News Release

Capstone Infrastructure Corporation Announces Bond Financing by Swedish District Heating Business

  • Enables Capstone to repatriate up to approximately $50 million in capital
  • Improves and strengthens Capstone's balance sheet

TORONTO, ONTARIO (February 22, 2012) – Capstone Infrastructure Corporation (TSX: CSE; CSE.DB.A; CSE.PR.A – the “Corporation”) today announced that Sefyr Värme AB, in which the Corporation holds a 33.3% interest and which is the parent company of Värmevärden, the Swedish district heating business, will issue SEK922 million (C$138 million[1]) of senior secured bonds to select institutional investors in Sweden.  The offering is expected to close on or about February 24, 2012.

The bonds will carry a coupon of 7.0%, have a term of five years and are non-amortizing. Sefyr Värme AB has the option to issue up to an additional SEK78 million (C$12 million1) of senior secured bonds at any time over the next five years, bringing the offering to an aggregate size of up to approximately SEK1 billion (C$150 million1).

“The size and terms of this financing are generally consistent with our expectations and reflect investor appetite for quality infrastructure investment opportunities,” said Michael Bernstein, President and Chief Executive Officer. “With the recapitalization of Värmevärden, Capstone expects to immediately repatriate approximately $46 million in capital that we plan to use to repay a portion of the $78 million that is currently outstanding on our senior credit facility with the possibility of additional capital being returned from this investment in the future.  This initiative is an important step towards strengthening Capstone’s financial position and flexibility.”

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 through a combination of stable dividends 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 70% 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 Capstone Infrastructure Corporation’s (the “Corporation”) future growth, results of operations, performance and business 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”, “estimate”, “plan”, “believe” or other similar words. These statements 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, accordingly, should not be read as guarantees of future performance or results. The forward-looking statements within this document are based on information currently available and what the Corporation currently believes are reasonable assumptions, including the material assumptions for each of the Corporation’s assets 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, 2010 under the heading “Asset Performance", as updated in subsequently filed interim MD&A of the Corporation and the business acquisition report of the Corporation dated June 14, 2011 related to the closing of the acquisition of an approximate 33% interest in the Swedish district heating business (“Värmevärden”) (such documents are available under the Corporation’s profile on Other material factors or assumptions that were applied in formulating the forward-looking statements 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; a full year of contribution from the Amherstburg Solar Park, Värmevärden and the UK water business (“Bristol Water”); a TransCanada Pipeline (“TCPL”) gas transportation rate of approximately $2.24 per gigajoule in 2012 and approximately $1.64 per gigajoule in 2013 and 2014; the level of gas mitigation revenue earned by the Cardinal facility; that there will be no unplanned material changes to the Corporation’s facilities, equipment or contractual arrangements, no unforeseen changes in the legislative and operating framework for the Corporation’s businesses, no delays in obtaining required approvals, no unforeseen changes in rate orders or rate structures for the Corporation’s power business, Värmevärden or Bristol Water, no unfavourable changes in environmental regulation and no significant event occurring outside the ordinary course of business; that there will be a stable regulatory environment and favourable decisions will be received from regulatory bodies concerning outstanding rate and other applications; that the senior credit facility, used to partially fund the Bristol Water acquisition, will be repaid on or prior to its maturity on October 3, 2012; refinancing of the Capstone Power Corp.-Cardinal Power of Canada, L.P. credit facility and project financing of the hydro facilities (that potentially include amortization profiles); that there will be no further amendments by the Government of Ontario to the application of the Global Adjustment Mechanism which comprises a portion of the Direct Customer Rate revenue escalator in the power purchase agreements (“PPAs”) for the Cardinal facility and the hydro facilities located in Ontario; the accounting treatment for Bristol Water’s business under IFRS, particularly with respect to accounting for maintenance capital expenditures; the amount of capital expenditures by Bristol Water; the UK pound sterling to Canadian dollar exchange rate; and that Bristol Water will operate and perform in a manner consistent with the regulatory assumptions underlying Bristol Water’s regulatory 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.


Although the Corporation 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; PPAs (in particular, the risk associated with the Cardinal PPA expiring in the fourth quarter of 2014); fuel costs and supply (including increases in the gas transportation rate charged by TCPL); contract performance; development risk; technology risk; default under credit agreements; land tenure and related rights; regulatory regime and permits; environmental, health and safety requirements; climate change and the environment; and force majeure) the Corporation (tax-related risks; variability and payment of dividends, which are not guaranteed; geographic concentration and non-diversification; insurance; environmental, health and safety regime; availability of financing; shareholder dilution; and the unpredictability and volatility of the common share price of the Corporation); the Corporation’s investment in Värmevärden (general business risks inherent in the district heating business; fuel costs and supply; reliance on industrial customers and ability of residential customers to cancel contracts on short notice; geographic concentration; government regulation; environmental health and safety liabilities; reliance on key personnel; labour relations; enforcement of indemnities against the vendors of Värmevärden; minority interest; and foreign exchange); and Bristol Water’s business (revenue is substantially influenced by price determinations made by the UK water regulator (“Ofwat”); failure to complete capital investment programs; failure to achieve water leakage targets; the imposition of penalties under Ofwat’s new comparative incentive mechanism; the economic downturn impacting the lending environment, as well as debt and capital markets, resulting in more costly financing and inflation negatively impacting leverage and key financial ratios, which may have a negative impact on credit ratings, as well as increasing the cost of capital expenditures; pension plan obligations may require Bristol Water to make additional contributions; failure to meet existing regulatory requirements and the potentially adverse impact of future legislative and regulatory changes; the ability for a Special Administrator to be appointed by the UK Secretary of State for the Environment, Food and Rural Affairs or Ofwat in certain circumstances (including the breach by Bristol Water of its license); foreign exchange; operational risks (including significant interruption of the provision of its services and catastrophic damage resulting in loss of life, environmental damage or economic and social disruption); development of competition within the water sector; reliance on key personnel; default under its Artesian loans, bonds, debentures or credit facility; geographic concentration; potential seasonality and climate change; labour relations; and enforcement of indemnities against the vendors of Bristol Water).


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. The forward-looking statements 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 Canadian law, the Corporation does not undertake any obligation to publicly update or revise any forward-looking statements or financial outlook.

For further information, please contact:

Aaron Boles
Vice President, Communications and Investor Relations
Tel: (416) 649-1325




[1] Based on the exchange rate of the Swedish Krona to the Canadian dollar of 6.67.