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Capstone Infrastructure Corporation Reports Fourth Quarter and Year End 2012 Results



  Capstone Infrastructure Corporation Reports Fourth Quarter and Year End 2012
  Results

Business Wire

TORONTO -- March 7, 2013

Capstone Infrastructure Corporation (TSX: CSE; CSE.DB.A; CSE.PR.A)

Fiscal 2012 Highlights:

  * Achieved 65.6% increase in annual revenue, primarily due to full year
    contributions from Bristol Water and Amherstburg Solar Park
  * Strong overall performance from portfolio during year partially offset by
    lower power production
  * Annual Adjusted EBITDA (excluding internalization costs) increased by
    60.1% to $120.7 million, slightly ahead of expectations
  * Increased annual AFFO by 1.9%, reflecting the impact of higher debt
    repayments in the power segment

Fourth Quarter Highlights:

  * Revenue increased by 3.3%, primarily reflecting a regulated increase in
    rates at Bristol Water
  * Adjusted EBITDA decreased by 1.1%, primarily due to Capstone’s lower
    ownership interest in Bristol Water compared with the fourth quarter of
    2011
  * AFFO increased by 34.6%, primarily due to lower business development
    expenses

Capstone Infrastructure Corporation (TSX: CSE; CSE.DB.A; CSE.PR.A – the
“Corporation”) today reported audited results for the fiscal year ended
December 31, 2012. The Corporation’s 2012 Annual Report to shareholders,
including Management’s Discussion and Analysis and audited consolidated
financial statements, is available at www.capstoneinfrastructure.com and on
SEDAR at www.sedar.com. All amounts are in Canadian dollars.

Financial Review

In millions of
Canadian
dollars or on
a per share      Quarter ended       Variance   Year ended          Variance
basis            Dec 31                         Dec 31
unless
otherwise
noted
                 2012      2011      (%)        2012      2011      (%)
Revenue          94.7      91.7      3.3        357.6     216.0     65.6     
Expenses         54.8      56.0      (2.0   )   206.6     160.1     29.1     
Net income       16.3      (2.4  )   769.0      43.7      (3.3  )   1,440.0  
Adjusted         31.1      31.5      (1.1   )   120.7     75.3      60.1     
EBITDA^1,2,3
AFFO^1,3,4       13.6      10.1      34.6       35.6      34.9      1.9      
AFFO per         0.179     0.141     27.0       0.473     0.541     (12.6   )
share^1,3,4
Dividends per    0.075     0.165     (54.5  )   0.450     0.660     (31.8   )
share
Payout           41    %   115   %   -          95    %   120   %   -        
ratio^1,3

^1"Adjusted EBITDA", “Adjusted Funds from Operations”, “Adjusted Funds from
Operations per Share” and “Payout Ratio” are non-GAAP financial measures and
do not have any standardized meaning prescribed by International Financial
Reporting Standards (“IFRS”). As a result, these measures may not be
comparable to similar measures presented by other issuers. Definitions of each
measure are provided on pages 20 and 21 of Management’s Discussion and
Analysis with reconciliation to IFRS measures provided on page 21.

^2While Bristol Water’s revenue and expenses are fully consolidated into
Capstone’s financial results, its Adjusted EBITDA was adjusted to reflect
Capstone’s 70% ownership interest between October 5, 2011 and May 9, 2012 and
subsequently reduced to 50% to reflect Capstone’s sale of a 20% interest to
ITOCHU Corporation on May 10, 2012.

^3Adjusted EBITDA, AFFO and AFFO per share for the year and quarter ended
December 31, 2011 exclude $19.7 million and $354,000, respectively, in costs
related to the internalization of management.

^4Consolidated AFFO includes dividends received from Bristol Water, which is
more reflective of the cash flow available to Capstone from the operating
activities of Bristol Water.

“In 2012, Capstone delivered Adjusted EBITDA of $120.7 million, slightly ahead
of our expectations and reflecting strong operational performance across our
businesses. We also took a number of steps to lower our risk profile,
including strengthening our balance sheet, establishing a new dividend policy
that is intended to offer stable income for shareholders, and broadening our
capabilities by establishing a new power development subsidiary," said Michael
Bernstein, President and Chief Executive Officer. "Our top priorities for 2013
are to secure a new contract for Cardinal and to create a pipeline of new
growth opportunities that will enable us to build the size, scope and value of
our company. We are supported in this pursuit by Capstone's sound
fundamentals, which include a high quality portfolio, financial flexibility
and a seasoned team of infrastructure professionals.”

Fiscal 2012 Highlights
Consolidated revenue for the year increased by 65.6%, or $141.6 million,
reflecting a full year of contribution from Bristol Water, which was acquired
in October 2011, and from Amherstburg Solar Park, which commenced operations
in June 2011, partially offset by lower power production overall.

Total expenses increased by 29.1%, or $46.6 million, which was largely
attributable to the addition of Bristol Water, higher fuel transportation
costs at the Cardinal gas cogeneration facility and a full year of staffing
expenses since internalization in April 2011. These variables were partially
offset by lower business development expenses in 2012. Excluding
internalization costs, total expenses increased by 47.2% during the year.

Adjusted EBITDA, excluding internalization costs, increased by 60.1%, or $45.3
million, driven primarily by Bristol Water and Amherstburg Solar Park. AFFO,
excluding internalization costs, increased by 1.9%, or $0.7 million, due to
positive contributions from the utilities segment, which was partially offset
by lower AFFO from the power segment due mostly to the impact of amortizing
debt, which was higher in 2012 than in 2011. The Corporation also paid a full
year of dividends, including applicable taxes, on its preferred shares, which
were issued on June 30, 2011.

Fourth Quarter Financial Highlights
During the fourth quarter, the Corporation's revenue increased by 3.3%, or
$3.0 million, over the same period in fiscal 2011, reflecting higher revenue
at Bristol Water attributable to an increase in the regulated water rate
charged to customers. Higher fourth quarter revenue also reflected revenue
growth in the power segment attributable to increased power generation at the
hydro power facilities and at Cardinal, which was partially offset by lower
power production at Erie Shores. Total expenses were 2.0%, or $1.1 million,
lower than in the fourth quarter of 2011, reflecting lower project development
costs which were partially offset by higher operating expenses at Bristol
Water. Fourth quarter Adjusted EBITDA declined by 1.1%, primarily due to the
Corporation’s lower ownership interest in Bristol Water compared with the
fourth quarter of 2011. AFFO during the quarter increased by 34.6%, primarily
due to lower business development expenses.

Financial Performance Highlights by Segment
Power Infrastructure:

In millions of
Canadian          Quarter ended                  Year ended          Variance
dollars           Dec 31          Variance (%)   Dec 31              (%)
unless
otherwise noted
                  2012    2011                   2012      2011       
Power generated   499.9   499.6   0.1            1,858.8   1,874.4   (0.8  )
(GWh)
Revenue           49.1    48.1    2.0            179.2     172.4     4.0    
Adjusted EBITDA   22.6    21.2    6.3            78.2      72.7      7.6    
AFFO              14.6    15.2    (4.0    )      43.9      50.0      (12.4 )

Power segment revenue increased 4.0%, or $6.8 million, in 2012, primarily
attributable to a full year of operations at Amherstburg Solar Park. In
addition, the Whitecourt biomass facility increased revenue by $1.0 million,
primarily due to the increased sale of renewable energy credits (“RECs”).
These positive drivers were partially offset by lower production at Cardinal,
resulting from the outage for its scheduled hot gas path inspection in the
second quarter of the year, and a decline in gas sales as Cardinal had
previously entered into gas swaps at higher prices with the last swap expiring
in 2011. Production at Erie Shores Wind Farm and the hydro power facilities
also declined by 1.4% and 2.8%, respectively, over 2011.

Adjusted EBITDA increased by 7.6%, or $5.5 million, reflecting the increase in
revenue partially offset by higher gas transportation costs at Cardinal. AFFO
declined by 12.4%, or $6.2 million, primarily reflecting higher debt service
expenses, including debt amortization, and higher maintenance capital
expenditures attributable to Cardinal's hot gas path inspection.

Utilities:

Water

In millions of Canadian       Quarter ended                    Year ended
dollars                       Dec 31            Variance (%)   Dec 31
unless otherwise noted
                              2012     2011^1                  2012     2011^1
Water supplied (megalitres)   19,875   19,700   0.9            81,245   19,700
Revenue                       45.6     43.6     4.6            178.4    43.6
Adjusted EBITDA               10.4     15.6     (33.3)         48.5     15.6
AFFO^2                        3.2      4.0      (20.0)         8.1      4.0

^1 Capstone acquired a 70% interest in Bristol Water on October 5, 2011, which
was reduced to 50% on May 10, 2012 following the sale of an interest
representing 20% of Bristol Water to a subsidiary of ITOCHU Corporation.

^2Bristol Water's contribution to Capstone's AFFO consists of dividends and
does not reflect the amount of cash generated by the business.

The Corporation's interest in Bristol Water was acquired on October 5, 2011.
On May 10, 2012, the Corporation sold an interest representing 20% of Bristol
Water to a subsidiary of ITOCHU Corporation.

In 2012, Bristol Water generated revenue of $178.4 million and Adjusted EBITDA
of $48.5 million, representing approximately 49.8% of the Corporation's
revenue and approximately 40.2% of the Corporation's Adjusted EBITDA,
respectively. During the year, the Corporation received $8.1 million in
dividends from Bristol Water compared with $4.0 million in 2011.

District Heating

In millions of           Quarter ended   Variance   Year ended       Variance
Canadian dollars         Dec 31          (%)        Dec 31           (%)
unless otherwise noted
                         2012   2011^1              2012    2011^1    
Heat production (GWh)    352    149      136.2      1,078   712      51.4
Interest income          0.7    1.7      (58.9)     3.4     5.0      (33.2)
Adjusted EBITDA and      1.7    1.7      2.7        5.4     5.0      6.6
AFFO^2

^1 Only nine months of activity from the date of acquisition are included in
the year ended December 31, 2011.

^2 Värmevärden's contribution to Capstone's Adjusted EBITDA and AFFO consists
of interest income and dividends and does not reflect the amount of cash
generated by the business.

In 2012, Värmevärden paid $3.4 million of interest income to the Corporation
compared with $5.0 million in 2011. The variance reflected the Corporation's
repatriation of approximately $49.4 million of its initial investment in March
2012, thereby reducing the balance outstanding on the shareholder loan
receivable. Värmevärden also paid $2.0 million in dividends during 2012
compared with nil in 2011. As a result, Värmevärden contributed $5.4 million
to the Corporation's Adjusted EBITDA and AFFO during the year compared with
$5.0 million in 2011.

Financial Position|
As at December 31, 2012, the Corporation had cash and cash equivalents of
$49.6 million. This balance included:

  * $20.9 million from the power segment; and
  * $25.3 million from the utilities-water segment, which, along with $111.1
    million in credit capacity added at Bristol Water during the year, will be
    used to support Bristol Water's capital investment program.

Approximately $15.9 million of the Corporation's total cash and cash
equivalents, including $12.6 million million from the power segment, is
available for general corporate purposes. As at December 31, 2012, the
Corporation's debt to capitalization ratio was 62.7%, which primarily reflects
lower corporate debt following the repayment of debt to acquire Bristol Water
and the lower proportionate amount of debt arising from Bristol Water due to
the Corporation's reduced ownership interest.

Outlook^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 Cardinal. Adjusted EBITDA
in 2013 is expected to be approximately $110 million to $120 million, which,
while consistent with 2012 performance, 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 previous 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 power development activities.

The Corporation's strategic priorities for 2013 include:

Securing a new power purchase agreement for Cardinal.
The Corporation remains in discussions with the Ontario Power Authority
(“OPA”) to achieve a fair outcome on Cardinal that recognizes the value of the
facility and its industrial, economic, social and community importance.

Maximizing the performance of its existing businesses.
The Corporation continues to focus on further enhancing the operational
performance of its businesses, which includes preventive maintenance, detailed
planning for capital expenditures that boost value, and finding ways to
increase cash flow such as the sale of RECs by Whitecourt.

Pursuing new investment opportunities.
With a stronger balance sheet, the Corporation is actively identifying growth
opportunities, primarily concentrating its business development efforts on
Canada, the United States, the United Kingdom and western Europe, including
operating infrastructure businesses and development opportunities that offer
an appropriate risk-adjusted rate of return.

Dividend Declarations
The Board of Directors today declared a quarterly dividend of $0.075 per
common share for the quarter ending March 31, 2013 on the Corporation’s
outstanding common shares. The dividend will be payable on April 30, 2013 to
shareholders of record at the close of business on March 28, 2013.

The Board of Directors also declared a dividend on its Cumulative 5-Year Rate
Reset Preferred Shares, Series A (the “Preferred Shares”) of $0.3125 per
Preferred Share to be paid on April 30, 2013 to shareholders of record at the
close of business on April 15, 2013. The dividend on the Preferred Shares
covers the period from February 1, 2013 to April 30, 2013.

In respect of the Corporation’s April 30, 2013 common share dividend payment,
the Corporation will issue common shares in connection with the reinvestment
of dividends to shareholders enrolled in the Corporation’s Dividend
Reinvestment Plan. The price of common shares purchased with reinvested
dividends will be the previous five-day volume weighted average trading share
price on the Toronto Stock Exchange, less a 5% discount.

The dividends paid by the Corporation on its common shares and the Preferred
Shares are designated “eligible” dividends for purposes of the Income Tax Act
(Canada). An enhanced dividend tax credit applies to eligible dividends paid
to Canadian residents.

A distribution of $0.075 per unit will also be paid on April 30, 2013 to
holders of record on March 28, 2013 of Class B Exchangeable Units of MPT LTC
Holding LP, which is a subsidiary entity of the Corporation.

Dividend Reinvestment Plan
Learn more about the Corporation’s Dividend Reinvestment Plan (“DRIP”) at
http://www.capstoneinfrastructure.com/InvestorCentre/StockInformation/DRIP.aspx.

^1See Notice to Readers

Fiscal 2012 Results Conference Call and Webcast
The Corporation will hold a conference call and webcast (with accompanying
slides) on Friday, March 8, 2013 at 8:30 a.m. EST to discuss fiscal 2012
results. To listen to the call from Canada or the United States, dial
1-800-319-4610. If calling from elsewhere, dial +1-604-638-5340. A replay of
the call will be available until March 22, 2013. For the replay, from Canada
or the United States, dial 1-800-319-6413 and enter the code 1385#. From
elsewhere, dial +1-604-638-9010 and enter the code 1385#. The event will be
webcast live with an accompanying slide presentation on the Corporation’s
website at www.capstoneinfrastructure.com.

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.

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 Capstone Infrastructure Corporation
(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 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, statements found in “Strategic
Overview” and “Results of Operations”. 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, 2012
under the heading “Results of Operations”, as updated in subsequently filed
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
power infrastructure facilities will experience normal wind, hydrological and
solar irradiation conditions, and ambient temperature and humidity levels; an
effective TCPL gas transportation toll of approximately $1.76 per gigajoule in
2013; that there will be no material change in the level of gas mitigation
revenue historically earned by the Cardinal facility; that there will be no
material changes to the Corporation's facilities, equipment or contractual
arrangements, no material changes in the legislative, regulatory and operating
framework for the Corporation's businesses, no delays in obtaining required
approvals, no material changes in rate orders or rate structures for the power
infrastructure facilities, Värmevärden or Bristol Water, no material changes
in environmental regulations for the power infrastructure facilities,
Värmevärden or Bristol Water and no significant event occurring outside the
ordinary course of business; that the amendments to the regulations governing
the mechanism for calculating the Global Adjustment (which affects the
calculation of the DCR escalator under the PPA for the Cardinal facility and
price escalators under the hydro power facilities located in Ontario) will
continue in force; that there will be no material change to the accounting
treatment for Bristol Water's business under International Financial Reporting
Standards, particularly with respect to accounting for maintenance capital
expenditures; that there will be no material change to the amount and timing
of capital expenditures by Bristol Water; that there will be no material
changes to the Swedish Krona to Canadian dollar and UK pound sterling to
Canadian dollar exchange rates; and that Bristol Water will operate and
perform in a manner consistent with the regulatory assumptions underlying
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 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 for various reasons, including risks related to: the Corporation
(variability of payments of dividends on common shares, which are not
guaranteed; volatile market price for the Corporation's securities;
availability of debt and equity financing; default under credit agreements and
debt instruments; 2016 debentures credit risk, prior ranking indebtedness and
absence of covenant protection; geographic concentration; foreign exchange;
acquisitions; derivatives; environmental, health and safety; changes in
legislation and administrative policy; insurance; reliance on key personnel;
and shareholder dilution); the power infrastructure facilities (operational
performance; PPAs; fuel costs and supply; contract performance; land tenure
and related rights; environmental; and regulatory environment); Bristol Water
(Ofwat price determinations; failure to deliver capital investment programs;
failure to deliver water leakage target; SIM and the serviceability
assessment; economic conditions; pension plan obligations; regulatory
environment; operational performance; competition; seasonality and climate
change; and labour relations); and Värmevärden (general risks inherent in the
district heating sector; fuel costs and availability; industrial and
residential contracts; environmental; regulatory environment; and labour
relations).

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 and financial outlook.

This document is not an offer or invitation for the subscription or purchase
of or a recommendation of securities. It does not take into account the
investment objectives, financial situation and particular needs of any
investors. Before making an investment in the Corporation, an investor or
prospective investor should consider whether such an investment is appropriate
to their particular investment needs, objectives and financial circumstances
and consult an investment adviser if necessary.

Contact:

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