TORONTO, Ontario (November 2, 2010) – Macquarie Power & Infrastructure Income
Fund (TSX: MPT.UN; MPT.DB.A – “MPT” or the “Fund) today reported unaudited results for
the quarter ended September 30, 2010. The Fund’s Management’s Discussion and Analysis
and unaudited financial statements for the quarter are available on the Fund’s website at
www.macquarie.com/mpt and on SEDAR at www.sedar.com.
“Overall, the Fund’s businesses continued to perform well in the third quarter with high
availability across the portfolio and higher power rates at Cardinal driving a 5.7% increase in
revenue,” said Michael Bernstein, President and Chief Executive Officer. “While our portfolio
is operationally sound, our results continued to reflect the impact of the Leisureworld sale and
higher than normal administrative costs. Notably, when Leisureworld distributions are
excluded from the prior year period, our adjusted EBITDA and funds from operations in the
third quarter of 2010 continued to show an improving trend, increasing 5.0% and 2.9%,
respectively, over the third quarter of 2009.”
Key Drivers of Financial Results
The Fund achieved higher total revenue in the third quarter primarily due to a higher electricity
price at the Cardinal gas cogeneration facility (“Cardinal”). Overall electricity production was
slightly lower than in the third quarter last year due to lower production at Cardinal due to
curtailment and atypically low water flows at the Wawatay hydro power facility in Ontario.
These variables were partially offset by increased production at the Whitecourt biomass facility (“Whitecourt”) as a result of fewer hours of maintenance compared with the same period last
year and increased production at Erie Shores Wind Farm (“Erie Shores”) due to higher wind
speeds than in 2009. Additionally, the third quarter is historically a seasonally low period for
the Fund, reflecting seasonal variations in wind and water flows, pricing provisions in certain of
the Fund’s power purchase agreements (“PPAs”) and higher ambient temperatures at Cardinal
during the warm summer months, which reduces production.
Higher revenue in the year-to-date period primarily reflected higher electricity prices and
increased electricity production due to less maintenance work in 2010 than in 2009.
Sale of Leisureworld Senior Care LP (“Leisureworld”)
Adjusted distributable cash for the quarter and year to date was lower than last year due to
decreased distributions from Leisureworld as a result of the sale of that business on March 23,
2010. The termination of the Leisureworld management agreement with Macquarie Power
Management Ltd. (“MPML” or the “Manager”), which is also the administrator of the Fund,
reduced management fees payable to the Manager in the third quarter and first nine months of
the year. The Fund will continue to see the various impacts of this one-time event in
subsequent quarters until the proceeds from this sale have been fully reinvested into new
Higher administrative expenses
Administrative expenses increased 46.8% and 40.3% in the quarter and year-to-date periods,
respectively, over the same periods last year. This variance primarily reflected non-recurring
costs related to the corporate conversion process and the transition to International Financial
Reporting Standards as well as higher cost reimbursement fees paid to the Manager related to
the Fund’s business development initiatives. These factors were only partially offset by the
decrease in management fees paid to the Manager following the sale of Leisureworld in the
Higher interest expense
Interest expense for the quarter and year to date increased by 7.7% and 18.9%, respectively,
over the same periods last year. This primarily reflected a higher principal amount outstanding
on the Fund’s 6.50% convertible debentures compared with last year. For the year-to-date
period, higher interest expense also reflected higher rates on the new credit facility established
in May 2009.
As at September 30, 2010, the Fund’s unrestricted cash and cash equivalents totalled $63.4
million (December 31, 2009 - $53.1 million) of which $51.5 million (December 31, 2009 - $42.5
million) was not designated for major maintenance, capital expenditure or general reserves.
The Fund was conservatively leveraged relative to the low risk profile and long life of its
assets, with a debt to capitalization2 ratio of 43.3% as at September 30, 2010 (December 31,
2009 – 49.9%). With cash on hand, cash accumulation as a result of the lower distribution to
unitholders, and amounts available under the Fund’s credit facility, the Fund currently has
access to approximately $100 million in capital to pursue growth opportunities.
Fiscal 2010 Outlook
For 2010, the Fund expects improved performance from its portfolio compared with 2009,
which will be partially offset by an increase in Fund-level administrative and interest costs.
Despite these increased expenses, the Fund’s operating cash flow is expected to be higher in
2010 than in 2009. An outlook for each of the Fund’s assets is provided on pages 18 to 22 of
the Management’s Discussion and Analysis for the quarter ended September 30, 2010.
2The fair value of unitholders’ equity reflected the Fund’s market capitalization as at September 30, 2010 based on a unit price of $7.30
(December 31, 2009 - $6.11) and units outstanding of 49,911,347 (December 31, 2009 – 49,914,927 units). Units outstanding include
Class B exchangeable units of a subsidiary of the Fund of which there were 3,249,390 outstanding at September 30, 2010 (December
31, 2009 – 3,249,390 units).
Based on the Fund’s current portfolio and outlook, the Fund’s distribution policy of $0.66 cents
per unit annually is expected to be sustainable through 2014. This distribution level is
expected to result in a payout ratio of approximately 70% to 75% over this five-year period
based on the Fund’s current portfolio. With the sale of Leisureworld, the 2010 payout ratio will
be above 80% and could move higher in future years as the Fund executes its growth strategy,
which could include development opportunities or operating assets with low current yields but
strong growth prospects.
Conversion to a Corporation
On October 12, 2010, the Fund’s Board of Trustees unanimously approved the conversion of
the Fund into a publicly-traded corporation (the “Conversion”) effective on or about January 1,
2011. The Conversion will be effected by way of a statutory plan of arrangement (the
“Arrangement”), which is subject to unitholder and court approval. If the Arrangement is
completed, units of the Fund will be automatically exchangeable for common shares of the
newly-formed Macquarie Power and Infrastructure Corporation (“MPIC”) on a one-for-one
basis. It is expected that MPIC’s dividend policy will initially be set at $0.055 per common
share per month, which is consistent with the Fund’s current policy. MPIC common shares will
be listed on the Toronto Stock Exchange under the symbol “MPT”. A Special Meeting of
Unitholders will be held on November 15, 2010 at 9 a.m. at One King West Hotel in Toronto.
Conference Call and Webcast
Management of the Fund will hold a conference call (with accompanying slides) to discuss
third quarter results on Wednesday, November 3, 2010 at 8:30 a.m. ET. The conference call
will be accessible via webcast through the Fund’s website with accompanying slides at
www.macquarie.com/mpt and by telephone at 416-340-8527 (Canada) or 1-877-440-9795
(North America). A replay of the call will be available until November 17, 2010 by dialling 416-
695-5800 or 1-800-408-3053 and entering the passcode 8150706.
Distribution Reinvestment Plan (DRIP)
Eligible unitholders may elect to participate in the Fund’s Distribution Reinvestment Plan. For
more information about the DRIP, please visit the Fund’s website at www.macquarie.com/mpt.
About Macquarie Power & Infrastructure Income Fund
Macquarie Power & Infrastructure Income Fund’s mandate is to invest in core infrastructure
businesses in Canada and internationally. MPT aims to acquire and actively manage a high
quality portfolio of long-life infrastructure businesses that will generate sustainable, long-term
distributions and an attractive total return for investors. MPT’s portfolio currently includes
investments in gas cogeneration, wind, hydro and biomass power generating facilities,
representing approximately 350 MW of installed capacity. MPT is also currently developing a
20 MW solar power facility in Ontario. MPT is managed by an affiliate of Macquarie Group
Limited. Please visit www.macquarie.com/mpt for additional information.
This news release is not an offer or invitation for subscription or purchase of or a recommendation of securities. It does not take into
account the investment objectives, financial situation and particular needs of the investor. Before making an investment in the Fund, the
investor or prospective investor should consider whether such an investment is appropriate to their particular investment needs,
objectives and financial circumstances and consult our investment adviser if necessary.
None of the entities noted in this news release is an authorized deposit-taking institution for the purposes of the Banking Act 1959
(Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited
ABN 46 008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of
Certain of the statements contained in this news release are forward-looking and reflect management’s expectations regarding the
Fund’s future growth, results of operations, performance and business based on information currently available to the Fund. Forwardlooking
statements 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 may not be appropriate for other purposes. These statements use
forward-looking words, such as “anticipate”, “continue”, “could”, “expect”, “may”, “will”, “estimate”, “believe” or other similar words, and
include, among other things, statements relating to the Fund’s conversion to a dividend-paying corporation (the “Conversion”), the
Fund’s distributions and distribution policy; and the anticipated dividend policy of Macquarie Power and Infrastructure Corporation
The forward-looking statements in this news release are based on information currently available and what the Fund currently believes
are reasonable assumptions, including the material assumptions for each of the Fund’s assets set out in the Fund’s 2009 Annual
Report under the heading “Outlook” on page 42, as updated in subsequently filed Quarterly Financial Reports of the Fund (such
documents are available on the Canadian Securities Administrators’ System for Electronic Document Analysis and Retrieval (“SEDAR”)
at www.sedar.com). Other material factors or assumptions that were applied in formulating the forward-looking statements contained
herein include the assumption that the business and economic conditions affecting the Fund’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 and that there will be no unplanned material changes to the Fund’s facilities, equipment or contractual arrangements.
Although the Fund believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual
results may differ from those suggested by the forward-looking statements for various reasons, including risks related to: power
infrastructure (operational performance; power purchase agreements; fuel costs and supply; contract performance; development risk;
technology risk; default under credit agreements; land tenure and related rights; regulatory regime and permits; environmental, health
and safety; climate change and the environment; force majeure; the Fund (changes in federal tax rules for flow-through entities; other
tax-related risks; variability of distributions; geographic concentration and non-diversification; dependence on Macquarie Power
Management Ltd. (“MPML” or the “Manager”) and potential conflicts of interest; insurance; environmental, health and safety regime;
availability of financing; unitholder dilution; volatile market price for units; international financial reporting standards; nature of units;
unitholder liability). There are also a number of risks related to the Fund’s Plan of Arrangement (the “Arrangement”) providing for the
conversion and to the activities of MPIC or the ownership of MPIC common shares, including risks relating to: changes to the
Arrangement structure; the assessment of fair market value of the Fund units and MPIC common shares; the satisfaction of conditions
precedent to the Arrangement; the receipt of regulatory approvals affecting the Arrangement; the realization of the anticipated benefits
of the Arrangement; the impact on the Fund’s unit price and future business operations of the Fund should the Arrangement not be
completed; dilution of MPIC shareholders; the payment of dividends by MPIC, which are not guaranteed; and unpredictability and
volatility of the common share price of MPIC.
For a more comprehensive description of these and other possible risks, please see the Fund’s Annual Information Form dated March
25, 2010 for the year ended December 31, 2009 as updated in subsequently filed Quarterly Financial Reports and other filings of the
Fund with the Canadian securities regulators. These filings are available on SEDAR at www.sedar.com. 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. These forward-looking statements reflect current expectations of
the Fund as at the date of this news release and speak only as at the date of this news release. Except as may be required by law, the
Fund does not undertake any obligation to publicly update or revise any forward-looking statements.