News Release

Capstone Infrastructure Corporation Reports Strong First Quarter 2013 Performance


• Total revenue increased by 2.3% due to a higher regulated water rate at Bristol Water
• Bristol Water delivered on its capital expenditure program and grew revenue by 6.1% while gross Adjusted EBITDA   increased by 7.9%
• Power segment achieved high availabilities and total production above long-term averages 
• Adjusted EBITDA decreased by 13.1% primarily due to lower ownership interest in Bristol Water 
• AFFO decreased by 8.5%, primarily reflecting higher debt principal payments and less interest income from Värmevärden

TORONTO, ONTARIO (May 13, 2013) – Capstone Infrastructure Corporation (TSX: CSE; CSE.DB.A; CSE.PR.A – the "Corporation") today reported unaudited results for the first quarter of fiscal 2013 ended March 31, 2013. 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.

Financial Review

1"Adjusted EBITDA", “Adjusted Funds from Operations”, and “Payout Ratio” are non-GAAP financial measures and do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”). As a result, these measures may not be comparable to similar measures presented by other issuers. Definitions of each measure are provided on pages 5 and 6 of Management’s Discussion and Analysis with reconciliation to IRFS measures provided on page 6.
2While Bristol Water’s revenue and expenses are fully consolidated into Capstone’s financial results, its Adjusted EBITDA was adjusted to reflect Capstone’s 70% ownership interest, which was held between October 5, 2011 and May 10, 2012, and subsequent 50% interest following the sale of a 20% interest to ITOCHU Corporation on May 10, 2012.
3Consolidated AFFO includes dividends received from Bristol Water, which is more reflective of the cash flow available to Capstone from the operating activities of Bristol Water.

"Our power and utilities businesses performed strongly in the first quarter. The two main factors affecting our Adjusted EBITDA and AFFO were our reduced interest in Bristol Water effective May 10, 2012, and higher debt principal payments, respectively, compared with the same period last year," said Michael Bernstein, President and Chief Executive Officer. "Operationally, our power facilities achieved production slightly above long-term averages but below production in the first quarter of 2012. Bristol Water benefited from higher water rates and continued to advance its capital expenditure program. Värmevärden benefited from price adjustments and improved plant availability. During the quarter we also continued to work toward a new contract for Cardinal and to evaluate various business development opportunities. With our lower payout ratio, we expect to build up approximately $40 to $50 million in internally-generated cash over 2013 and 2014 to reinvest in our company's growth."

Financial Highlights 

Revenue increased by 2.3%, or $2.1 million, over the same quarter in 2012. This variance was mostly due to a higher regulated water rate, which increases annually, at Bristol Water, and higher electricity sales at the Cardinal gas cogeneration facility.

Total expenses in the first quarter increased by 3.2%, or $1.6 million, over the same period last year primarily due to slightly higher operating expenses at Bristol Water and increased fuel costs at Cardinal as a result of higher production.

Adjusted EBITDA was 13.1%, or $4.9 million, lower than in the same period last year. Of this amount, $4.8 million was attributable to the Corporation's reduced interest in Bristol Water effective May 10, 2012 and less interest income received from Värmevärden following the recapitalization of the business in March 2012. In addition, the Corporation's power segment produced 1.3% less electricity than in the same period last year.

AFFO was 8.5%, or $1.3 million, lower than in the first quarter last year. This variance was largely due to lower overall power production, higher debt principal payments and lower interest income from Värmevärden. These factors were partially offset by a $1.6 million dividend received from Bristol Water, which now pays dividends to its shareholders on a quarterly rather than semi-annual basis.

Financial Performance Highlights by Segment

Power Infrastructure:

 Revenue in the first quarter decreased by 0.9%, or $0.4 million, due to lower electricity production as a result of less favourable weather conditions for Erie Shores Wind Farm, the hydro power facilities, and Amherstburg Solar Park than in the same period last year when resource availability was generally better than average. In addition, Whitecourt limited its production during the quarter in response to lower average power pool prices in Alberta. Whitecourt also sold fewer renewable energy credits ("RECs") than in the same period last year. These factors were partially offset by increased production and a higher power rate at Cardinal.

Adjusted EBITDA for the quarter decreased by 4.9%, or $1.2 million, primarily reflecting lower revenue compared with the same quarter last year. AFFO declined by 14.4%, or $2.7 million, reflecting lower Adjusted EBITDA and higher debt principal payments in 2013 as a result of the recapitalization of the hydro power facilities in June 2012. In the first quarter, $2.7 million of debt at the power facilities was repaid through scheduled amortization payments.



The Corporation initially acquired a 70% interest in Bristol Water on October 5, 2011 and subsequently sold a 20% indirect interest in the business on May 10, 2012.

Revenue increased by 6.1%, or $2.5 million, primarily due to the annual regulated increase in water rates. Bristol Water's Adjusted EBITDA contribution declined by 22.9%, or $3.1 million, reflecting the Corporation's reduced interest in the business. During the quarter, Bristol Water paid a dividend of $1.6 million to the Corporation.

In the first three months of 2013, Bristol Water made capital expenditures of $36.6 million under its approximately $440 million capital program for the current five-year asset management plan ("AMP5"), which concludes in March 2015. As at March 31, 2013, Bristol Water had cumulative capital expenditures of $261 million over the AMP5 period, which was $38 million lower than planned. Bristol Water completed more than $134 million in capital expenditures in its fiscal year ended March 31, 2013, thereby reducing its expenditure shortfall by 48% as at year end. Bristol Water expects to fully complete its AMP5 capital program by the end of the regulatory period.

District Heating

During the first quarter of 2013, Värmevärden paid $0.7 million of interest income to the Corporation compared with $1.4 million of interest income in the first quarter last year. The variance reflected the balance outstanding on the shareholder loan receivable as a result of the return of approximately $48 million in capital from Värmevärden in March 2012.

Financial Position
As at March 31, 2013, the Corporation had cash and cash equivalents of $43.3 million, including $27.6 million from the power segment and $11.8 million from Bristol Water. Bristol Water has an additional $106.4 million in credit capacity to support its capital expenditure program. Approximately $19.8 million of the Corporation’s total cash and cash equivalents is available for general corporate purposes. As at March 31, 2013, the Corporation’s debt to capitalization ratio was 61.5%.

The Corporation expects continuing stable performance from its power generation and utilities businesses. Adjusted EBITDA in 2013 is expected to be approximately $110 million to $120 million, which, while consistent with 2012 performance, represents an approximately $6 million increase in Adjusted EBITDA over 2012 on a pro forma basis had the Corporation held its 50% interest in Bristol Water for all of 2012.

The Corporation's 2013 outlook reflects the following assumptions:

• A lower average effective gas transportation toll in 2013 of $1.95 per gigajoule ("GJ") compared with $2.24 per GJ in 2012;
• Increased business development activity compared with 2012, which is expected to result in higher corporate costs consistent with historical levels; and
• Modest overhead costs related to power development activities.

On March 27, 2013, the National Energy Board ("NEB") announced its decision to fix multi-year tolls on TransCanada's ("TCPL") Mainline. On May 1, 2013, TCPL submitted its compliance filing indicating the tolls that will take effect on July 1, 2013. Based on this new information, Capstone has revised its outlook for gas transportation tolls and now expects to pay a blended rate of $1.95 per GJ in 2013 and $1.65 per GJ in 2014. Also on May 1, 2013, TCPL filed an application for review and variance. The outcome of this application, including the toll level and effective date for the new toll, remains uncertain.

A detailed outlook for the Corporation's power, utilities and corporate segments is available on pages 12 to 16 of the quarterly report. The Corporation's strategic priorities for 2013 include:

Securing a new power purchase agreement for Cardinal.
With the selection of a new Premier and Cabinet in Ontario in February, the Corporation is actively in discussions with the Ontario Power Authority ("OPA") with the goal of achieving a fair, long-term solution for Cardinal that recognizes the value of the facility and its industrial, economic, social and community importance.

Maximizing the performance of its existing businesses.
The Corporation continues to focus on further enhancing the operational performance of its businesses, which includes preventive maintenance, detailed planning for capital expenditures that boost value, and finding ways to increase cash flow such as the sale of RECs by Whitecourt.

Pursuing new investment opportunities.
With a stronger balance sheet, the Corporation is identifying a range of growth opportunities, primarily concentrating its business development efforts on Canada, the United States, the United Kingdom, Western Europe and Australia, including operating infrastructure businesses and development opportunities that offer an appropriate risk-adjusted rate of return.

Dividend Declarations
The Board of Directors today declared a quarterly dividend of $0.075 per common share on the Corporation's outstanding common shares for the quarter ending June 30, 2013. The dividend will be payable on July 31, 2013 to shareholders of record at the close of business on June 28, 2013.

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 July 31, 2013 to shareholders of record at the close of business on July 15, 2013. The dividend on the Preferred Shares covers the period from May 1, 2013 to July 31, 2013.

In respect of the Corporation’s July 31, 2013 common share dividend payment, the Corporation will issue common shares in connection with the reinvestment of dividends to shareholder 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 July 31, 2013 to holders of record on June 28, 2013 of Class B Exchangeable Units of MPT LTC Holding LP, which is a subsidiary entity of the Corporation.

1See Notice to Readers

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

Q1 Conference Call and Webcast
The Corporation will hold a conference call and webcast (with accompanying slides) on Tuesday, May 14, 2013 at 8:30 a.m. EDT to discuss first 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 May 28, 2013. 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

Annual General Meeting of Shareholders
The Corporation will hold its Annual General Meeting ("AGM") of Shareholders on Tuesday, June 18, 2013 at 10 a.m. EDT at the TMX Broadcast Centre Gallery, located at 130 King Street West in Toronto. The AGM will also be webcast live with accompanying slides 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.

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 Capstone Infrastructure Corporation (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 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. 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, 2012 under the heading “Results of Operations”, as updated in subsequently filed MD&A of the Corporation (such documents are available under the Corporation's profile on

Other potential 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; that the power infrastructure facilities will experience normal wind, hydrological and solar irradiation conditions, and ambient temperature and humidity levels; an effective TransCanada pipeline ("TCPL") gas transportation toll of approximately $1.95 per gigajoule in 2013; that there will be no material change in the level of gas mitigation revenue historically earned by the Cardinal facility; that there will be no material changes to the Corporation's facilities, equipment or contractual arrangements, no material changes in the legislative, regulatory and operating framework for the Corporation's businesses, no delays in obtaining required approvals, no material changes in rate orders or rate structures for the power infrastructure facilities, Värmevärden or Bristol Water, no material changes in environmental regulations for the power infrastructure facilities, Värmevärden or Bristol Water and no significant event occurring outside the ordinary course of business; that the amendments to the regulations governing the mechanism for calculating the Global Adjustment (which affects the calculation of the direct customer rate ("DCR") escalator under the power purchase agreement ("PPA") for the Cardinal facility and price escalators under the PPAs for the hydro power facilities located in Ontario) will continue in force; that there will be no material change to the accounting treatment for Bristol Water's business under International Financial Reporting Standards, particularly with respect to accounting for maintenance capital expenditures; that there will be no material change to the amount and timing of capital expenditures by Bristol Water; that there will be no material changes to the Swedish Krona to Canadian dollar and British pound to Canadian dollar exchange rates; and that Bristol Water will operate and perform in a manner consistent with the regulatory assumptions underlying asset management plan 5 ("AMP5"), 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 for various reasons, including: risks related to the Corporation's securities (dividends on common shares and preferred shares are not guaranteed; volatile market price for the Corporation's securities; shareholder dilution; and convertible debentures credit risk, subordination and absence of covenant protection); risks related to the Corporation and its businesses (availability of debt and equity financing; default under credit agreements and debt instruments; geographic concentration; foreign currency exchange rates; acquisitions and development; environmental, health and safety; changes in legislation and administrative policy; and reliance on key personnel); risks related to the Power Infrastructure Facilities (power purchase agreements; operational performance; fuel costs and supply; contract performance; land tenure and related rights; environmental; regulatory environment); risks related to Bristol Water (Ofwat price determinations; failure to deliver capital investment programs; economic conditions; operational performance; failure to deliver water leakage target; service incentive mechanism ("SIM") and the serviceability assessment; pension plan obligations; regulatory environment; competition; seasonality and climate change; and labour relations); and risks related to Värmevärden (operational performance; fuel costs and availability; industrial and residential contracts; environmental; regulatory environment; and labour relations).

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 and financial outlook.

For further information, please contact:
Aaron Boles
Vice President, Communications and Investor Relations
Tel: (416) 649-1325