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Capstone Infrastructure Corporation Provides 2013 Outlook and Adds New Power Development Capabilities

  Capstone Infrastructure Corporation Provides 2013 Outlook and Adds New Power
  Development Capabilities

Business Wire

TORONTO -- December 12, 2012

Capstone Infrastructure Corporation (TSX: CSE; CSE.DB.A; CSE.PR.A – the
“Corporation”) today provided its financial outlook for fiscal 2013 and
announced the establishment of a new group focused on sourcing, developing and
pursuing power projects in Canada and the United States.

“Capstone has a strong, diversified portfolio that is performing in line with
expectations and represents a solid platform from which to grow. This platform
is complemented by a strengthened balance sheet and a lower payout ratio,
which provides us with flexibility to pursue growth opportunities,” said
Michael Bernstein, President and Chief Executive Officer. “In the year ahead,
we expect solid performance from our current portfolio and increased business
development activity as we focus on building the scale and value of our
company through the acquisition of operating infrastructure businesses as well
as development-stage power projects.”

Outlook for 2013^1

The Corporation expects continuing stable performance from its portfolio of
power generation and utilities businesses and a return to a lower effective
gas transportation toll in 2013 to transport gas to the Cardinal gas
cogeneration facility (“Cardinal”). Adjusted Earnings before Interest, Taxes,
Depreciation and Amortization (“Adjusted EBITDA”) in 2013 is anticipated to be
approximately $110 million to $120 million, which, while consistent with the
outlook provided for 2012, represents an approximately $6 million increase in
Adjusted EBITDA over 2012 on a pro forma basis had the Corporation held its
50% interest in Bristol Water for the full 2012 year. The Corporation’s 2013
outlook reflects the following assumptions:

  *Holding a 50% interest in Bristol Water for the full year following a
    partial sale of the Corporation’s previously 70% interest in May 2012;
  *Increased business development activity compared with 2012, which is
    expected to result in higher corporate costs consistent with historical
    levels; and
  *Modest overhead costs related to the Corporation’s new power development
    activities.

The Corporation continues to negotiate with the Ontario Power Authority
(“OPA”) to achieve a fair contract outcome for Cardinal that balances value
for Ontario ratepayers, value Cardinal’s industrial partner and value for the
Corporation’s shareholders. While negotiations are ongoing, the Corporation no
longer expects the process to conclude in 2012. Cardinal’s current power
purchase agreement expires at the end of 2014.

Capstone Power Development

The Corporation today also announced the formation of a new power development
subsidiary, Capstone Power Development, based in Vancouver, British Columbia
under the leadership of Michael Chapin.

Mr. Chapin is an accomplished energy professional with more than 30 years of
experience in the North American power industry and most recently co-founded
GreenWing Energy Management Ltd. Over his career, Mr. Chapin has led the
development and acquisition of more than 3 gigawatts of clean energy projects
(wind, solar, hydro and natural gas) in North America, including the 100
megawatt (“MW”) St. Leon Wind Energy Project in Manitoba, the 187.5 MW High
Plains Wind Energy Project in Wyoming, and the sale of a 1,400 MW portfolio of
wind projects located in California, Nevada, Colorado, New Mexico and North
Dakota. Mr. Chapin has also advised a number of industry-leading energy
developers, including Tenaska, El Paso Corporation, AES Corp. and Cogentrix,
and has held senior positions at a number of major utilities, including Vice
President of B.C. Gas Inc.’s non-regulated subsidiary and as a member of the
team that started CU Power International (now Atco Power). Mr. Chapin holds a
Bachelor of Applied Science degree in Electrical Engineering from the
University of British Columbia.

“We are delighted to launch a new development initiative with Michael, who is
a seasoned professional with a proven record of successfully developing power
projects, building partnerships and creating value for shareholders,” said Mr.
Bernstein. “Michael’s efforts will focus on developing and acquiring renewable
and clean electricity generation projects in western Canada and the United
States where there are significant greenfield and brownfield project
opportunities.”

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 by
providing reliable income 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 50% interest in a regulated water utility in the United Kingdom.
Please visit www.capstoneinfrastructure.com for more information.

^1 Please see Notice to Readers on page 2.

Notice to Readers

Certain of the statements contained within this document are forward-looking
and reflect management’s expectations regarding the future growth, results of
operations, performance and business of the Corporation based on information
currently available to the Corporation. Forward-looking statements and
financial outlook 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 and financial outlook may not be
appropriate for other purposes. These statements and financial outlook use
forward-looking words, such as “anticipate”, “continue”, “could”, “expect”,
“may”, “will”, “estimate”, “plan”, “believe” or other similar words, and
include, among other things, forward-looking statements concerning the
Corporations new dividend policy, the outlook for the Corporation's power
infrastructure facilities; Swedish district heating business ("Värmevärden")
and the UK water utility ("Bristol Water"). These statements and financial
outlook 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 financial outlook and, accordingly, should not
be read as guarantees of future performance or results. The forward-looking
statements and financial outlook within this document are based on information
currently available and what the Corporation currently believes are reasonable
assumptions, including the material assumptions 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, 2011
under the heading “Results of Operations”, as updated in subsequently filed
interim MD&A of the Corporation (such documents are available under the
Corporation’s profile on www.sedar.com).

Other material factors or assumptions that were applied in formulating the
forward-looking statements and financial outlook 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; that the
Corporation’s power businesses experience normal wind, hydrology, solar
irradiation and ambient temperatures and humidity levels; the contribution
from Bristol Water reflecting the Corporation’s reduced ownership interest as
at May 10, 2012; an effective TransCanada Pipelines (“TCPL”) gas
transportation toll of approximately $1.76 per gigajoule in 2013; no material
change in 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, regulatory 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 infrastructure
facilities, 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 no further amendments by the
Ontario government to the regulations governing the mechanism for calculating
the Global Adjustment (which affects the calculation of the price escalators
under each power purchase agreement (a “PPA”) for the Cardinal facility and
the hydro power facilities located in Ontario); the accounting treatment for
Bristol Water’s business under International Financial Reporting Standards,
particularly with respect to accounting for maintenance capital expenditures;
the amount and timing of capital expenditures by Bristol Water; no material
change to the Swedish Krona to Canadian dollar exchange rate; no material
change to 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 its current asset management plan,
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 being achieved.

Although the Corporation believes that it has a reasonable basis for the
expectations reflected in these forward-looking statements and financial
outlook, actual results may differ from those suggested by the forward-looking
statements and financial outlook for various reasons, including risks related
to: variability and payments of dividends on the Corporation’s common shares,
which are not guaranteed; volatile market price for the Corporation’s
securities; availability of debt and equity financing; default under credit
agreements; credit risk, prior ranking indebtedness and absence of covenant
protection for holders of the Corporation’s convertible debentures; dependence
on subsidiaries and investees; acquisitions; geographic concentration and
non-diversification; foreign exchange risk; reliance on key personnel;
insurance; shareholder dilution; derivatives risks; changes in legislation and
administrative policy; competition; private companies and illiquid securities;
operational performance; PPAs; fuel costs and supply; contract performance;
Amherstburg Solar Park technology risk; land tenure and related rights;
environmental, health and safety regime; regulatory regime and permits; force
majeure; influence of the UK water regulator (“Ofwat”) price determinations;
failure of Bristol Water to deliver capital investment programs; failure of
Bristol Water to deliver water leakage target; Ofwat’s introduction of the
Service Incentive Mechanism and the serviceability assessment; economic
environment, inflation and capital market conditions; pension plan
obligations; operational risks; competition; default under Bristol Water’s
artesian loans, bonds, debentures and credit facility; seasonality and climate
change; labour relations; special administration; general risks inherent in
the district heating sector; industrial and residential contracts; default
under Värmevärden’s bonds; and minority interest. Further information
regarding these risk factors is contained in the Corporation’s Annual
Information Form (which is available under the Corporation’s profile on
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 and financial outlook. The forward-looking statements and financial
outlook 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 law, the Corporation does
not undertake any obligation to publicly update or revise any forward-looking
statements or financial outlook.

Contact:

Capstone Infrastructure Corporation
Sarah Borg-Olivier, 416-649-1325
Senior Vice President, Communications
sborg-olivier@capstoneinfrastructure.com
 
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