News Release

Macquarie Power Income Fund Announces Acquisition and Offering of Subscription Receipts

TORONTO, September 12, 2005 – Macquarie Power Income Fund (TSX: MPT.UN – the “Fund”) today announced that it intends to acquire a 45% indirect equity interest in the longterm care business of Leisureworld Inc. and associated entities (“Leisureworld”) for approximately $102 million, including offering and transaction costs. Leisureworld is a leading operator of long-term care facilities in Ontario.

The Fund’s Manager and Board of Trustees believe that the Leisureworld business represents an attractive infrastructure asset and the investment is consistent with the Fund’s objective of producing stable and sustainable levels of cash available for distribution to Unitholders. The Fund’s Manager and Trustees believe that the investment will diversify the Fund’s sources of cash flow, extend the average life of the Fund’s assets and provide the Fund with attractive sources of growth going forward.

In connection with the proposed acquisition, Standard & Poor’s has re-affirmed the Fund’s SR-2 stability rating.

Mr. Bob Rollinson, President and Chief Executive Officer of the Fund, said, “The long-term care sector represents a particularly attractive infrastructure opportunity for the Fund.

Long-term care is a vital part of provincial infrastructure, providing an essential service to Ontario communities and the quality of the Leisureworld business makes it an excellent investment. “Leisureworld has demonstrated stable cash flow growth over time, due to the combination of predictable revenues from government and other sources, and growing demand in the sector. Leisureworld’s facilities have a long useful life, significantly extending the average life of the Fund’s assets.

“In addition, Leisureworld is expected to benefit from Ontario’s broader demographic trends, enhancing the potential for future revenue growth.

“Going forward, the Manager expects that the Fund’s investment in Leisureworld will be accretive for Unitholders, offering an increase to the Fund’s cash available for distribution from 2006 and the potential for additional growth in the future,” said Mr Rollinson.


  • The long-term care sector represents an attractive infrastructure opportunity that provides an essential service to Ontario communities
  • Long-term care facilities have a long useful operating life, thereby significantly extending the average life of the Fund’s assets
  • The acquisition of Leisureworld will diversify the Fund’s cash flow stream
  • The Manager expects that the Fund’s acquisition of Leisureworld will be accretive to the Fund’s cash distributions per unit
  • The acquisition provides the opportunity to increase the Fund’s cash available for distribution through growth of the Leisureworld business.

In operation since 1973, Leisureworld is the third-largest operator of long-term care facilities in Ontario, with a portfolio of 19 long-term care facilities, 2 retirement homes and 1 independent living facility. The purchase also includes Preferred Health Care Services, a leading provider of professionals for long-term care homes and for private care.

The long-term care facilities (3,147 total beds) owned and/or operated by Leisureworld are of a high quality, with 67% of total beds located in Class A facilities, compared to the provincial average of 46%. Class A facilities are the highest standard designated by the Ministry of Health and Long Term Care and are the only Class eligible to receive capital cost funding from the provincial government.

Leisureworld has experienced stable and predictable revenue due to the availability of government funding and historically high occupancy rates. As facilities have progressed towards full occupancy, Leisureworld has demonstrated strong growth in adjusted EBITDA.

Leisureworld’s adjusted EBITDA in fiscal 2004 increased by $2.0 million (8.5%) to $26.0 million when compared to fiscal 2003. For the six-month period ended June 30, 2005, adjusted EBITDA grew by $2.9 million (23.9%) to $15.1 million over the same period in 2004.

The Manager expects continued growth in adjusted EBITDA due to increased occupancy at Leisureworld’s three newest long-term care facilities and the addition of one new facility.

The Manager also believes there to be numerous growth drivers in the Leisureworld business which have the potential to increase the Fund’s cash available for distribution. These drivers include:

  • increased “ramp up” in occupancy at 3 of Leisureworld’s long-term care facilities;
  • the addition of a new Class A long-term care facility in Orillia, anticipated to open in the second half of 2006;
  • optimization of private and semi-private (“preferred”) accommodation in existing facilities, providing additional incremental revenue per resident;
  • Leisureworld’s potential to obtain additional new long-term care facility licences over time;
  • Increased overall demand in the Ontario long-term care sector due to demographic trends including an aging population, increased life expectancy, increased senior affluence and changing family dynamics.

Upon closing of the acquisition, the Leisureworld business will continue to be managed by the existing team of experienced management and staff, under David Cutler as Chief Executive Officer. Mr. Cutler has over 15 years of experience in the long-term care sector, including as Chief Operating Officer of Leisureworld for the past 6 years.

In connection with the acquisition, the Fund has entered into an agreement to sell to a group of underwriters led by TD Securities Inc., BMO Nesbitt Burns Inc., and CIBC World Markets Inc., on a bought deal basis, 5,630,000 subscription receipts at a price of $11.50 per subscription receipt to raise gross proceeds of approximately $65 million. The offering is being made by way of a short form prospectus to be filed in all provinces and territories of Canada. Closing of the offering is expected to occur in late September, 2005. Closing of the acquisition is expected to occur in mid-October, 2005 and is conditional upon receipt of third party regulatory approvals, including from the Ontario Ministry of Heath and Long Term Care.

The subscription receipts are exchangeable on a one-for-one basis for units of the Fund on the closing of the acquisition. Provided that the offering closes on or before September 30, 2005, holders of subscription receipts will be entitled to distributions as if they had been holders of units on September 30, 2005.

The net proceeds from the offering of subscription receipts, being approximately $58 million, will be used by the Fund to partially fund its $93 million indirect equity investment in the acquisition of Leisureworld.

The balance of the Fund’s investment will be funded by the net issuance of approximately $35 million of exchangeable units to certain of the vendors of the Leisureworld business. The exchangeable units will be exchangeable for units of the Fund on a one-for-one basis.

Assuming the exchange of all the exchangeable units, the holders of the exchangeable units would own, in aggregate, approximately 10.8% of the issued and outstanding units of the Fund.

THE ACQUISITION OF LEISUREWORLD BY MACQUARIE SENIOR CARE LP (MSCLP) Macquarie Senior Care LP (MSCLP) is the entity which is indirectly acquiring the Leisureworld business for a total cost of approximately $517 million (including MSCLP’s transaction and purchase costs).

The acquisition will be partially funded by drawing upon an approximately $310 million Senior Bridge Debt facility provided by a Canadian chartered bank. It is intended that this bridge facility will be refinanced in the Canadian bond markets with one or more series of Senior Secured Notes. A bond forward will be used to hedge against interest rate movements until the issuance of the Senior Secured Notes.

Standard & Poor’s and Dominion Bond Rating Service have provided preliminary ratings on the Senior Secured Notes of A- and A(high) respectively.

The remaining $207 million of MSCLP’s acquisition cost will be financed as follows:

  • 45% indirect equity acquisition by the Fund for approximately $93 million, comprised of:
    • $58 million as net proceeds from the issue of subscription receipts
    • $35 million net investment in exchangeable units from certain of the vendors of the Leisureworld business
  • 55% indirect equity acquisition by a subsidiary of Macquarie Bank Limited for approximately $114 million.

The Fund will hold a conference call to discuss the announcement on September 12, 2005 at 4:30 PM EST. The conference call will also be available via webcast through the Fund’s website at (under the “Events” section of the Investor centre) and by telephone at 416-640-4127. A replay of the conference call will be available until September 19, 2005 following the conference call and can be accessed by dialling 416-640-1917, pass code 21152109#.

Macquarie Power Income Fund is an unincorporated limited purpose trust which owns a 156 MW gas-fired cogeneration power station located in Cardinal, Ontario. The Fund’s units are listed on the Toronto Stock Exchange under the symbol MPT.UN. The Fund is managed by Macquarie Power Management Ltd. , a wholly-owned subsidiary of Macquarie Bank Limited and a member of the Macquarie group.

Certain statements in this press release may constitute ‘‘forward-looking’’ statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund and its subsidiary entities, the Leisureworld LTC Business, MSCLP or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this press release, such statements use such words as ‘‘may’’, ‘‘will’’, ‘‘expect’’, ‘‘believe’’, ‘‘plan’’ and other similar terminology. These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this press release. 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. Although the forward-looking statements contained in this press release are based upon what the Manager believes are reasonable assumptions, neither the Fund nor the Manager can 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 press release, and the Fund and the Manager assume no obligation to update or revise them to reflect new events or circumstances.

Certain financial information contained in this news release, including references to cash available for distribution and earnings before interest, taxes, depreciation and amortization (EBITDA), are not standard measures under Generally Accepted Accounting Principles ("GAAP") in Canada and may not be comparable to similar measures presented by other entities. These measures are considered to be important measures used by the investment community to assess the source and sustainability of the Fund's cash distributions and should be used to supplement other performance measures prepared in accordance with GAAP in Canada. For further information on non-GAAP financial measures used by the Fund and a reconciliation of such measures to GAAP financial measures, see the annual and quarterly Management Discussion and Analysis and the notes to the annual and quarterly financial statements filed by the Fund with Canadian securities regulators.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities described herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification or registration under applicable securities laws of any such jurisdiction. The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933 (the “Securities Act”) and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act. More information on Macquarie Power Income Fund can be found at the Fund’s website, .

For further information, please contact:

Bob Rollinson
Chief Executive Officer
Macquarie Power Management Ltd.
Tel: (416) 607-5155

Alex Doughty
Corporate Communications
Macquarie group
Tel: (212) 231-1710