– Macquarie Power & Infrastructure Income
Fund (TSX: MPT.UN; MPT.DB – “MPT” or the “Fund”), which owns and operates essential
infrastructure assets, today reported unaudited results for the third quarter ended
September 30, 2009. The Management’s Discussion and Analysis and unaudited financial
statements are available on the Fund’s website at
The Fund also announced that it has filed revised unaudited interim consolidated financial
statements and management discussion and analyses (the “revised financial reports”) for the
first and second quarters of 2009 with Canadian securities regulatory authorities. The revised
reports reflect an adjustment in the Fund’s option pricing model that affected the calculation of
the fair value of the Fund’s embedded derivative asset.
“Overall, our infrastructure businesses operated well during the third quarter, reflecting the
stable, contractually defined or regulated markets in which they operate,” said Michael
Bernstein, the Fund’s President and Chief Executive Officer. “Our quarterly payout ratio
reflected higher than anticipated management and administrative costs related to our analysis
regarding the Fund’s corporate conversion, as well as business development expenses as we
continued to assess a number of growth opportunities for the Fund.”
During the quarter, the Fund announced a new distribution level of $0.055 per unit per month,
or $0.66 per unit annually, effective January 2010, as well as its intention, subject to unitholder
and other approvals, to convert into a dividend-paying corporation prior to January 1, 2011.
The Fund currently expects the new distribution level to result in an average payout ratio of
approximately 70% - 75% of distributable cash1 over a five-year period. For the balance of
2009, the Fund intends to maintain distributions to unitholders at $0.08750 per unit monthly,
which, based on management’s current outlook, is expected to represent a payout ratio for
2009 of approximately 105%. Distributions to unitholders will be supported by the Fund’s
general reserve account.
Third Quarter Financial Performance
Revenue for the quarter was $32.7 million compared with $32.4 million in the third quarter of
2008, primarily reflecting stable power production at the Cardinal gas cogeneration (“Cardinal”)
facility and Erie Shores Wind Farm (“Erie Shores”) as well as higher power rates at Cardinal.
These drivers were offset by lower production at the Whitecourt biomass (“Whitecourt”) facility
due to 18 days of outage in July to complete maintenance work. Production at the hydro
power facilities was slightly lower than in the same period last year, reflecting dry conditions at
the Sechelt hydro power facility, partially offset by strong precipitation at the Wawatay hydro
The Fund’s distributable cash was $8.3 million ($0.166 per unit) compared with $9.8 million
($0.197 per unit) in 2008. Declared distributions to unitholders were consistent with the third
quarter of 2008 at $13.1 million ($0.262 per unit), representing a payout ratio of 158%
compared with 133% in the same period last year, which reflected higher management and administrative costs and higher net interest expense as a result of the May 2009 refinancing of
the Fund’s credit facilities. The payout ratio for the first nine months of 2009 was 117%
compared with 105% in the same period last year, reflecting lower revenue and higher
expenses in the first nine months of 2009.
Income from operations2 for the Fund was $2.3 million compared with $4.1 million in the third
quarter of 2008. This variance primarily reflected higher operating expenses due to the major
maintenance work at Whitecourt, which was partially offset by lower gas transportation costs at
Cardinal. Increased management and administrative costs reflected higher business
development and consulting costs related to the Fund’s planned conversion to a dividendpaying
Excluding Whitecourt, the Fund’s contribution margin3 for the third quarter of 2009 was $11.4
million compared with $10.2 million in the same period last year, reflecting the strong
operational performance of Cardinal, Erie Shores and the hydro power facilities.
As at September 30, 2009, the Fund had positive working capital of $10.6 million and cash on
hand of $16.1 million, of which $5.6 million was not designated for general, major maintenance
and capital expenditure reserve accounts. The Fund is conservatively leveraged relative to the
low risk profile and long life of its assets, with a debt to capital ratio of 47.2%.
Third Quarter Operational Highlights
Total power production was 480,152 MWh compared with 479,348 MWh in the third quarter of
Cardinal produced 309,786 MWh of electricity (Q3 2008 – 297,301 MWh), reflecting 112 hours
of curtailment (Q3 2008 – 448) and cooler ambient temperatures. Cardinal curtails production
from time to time during maintenance activities and periods where the spot market price of gas
is favourable. During curtailment, the facility continues to produce electricity but at less than
capacity. For the quarter, Cardinal achieved an availability of 99.8% (Q3 2008 – 100.0%) and
a capacity factor of 99.4% (Q3 2008 – 95.4%).
Erie Shores produced 35,210 MWh (Q3 2008 – 34,679 MWh) of electricity, reflecting a slightly
higher average wind speed during the quarter. The facility achieved an overall availability of
95.5% (Q3 2008 – 94.8%) and a capacity factor of 16.1% (Q3 2008 – 16.0%).
The Fund’s hydro power facilities produced 35,994 MWh (Q3 2008 – 36,680 MWh) of
electricity, primarily as a result of lower water flows at the Sechelt hydro power facility in British
Columbia due to dry conditions, which was partially offset by higher production at the Wawatay
hydro power facility, the Fund’s second largest hydro power facility, located in Ontario, due to
greater precipitation. The hydro power facilities achieved a weighted average availability of
97.9% (Q3 2008 – 93.6%) and a capacity factor of 45.7% (Q3 2008 – 46.8%).
Whitecourt produced 41,180 MWh of electricity (Q3 2008 – 53,301 MWh), reflecting 480 hours
of outage (Q3 2008 – nil) during the quarter primarily to correct a higher than normal vibration
of the turbine and to complete other balance of plant maintenance work. As a result, the
facility operated at an availability of 78.5% (Q3 2008 – 100.0%) and achieved a capacity factor
of 77.5% (Q2 2008 – 99.8%).
The Chapais biomass facility (“Chapais”), in which the Fund holds a minority preferred equity
and debt interest, produced 57,982 MWh (Q3 2008 – 57,387 MWh) of electricity. The facility
experienced availability of 98.8% (Q3 2008 – 96.5%), reflecting 27 hours of outage (Q3 2008 –
77), and achieved a capacity factor of 93.8% (Q3 2008 – 92.8%).
The Fund owns an indirect 45% equity interest in Leisureworld Senior Care LP
(“Leisureworld”), which the Fund accounts for as an equity investment. In the third quarter,
Leisureworld delivered stable performance, achieving a 6.1% increase in revenue over the
same period last year, reflecting increases in private accommodation and government funding rates. Average total occupancy in the third quarter was 99.0% (Q3 2008 – 98.7%). The
average occupancy of private rooms was 97.0% (Q3 2008 – 93.3%).
Appointment of New Trustee
The Fund is pleased to announce the appointment of Mr. V. James Sardo to its Board of
Trustees, effective November 4, 2009.
Mr. Sardo is a seasoned executive with significant operational and corporate governance
expertise. He is currently a director of New Flyer Industries Inc.; Hydrogenics Corporation;
and Northstar Healthcare Inc. Previous directorships include: Countryside Power Income
Fund, where he served as chairman; UE Waterheater Income Fund; and Custom Direct
Income Fund. From 2004 to 2005, Mr. Sardo served as interim Chief Executive Officer of
Royal Group Technologies. Mr. Sardo was formerly President, Canadian Operations of Moore
Corporation Limited and President and Chief Executive Officer of SMK Speedy International
Inc. He is also the former Chairman and Chief Executive Officer of Firestone Canada Inc. and
the President of Firestone Industrial Products Company. Mr. Sardo is a member of the
Institute of Corporate Directors and holds the ICD.D designation.
“We are delighted to welcome Jim to the Fund’s Board of Trustees,” said Derek Brown,
Chairman of the Board of Trustees. “His considerable management and strategic planning
experience will be extremely valuable to our team as we work to build MPT into Canada’s
leading public infrastructure investment vehicle.”
Filing of Revised Financial Reports
Revised financial reports for the first and second quarter were filed to provide for an
adjustment in the Fund’s embedded derivative asset and the related future income tax impact.
This restatement results from certain corrections that have been made to the option pricing
model that is used to calculate the fair value of the Fund’s embedded derivative asset. In
January 2009, the Fund amended Cardinal’s gas purchase agreement with Husky, which
allows for a more favourable profit sharing arrangement on net proceeds from the mitigation of
excess gas. The Fund’s previous option pricing model did not properly capture the impact of
these changes in the first quarter of 2009. Management has determined that the revised model
more accurately calculates the fair value of the Fund’s embedded derivative asset. As a result
of this, the Fund’s net income in the first quarter was $2.1 million rather than $7.0 million as
previously reported. In the second quarter, the net loss was $1.8 million rather than the $1.9
million as previously reported.
These adjustments had no impact on the Fund’s previously reported distributable cash, payout
ratio or cash flows from operating, investing and financing activities. No other changes were
required in the Fund’s previously announced and filed interim financial reports.
Mr. Bernstein continued, “Our businesses are fundamentally sound, reflecting the essential
nature of the services they provide. We expect our portfolio to continue to support a strong
distribution to our investors. At the same time, we are continuing to pursue growth
opportunities that will increase the Fund’s size, scale and liquidity and enable us to deliver a
superior return to our unitholders.”
In 2009, Cardinal is expected to generate lower revenue than in 2008, which primarily reflects
the hot gas path inspection that required 13 days of outage in April. While Cardinal will
continue to experience higher gas transportation costs, the confirmed 2009 rate is below the
average 2008 level. As a result of these factors, cash flow from Cardinal will be slightly lower
in 2009 compared with 2008.
Erie Shores is expected to generate slightly less electricity than the estimated average annual
production of 249,800 MWh, reflecting generally lower wind speed and density in 2009 to date.
Erie Shores’ production is subject to wind speed and density, which are typically strongest
during the fall and winter months.
The hydro power facilities are expected to generate less electricity than the average long-term
annual production of 166,360 MWh, which reflects the poor hydrological conditions
experienced primarily in the first quarter of 2009. Production at the hydro power facilities is
subject to water flows, which are typically strongest during the spring and fall months.
Whitecourt completed its spring outage to repair the turbine vibration on July 18, 2009,
requiring 433 hours of outage in the quarter. No further maintenance work is scheduled for the
facility in 2009. Management currently expects that the turbine will operate reliably until the
next scheduled major maintenance inspection, which occurs every seven years. Whitecourt is
expected to achieve an availability of approximately 80% to 83% in 2009 (2008 - 88.4%) and
to return to its five-year average availability of approximately 95% in 2010.
Leisureworld is continuing to focus on enhancing the quality of care and accommodation for
residents, which contributes to the continuing high occupancy of its homes. In addition,
Leisureworld is continuing to attract a growing number of residents to private accommodation,
for which Leisureworld receives a regulated premium. Leisureworld’s distribution policy will be
maintained for fiscal 2009. Effective in January 2010, Leisureworld’s annual distribution to the
Fund is expected to be $9.5 million compared with $10.4 million currently. This new
distribution policy more closely reflects management’s outlook for Leisureworld’s financial
performance in 2010.
Conference Call and Webcast
Management of the Fund will hold a conference call (with accompanying slides) to discuss
third quarter results on Thursday, November 5, 2009 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 416-340-8061 (Canada) or 1-866-225-0198
(North America). A replay of the call will be available until November 19, 2009 by dialling 416-
695-5800 or 1-800-408-3053 and entering the passcode 3340311.
The Fund will hold its fourth annual Investor Day on December 2, 2009 commencing at 4 p.m.
at the Toronto Board of Trade. For more information, contact investor relations at email@example.com. The Investor Day event will be webcast live on the Fund’s website.
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.
1 Distributable cash is defined as cash flows from operating activities after removing changes in working capital. Distributable cash also
reflects the impacts of: cash taxes; releases from maintenance reserves; allocations to major maintenance and capital expenditure
reserves; non-discretionary payments and receipts; and distributions from Leisureworld.
2 Income from operations refers to income before net interest, foreign exchange, share of income (losses) from long-term investments,
unrealized gains (losses) on swap contracts and on embedded derivatives in gas purchase contracts, gain on sale of capital assets,
3 Contribution margin is defined as revenue net of direct operating expenses.
About Macquarie Power & Infrastructure Income Fund
Macquarie Power & Infrastructure Income Fund invests in essential infrastructure assets in
North America with an emphasis on power infrastructure. MPT’s strategy is to acquire and
actively manage a diverse, high quality portfolio of infrastructure assets to improve their
financial performance and provide growing and sustainable distributions to unitholders. MPT’s
portfolio includes investments in gas cogeneration, wind, hydro and biomass power generating
facilities, representing approximately 350 MW of installed capacity, and a 45% interest in
Leisureworld Senior Care LP, a leading provider of long-term care, or social infrastructure, in
Ontario. MPT is managed by a wholly-owned subsidiary of Macquarie Group Limited. Please
www.macquarie.com/mpt for additional information.
Certain statements in this news release may constitute “forward-looking” statements, which involve known and
unknown risks, uncertainties and other factors that may cause the actual results to be materially different from any
future results expressed or implied by such forward-looking statements. When used in the this news release, such
statements use such words as “may”, “will”, “expect”, “believe”, “plan” and other similar terminology. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or
results and will not necessarily be accurate indications of whether or not such results will be achieved. The forwardlooking
statements contained 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 2008 Annual Report under the headings “Outlook” on pages 23 to 24, as updated in subsequently
filed quarterly Financial Reports of the Fund. However, the Fund cannot assure investors that actual results will be
consistent with these forward-looking statements. These forward-looking statements are made as of the date of this
news release, and, except as required by law, the Fund does not undertake any obligation to update publicly or to
revise any of the included forward-looking statements, whether as a result of new information, future events or
otherwise. The Fund cautions readers not to place undue reliance on any forward-looking statements contained in this
news release. The forward-looking statements contained in this news release are expressly qualified by this
The forward-looking information contained in this news release is presented for the purposes of assisting investors
and analysts in understanding the Fund’s financial position and our stated priorities and objectives may not be
appropriate for other purposes. The Fund cautions readers not to place undue reliance on any forward-looking
statements, which speak only as of the date made. A number of factors could cause actual results to differ materially
from the results discussed in the forward-looking statements, including, but not limited to, risks associated with: the
operational performance of the Fund’s assets; power purchase agreements; fuel costs, supply and transportation;
default under credit agreements; regulatory regime and permits; land tenure and related rights; government regulation
and funding; the ability to complete future acquisitions; LTC home ownership and operation; minority ownership
interest in Leisureworld; reliance on key personnel; default under Leisureworld’s long-term debt and credit facility;
labour relations and cost; the variability of distributions; unitholder liability; dependence on Macquarie Power
Management Ltd., the manager of the Fund, and potential conflicts of interest; insurance; and risks related to the
environmental, health and safety regimes within which the Fund’s assets operate. The risks and uncertainties
described above are not exhaustive and other events and risk factors, including risk factors disclosed in Fund’s filings
with Canadian securities regulatory authorities, could cause actual results to differ materially from the results
discussed in the forward-looking statements.
Non-GAAP Financial Measures
"Income from operations", "distributable cash" and “contribution margin” do not have any standardized meaning under
Canadian GAAP. Management believes they are useful measures of performance as they provide investors with
indications of income from operations and the amount of cash available for distribution to unitholders. The Fund's
method of calculating "income from operations" and "distributable cash" may not be comparable to other similarly