News Release

Capstone Infrastructure Corporation Announces $75 Million Common Share Bought Deal Offering

Toronto, Ontario (October 24, 2011) – Capstone Infrastructure Corporation (TSX: CSE; CSE.PR.A; CSE.DB.A – “CSE” or the “Corporation”) today announced that it has agreed to issue, on a bought deal basis, 12,000,000 common shares (the “Common Shares”) at a price of $6.25 per Common Share, for aggregate gross proceeds of $75,000,000, to a syndicate of underwriters co-led by TD Securities Inc. and RBC Capital Markets for distribution to the public.

CSE has granted the underwriters an option to purchase up to an additional 1,800,000 Common Shares at the same offering price to cover over-allotments, exercisable in whole or in part at any time until 30 days after closing, which, if exercised in full, would increase the gross offering size to $86,250,000.

The net proceeds of the offering will be used by the Corporation to repay a portion of the amount drawn on the senior credit facility used to fund the Corporation’s recent acquisition of a 70% indirect interest in Bristol Water, a regulated water utility in the United Kingdom, thereby mitigating the risk related to refinancing the senior credit facility while increasing the Corporation’s financial flexibility to pursue additional growth opportunities.  The Common Shares will be offered in all provinces and territories of Canada by way of a short-form prospectus. The offering is expected to close on or about November 10, 2011 and is subject to the receipt of Toronto Stock Exchange and any other necessary regulatory approvals.  

“While our senior credit facility is cost effective and does not mature until October 2012, we are pleased with this opportunity to establish permanent financing,” said Michael Bernstein, President and Chief Executive Officer.  “In addition, this offering of Common Shares bolsters our balance sheet while we continue to evaluate attractive growth opportunities consistent with our strategy to create value for shareholders.”

The offering of Common Shares is expected to increase the Corporation’s 2011 payout ratio, which is based on Adjusted Funds from Operations (“AFFO”) and excludes internalization costs, to 120% to 125% compared with the previously provided outlook of approximately 120%.  For 2012, the Corporation expects its payout ratio to be consistent with the previously provided outlook of approximately 85% to 90%.  With this offering of Common Shares, the Corporation’s debt-to-capitalization ratio is expected to be less than 60%, compared with the previously provided outlook, based on full amount of the senior credit facility outstanding, of more than 60%.

Potential future sources of capital to refinance the balance of the senior credit facility, which matures in October 2012, include proceeds from a future recapitalization of Värmevärden, internally-generated cash flows of the Corporation and the addition of holding company debt at Bristol Water.

This press release is not an offer of securities for sale in the United States. The securities being offered have not been and will not be registered under the United States Securities Act of 1933 and accordingly will not be offered, sold or delivered, directly or indirectly within the United States, its possessions and other areas subject to its jurisdiction or to, or for the account or for the benefit of a U.S. person, except in limited circumstances.

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
This news release contains figures that are performance measures not defined by International Financial Reporting Standards ("IFRS" or "GAAP"). These non-GAAP performance measures do not have any standardized meaning prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other issuers. The Corporation believes that these indicators are important since they provide additional information about the Corporation’s performance and cash generating capabilities and facilitate comparison of results over different periods.

The Corporation uses AFFO as a measure of cash generated during the period for distribution to shareholders. The Corporation defines AFFO as revenue less operating expenses and administrative expenses plus interest and dividends/distributions received from equity accounted investments, less interest paid plus principal received from loans receivable on equity accounted investments, less income taxes paid, less maintenance capital expenditures and scheduled repayment of principal on debt. Payout ratio measures the proportion of cash generated from operations that is paid as dividends. The payout ratio is calculated as dividends declared divided by AFFO.

Certain of the statements contained in this news release are forward-looking and reflect management’s expectations regarding the Corporation’s 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”, “believe” or other similar words, and include, among other things, statements concerning the expected completion of the offering and timing thereof, as well as the use of the proceeds from the offering. 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 in this news release 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 its fiscal 2010 Annual Report under the heading “Asset Performance”, as updated in subsequently filed Quarterly Financial Reports of the Corporation and other filings made by the Corporation with the Canadian securities regulatory authorities (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 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, and that there will be no unplanned material changes to the Corporation’s facilities, equipment or contractual arrangements. 

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; 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; 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) and failure to complete the offering of Common Shares. There are also a number of risks related to the Corporation’s investment in Värmevärden, the district heating business in Sweden, including: general business risks inherent in the district heating business; geographic concentration; minority interest; government regulation; termination of supply and customer contracts; enforcement of indemnities against the vendors of Värmevärden; environmental health and safety liabilities; liability and insurance; and reliance on key personnel. There is also a risk that Värmevärden may not achieve expected results. There are also a number of risks related to Bristol Water’s business, including: default under the Corporation’s senior credit facility; Bristol Water’s revenue is substantially influenced by price determinations made by the UK Water Services Regulatory Authority (“Ofwat”); Bristol Water’s capital investment programs; Bristol Water’s leakage targets; Ofwat’s introduction of the service incentive mechanism and its serviceability assessment of Bristol Water; the economic environment, inflation and capital market conditions; pension plan obligations; legal and regulatory risk; increased competition; operational risks; foreign exchange; reliance on key personnel; enforcement of indemnities against the vendor of Bristol Water; default under Bristol Water’s Artesian loans, bonds, debentures and credit facility; geographic concentration; and seasonality.

For a more comprehensive description of these and other possible risks, please see the Corporation’s Annual Information Form dated March 24, 2011 for the year ended December 31, 2010 as updated in subsequently filed Quarterly Financial Reports and other filings made by the Corporation with the Canadian securities regulatory authorities. These filings are available on SEDAR. 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 Corporation 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 Corporation 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
T: 416-607-5009

Michael Smerdon
Executive Vice President and CFO
T: 416-607-5167