. The forward-looking statements and financial outlook within this document reflect current expectations of the Corporation as at the date of this document and speak only as at the date of this document. Except as may be required by applicable law, the Corporation does not undertake any obligation to publicly update or revise any forward-looking statements or financial outlook.