News Release

Macquarie Power & Infrastructure Income Fund to Invest in European District Heating Business

Essential service with proven operations, an established customer base and a competitive market position
  • Diversifies MPT into a new core infrastructure category and geographic region
  • Provides strong yield
  • Expected to deliver an attractive total return

TORONTO, ONTARIO (December 13, 2010) – Macquarie Power & Infrastructure Income Fund (TSX: MPT.UN; MPT.DB.A – “MPT” or the “Fund) today announced that it has entered into an agreement with Fortum Corporation to acquire an approximately 33.3% equity interest in a portfolio of district heating operations (the “DH Business”) centrally located in Sweden, for approximately C$100 million. The remaining approximately 66.7% interest in the DH Business will be acquired by Macquarie European Infrastructure Fund II (“MEIF II”), a private unlisted infrastructure fund managed by a subsidiary of Macquarie Group Limited (“MGL”). The transaction, which is subject to receipt of regulatory and other approvals, is expected to close in March 2011. MPT currently expects to satisfy its portion of the purchase price through its existing cash resources and credit facility.

“This district heating portfolio represents an established core infrastructure business with proven cash flow in an economically sound and demographically stable country where the Macquarie group has a presence, all of which aligns perfectly with MPT’s growth mandate,” said Michael Bernstein, President and Chief Executive Officer of MPT. “This investment provides an attractive return, leverages the strength of the Macquarie relationship, diversifies our portfolio internationally and by infrastructure category, and contributes to the long-term sustainability of our distributions to unitholders.”

Investment Rationale for MPT
This investment is expected to:

  • Deliver a total return at the upper end of MPT’s targeted 10% to 14% post-tax, levered range;
  • Deliver a stable cash yield averaging approximately 8% annually;
  • Significantly increase the size, scale and value of the portfolio, thereby strengthening MPT’s platform for continuing growth; and
  • Enhance MPT’s profile as a leading owner and operator of core infrastructure businesses.

About the Business
District heating refers to an underground distribution system that delivers heat to numerous buildings or industrial users within a community from a single facility. The DH Business’ district heating system consists of 11 regional facilities that include both heat production and distribution. The DH Business’ heat production facilities have a total capacity of 786 MW(th) and include biomass- and oil-fired boilers and steam turbines. With the significant use of renewable fuels as well as recovered waste heat derived from the industrial processes of certain customers, the DH Business features an attractive renewable generation profile. The heat generated by these production facilities is distributed through a 317-kilometre network of pipelines to approximately 4,000 supply points including large residential buildings, such as apartment buildings or municipally-owned facilities, and industrial customers where it is used for space heating and domestic hot water heating, or for industrial heating and processes, respectively. The DH Business is composed of:

  • A majority interest in three district heating companies in which local municipalities hold minority interests;
  • A 100% interest in seven district heating businesses; and
  • One industrial outsourcing contract.

Approximately 70% of the DH Business’ revenue is derived from large residential customers, primarily the owners or operators of apartment buildings. Rates under the residential contracts are set annually. Approximately 25% of revenue is derived from seven large and established industrial customers with long-term contracts expiring between 2011 and 2019 with renewal on comparable terms typically expected due to the extensive integration of the district heating system into the operations of these industrial customers. Residential and industrial customers each pay a fixed capacity payment as well as for the volume of heat consumed. The remaining approximately 5% of revenue is primarily derived from the sale of merchant electricity.

In 2009, heat sales were 1.3 terawatt hours (“TWh”), resulting in revenue of approximately C$100 million and earnings before interest, taxes, depreciation and amortization (“EBITDA”) of approximately C$33 million. On closing, MPT will implement an appropriate foreign exchange hedging program. The DH Business has approximately 90 employees, including a seasoned management team with extensive experience in the Swedish district heating market.

Sweden is recognized as a world leader in district heating systems, which typically deliver improved energy efficiency and are environmentally friendly. District heating is used by approximately 56% of the Swedish population, primarily reflecting the significantly lower cost of district heating relative to available alternatives such as electricity, geothermal heat pump or wood pellets, many of which require a significant up-front investment to switch and entail higher operating and maintenance expenses. Moreover, approximately 60% of Swedish households reside in apartment buildings, of which 95% rely on district heating.

Accordingly, the DH Business benefits from:

  • A stable customer base and strategic competitive advantage due to the high cost of heat alternatives, resulting in low residential customer turnover;
  • Historically stable EBITDA margins; and
  • An attractive, carbon-neutral profile arising from the use of renewable fuels.

Macquarie’s Infrastructure Presence Globally and in Europe
Affiliated entities of Macquarie Power Management Ltd., the administrator of the Fund, manage infrastructure funds that own and operate approximately 100 infrastructure businesses in 25 countries, including district heating, regulated utilities, gas transportation, water and sewerage, roads, airports, seaports and rail businesses. Approximately 60%1 of these infrastructure businesses are located in Europe. In Sweden, Macquarie-managed funds invest in Arlanda Express, a high-speed rail service linking the airport to Stockholm’s city centre and a number of wind farms. Of Macquarie’s 70 offices worldwide, 14 are located in Europe, including in London and Stockholm.

About Macquarie Power & Infrastructure Income Fund
Macquarie Power & Infrastructure Income Fund’s mission is to build and responsibly manage a portfolio of high quality core infrastructure businesses in Canada and internationally in order to deliver a superior total return to investors through stable dividends and capital appreciation. MPT’s portfolio currently includes investments in gas cogeneration, wind, hydro and biomass power generating facilities across Canada, representing approximately 350 MW of installed capacity. MPT is also developing a 20 MW solar power facility in Ontario. MPT is managed by an affiliate of Macquarie Group Limited. Please visit for additional information. Effective January 1, 2011, MPT will convert into Macquarie Power and Infrastructure Corporation, a dividend-paying corporation publicly listed on the Toronto Stock Exchange under the symbol “MPT”.

Conference Call and Webcast Details
Management of the Fund will hold a conference call (with accompanying slides) to discuss this acquisition on Monday, December 13, 2010 at 10 a.m. ET. The conference call will be accessible via webcast through the Fund’s website with accompanying slides at and by telephone at 416-340-2216 (Canada) or 1-866-226-1792 (North America). A replay of the call will be available until December 27, 2010 by dialling 905- 694-9451 or 1-800-408-3053 and entering the passcode 8210771.

Notice to Readers:
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 these entities.

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.

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 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, that there will be no unplanned material changes to the Fund’s facilities, equipment or contractual arrangements, and that the acquisition of the DH Business will be completed in accordance with the terms of the acquisition agreement.

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 of the Fund into a dividend-paying corporation (“MPIC”) on or about January 1, 2011 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. There are also a number of risks related to the Fund’s proposed investment in the DH Business, including: general business risks inherent in the district heating business; geographic concentration; minority interest; government regulation; termination of supply and customer contracts; possible failure to complete the acquisition; enforcement of indemnities against the vendors of the DH Business; environmental health and safety liabilities; liability and insurance; and reliance on key personnel.

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 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.


Michael Smerdon
Vice President and Chief Financial Offic
Tel: (416) 607 5167
Aaron Boles
Vice President, Communications and Investor Relations
Tel: (416) 649 1325