News Release

Macquarie Power & Infrastructure Income Fund Announces Board Approval of Conversion to Corporation

  • Board of Trustees determines that conversion is in best interests of the Fund and fair to unitholders
  • New corporation expected to implement a monthly dividend of $0.055 per share
  • Special meeting of unitholders to be held on November 15, 2010


TORONTO, Ontario (October 13, 2010) – Macquarie Power & Infrastructure Income Fund (TSX: MPT.UN; MPT.DB.A – “MPT” or the “Fund”) today announced that its Board of Trustees has unanimously approved the conversion of the Fund into a publicly-traded corporation (the “Conversion”) effective on or about January 1, 2011. In connection with the Conversion, an arrangement agreement has been entered into between the Fund and Macquarie Power and Infrastructure Corporation (“MPIC”), a newly-formed wholly-owned subsidiary of the Fund. The Fund previously announced its intention to convert to a corporation on September 29, 2009.

The Conversion will be effected by way of a statutory plan of arrangement (the “Arrangement”), which is subject to unitholder and court approval. If the Arrangement is completed, unitholders will exchange their units of the Fund for common shares of MPIC on a one-for-one basis.

Upon completion of the Arrangement, MPIC will become the owner, directly or indirectly, of the businesses currently owned by the Fund and will continue to actively manage a high quality portfolio of long-life infrastructure businesses in Canada and internationally with the objective of generating sustainable long-term dividends and an attractive total return for investors.

Details of the Conversion
The Conversion is driven by the imposition of new federal tax rules for specified investment flow-through vehicles, including income trusts, which are scheduled to come into effect on January 1, 2011. These new tax rules will effectively eliminate the benefits of the income trust structure for both the Fund and its unitholders. The Board of Trustees believes that the Conversion will result in a simpler but tax-efficient structure, better access to cost-effective capital, and improved certainty and liquidity for investors.

Dividend Policy
Since January 2010, the Fund has paid monthly distributions of $0.055 per unit, or $0.66 per unit on an annualized basis. Based on the Fund’s current portfolio and outlook, this distribution level is expected to be sustainable through 2014. It is expected that MPIC’s dividend policy will be initially set at $0.055 per common share per month with its first monthly dividend being declared in respect of the month ending January 31, 2011, assuming that the conversion is effective on or about January 1, 2011.

Macquarie Power & Infrastructure Income Fund is not an authorised deposit taking institution for the purposes of the Banking Act (Cth) 1959 and Macquarie Power & Infrastructure Income Fund’s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Power & Infrastructure Income Fund.

MPT unitholders who are enrolled in the Fund’s current Distribution Reinvestment Plan (“DRIP”) when the Conversion is implemented will automatically become participants in MPIC’s Dividend Reinvestment Plan.

Debentures
Upon completion of the Arrangement, the Fund’s 6.50% convertible unsecured subordinated debentures due December 31, 2016 (the “Debentures”) will become obligations of MPIC and continue to have substantially the same terms and conditions, with the automatic adjustment that they will be convertible into MPIC common shares in accordance with their terms.

Tax Implications
It is expected that the Conversion will be effected on a tax-deferred basis to unitholders and holders of Debentures for Canadian and U.S. income tax purposes. The Fund’s understanding is that dividends paid in respect of MPIC common shares held by individuals resident in Canada will be eligible for the enhanced Canadian dividend tax credit. It is intended that dividends paid to U.S. investors will continue to be taxed for U.S. purposes as “qualified foreign dividends” to the extent that the dividends are paid out of current or accumulated earnings and profits, provided all U.S. shareholder-level requirements are met, including satisfaction of the prescribed hold periods. Unitholders are advised to consult their own tax advisors with respect to their own particular circumstances.

Management and the Board of Trustees
As is the case with the Fund, MPIC will be managed by Macquarie Power Management Ltd., an indirect wholly-owned subsidiary of Macquarie Group Limited. The officers of MPIC will be the same individuals as those who currently serve as officers of the Fund and the Board of Directors of MPIC will be composed of the same individuals who currently serve on the Fund’s Board of Trustees

Special Meeting of Unitholders
The Board of Trustees has concluded that the Conversion is fair to unitholders and in the best interests of the Fund, and recommends that unitholders vote in favour of the Arrangement at a Special Meeting of Unitholders to be held on November 15, 2010 at 9 a.m. (Toronto time) at the One King West Hotel in Toronto. Unitholders of record at 5 p.m. (Toronto time) on October 8, 2010 will be entitled to vote at the Special Meeting. For the Conversion to be completed, the Arrangement requires the approval of two-thirds of the votes cast by unitholders, in person or by proxy, at the Special Meeting.

Further details of the Arrangement will be outlined in the Fund’s Information Circular, which will be mailed to unitholders on or about October 21, 2010. If the Arrangement is approved, and subject to the satisfaction of certain customary conditions, including approval by the Toronto Stock Exchange (the “TSX”) of the listing of MPIC’s common shares, units of the Fund will be automatically exchanged for MPIC common shares upon the Conversion without any further action required on behalf of unitholders.

About Macquarie Power & Infrastructure Income Fund
Macquarie Power & Infrastructure Income Fund’s mandate is to invest in core infrastructure businesses in Canada and internationally. MPT aims to acquire and actively manage a high quality portfolio of long-life infrastructure businesses that will generate sustainable, long-term distributions and an attractive total return for investors. MPT’s portfolio currently includes investments in gas cogeneration, wind, hydro and biomass power generating facilities, representing approximately 350 MW of installed capacity. MPT is also currently developing a 20 MW solar power facility in Ontario. MPT is managed by an affiliate of Macquarie Group Limited. Please visit www.macquarie.com/mpt for additional information.

Disclaimer
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, and include, among other things, statements relating to the Fund’s conversion to a dividend-paying corporation (the “Conversion”), the Fund’s distributions and distribution policy; and the anticipated dividend policy of Macquarie Power and Infrastructure Corporation (“MPIC”).

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 www.sedar.com). 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 and that there will be no unplanned material changes to the Fund’s facilities, equipment or contractual arrangements.

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 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.

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 www.sedar.com. 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.



FOR FURTHER INFORMATION PLEASE CONTACT:

Aaron Boles
Vice President, Communications and Investor Relations
Tel: (416) 649 1325
Email:
aboles@capstoneinfra.com