TORONTO, ONTARIO--(Marketwired - Feb. 21, 2017) - Today Capstone Infrastructure Corporation ("Capstone" or the "Corporation") (TSX:CSE.PR.A) announced that, alongside its co-shareholder Macquarie European Infrastructure Fund 2 ("MEIF2"), it has agreed to sell 100% of the Värmevärden group ("Värmevärden") to institutional investors advised by J.P. Morgan Asset Management. Capstone expects to receive approximately $140 million in net proceeds for its 33.3% indirect interest in Värmevärden.
The purchase price represents an attractive valuation which is the result of a competitive sales process, as well as the hard work by Värmevärden management team and its shareholders over the past 6 years to develop, de-risk and grow the business. Since its investment in 2011, Capstone has realized a total return for Värmevärden in excess of 22% per annum. A portion of the proceeds from the sale will be used to eliminate the remaining outstanding balance of the promissory note issued by Capstone to Irving Infrastructure Corp. on April 29, 2016. This leaves Capstone with a simpler capital structure going forward.
This transaction provides several additional benefits to Capstone including a material reduction in corporate debt, minimizing exposure to foreign currency risk, and re-focusing the business as a pure-play independent power producer which positions Capstone for future sustainable growth in the sector in North America.
The Capstone power portfolio reported adjusted EBITDA ("AEBITDA") and Adjusted Funds from Operations ("AFFO")1 over the 12 months ending September 30, 2016, of $82.5 million and $32.5 million, respectively (excluding net contributions from OEFC proceeds awarded for retroactive payments to Cardinal and the Ontario hydro facilities). Capstone's power portfolio is strong and growing with a weighted average remaining contractual life left on its power purchase agreements ("PPAs") of 14.5 years which has increased in length with the completion of recent wind farm development projects.
1 AEBITDA and AFFO are non-GAAP financial measures that assist management and stakeholders in analyzing the cash flow available for future growth capital investments, acquisitions and dividends available to the preferred shareholders and Capstone's common shareholder. For reconciliations of AEBITDA and AFFO to Net Income, see management's discussion and analysis of the Corporation's interim financial results as at and for the three and nine months ended September 30, 2016, which is available under the Corporation's profile on www.sedar.com.
ABOUT CAPSTONE INFRASTRUCTURE CORPORATION
Capstone's mission is to provide investors with an attractive total return from responsibly managed long-term investments in power generation in North America. The company's strategy is to develop, acquire and manage a portfolio of high quality power businesses that operate in a contractually-defined environment and generate stable cash flow. Capstone currently owns, operates and develops thermal and renewable power generation facilities in North America with a total installed capacity of net 505 megawatts. Please visit www.capstoneinfrastructure.com for more information.
ABOUT J.P. MORGAN ASSET MANAGEMENT - GLOBAL REAL ASSETS
J.P. Morgan Asset Management - Global Real Assets has more than $96 billion in assets under management and more than 400 professionals in 20 offices throughout the Americas, Europe and Asia Pacific, as of December 31, 2016. With a 45-plus year history of successful investing, J.P. Morgan Asset Management - Global Real Assets' broad capabilities provide many of the world's most sophisticated investors with a global platform of real estate, infrastructure and transportation strategies driven by local investment talent with disciplined investment processes consistently implemented across asset types and regions. For more information: jpmorgan.com/institutional/global_real_assets
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 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", "intend", "estimate", "plan", "believe" or other similar words.
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