Capstone Infrastructure Corporation Announces Arrangement Agreement with Renewable Energy Developers Inc.

  Capstone Infrastructure Corporation Announces Arrangement Agreement with
  Renewable Energy Developers Inc.

Business Wire

TORONTO -- July 3, 2013

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

Transaction Highlights

  *Results in a larger, more diversified and well-funded company with power
    generation facilities across Canada, totalling net 465 MW, and
    international utilities investments
  *Accelerates Capstone’s entry into renewable power development with a
    pipeline of contracted projects totalling net 79 MW
  *Brings together two highly complementary groups with the expertise to
    drive the growth of the combined entity
  *Provides ReD shareholders with a 20% increase in quarterly dividend on a
    pro forma basis and is expected to be accretive to the combined company’s
    cash flow over the long term
  *Enhances scope, scale and long-term value of company for shareholders of
    Capstone and ReD Inc.

Capstone Infrastructure Corporation (TSX: CSE; CSE.PR.A; CSE.DB.A –
“Capstone”) and Renewable Energy Developers Inc. (formerly Sprott Power Corp.)
(TSX: RDZ; RDZ.DB – “ReD”) have entered into a definitive agreement (the
“Agreement”) whereby Capstone will acquire all the outstanding shares of ReD
(the “Transaction”) by way of a share exchange, which will result in a larger
infrastructure company with power generation facilities across Canada
totalling approximately net 465 megawatts (“MW”) of installed capacity, an
attractive pipeline of contracted development opportunities in Canada
representing net 79 MW of capacity, and international investments in regulated
water and district heating businesses. The Board of Directors of each company
has unanimously approved the Transaction.

Under the terms of the Transaction, shareholders of ReD will receive 0.26 of a
Capstone common share and $0.001 in cash, which, combined, is currently the
equivalent of $1.01, for each common share of ReD. The consideration payable
to ReD’s shareholders represents a premium of 10.8% based on the 20-day volume
weighted average price (“VWAP”) of ReD’s common shares and Capstone’s common
shares on the Toronto Stock Exchange (“TSX”) as at July 2, 2013 of $0.91 and
$3.88, respectively. Upon completion of the Transaction, which is valued at
approximately $70 million, existing Capstone shareholders and ReD shareholders
will own approximately 80% and approximately 20% of the common shares of the
combined company, respectively.

“We look forward to building on the combined strengths of our organizations,”
said Michael Bernstein, President and Chief Executive Officer of Capstone.
“These include ReD’s operating wind power facilities and development pipeline
and team, and Capstone’s sizable Canadian power portfolio, proven financing
capability and broad network of relationships in Canada and internationally.
In addition, by combining our companies, we will further bolster Capstone’s
ability to successfully source, pursue and execute earlier-stage power
opportunities. With ReD’s advanced-stage development projects, which are
expected to enter into construction in 2013, and the surplus cash Capstone is
building up over 2013 and 2014, we see this transaction as a solid strategic
match that will contribute to cash flow growth for Capstone. We are confident
about the combined team’s ability to realize long-term value for shareholders
from our collective businesses.”

Jeffrey Jenner, ReD’s President and Chief Executive Officer, said, “By
combining Capstone and ReD, we are creating a unique company with almost 550
MW of operating and contracted power development assets in Canada. We see this
as a strong and complementary fit for both our assets and our team. Capstone’s
diversified asset base delivers strong stable cash flow that will allow us to
build out our existing development projects and position our combined company
for growth in the years ahead.”

Benefits for Capstone Shareholders

  *Expands Capstone’s renewable power footprint in Canada by adding net 95 MW
    in operating wind power facilities in Nova Scotia and Ontario.
  *Enables Capstone to access a net 35 MW pipeline of wind power projects
    with 20-year power purchase agreements (“PPAs”) under development in Nova
    Scotia, Ontario, Saskatchewan and Quebec, and the option to acquire an
    additional net 44 MW in wind power projects with PPAs in Ontario. These
    projects will require equity funding from Capstone in the amount of
    approximately $60 million over the next two years, with the balance of the
    projects’ financing requirement to be satisfied with project-level debt.
  *Brings additional proven development and project management personnel with
    a record of completing renewable power projects on time and on budget.
  *Delivery of the development projects in ReD’s pipeline is expected to be
    accretive to cash flow over the long term.

Benefits for ReD Shareholders

  *Consideration represents a premium of 10.8% to ReD’s 20-day VWAP.
  *Provides a 20% increase in the quarterly dividend from $0.01625 to $0.0195
    per ReD common share on a pro forma basis.
  *Significantly strengthens financing capability and access to capital
    required to advance near- and long-term development projects.
  *Increases size of operating power portfolio to a combined net 465 MW of
    renewable and clean energy technologies.
  *Adds seasoned leadership to complement ReD’s development and asset
    management teams.
  *Provides opportunity to participate in a stable, growing company focused
    on long-life, high quality core infrastructure businesses in Canada and
    internationally.

Capstone’s Post-Transaction Profile
Following the completion of the Transaction, Capstone expects to assume
approximately $129 million in project-level long-term debt and approximately
$34.5 million of ReD’s outstanding 6.75% convertible debentures. With ReD’s
operating facilities, Capstone’s weighted average remaining PPA term will be
extended to 8.7 years from 6.8 years currently.^1 Upon completion of all the
development projects, Capstone will extend its weighted average remaining PPA
term to 10.4 years. For fiscal 2013, Capstone expects to deliver Adjusted
EBITDA^2 of approximately $115 million to $125 million, reflecting the
partial-year contribution from the new operating facilities partially offset
by higher administration expenses as well as transaction-related costs and
assuming the Transaction is completed by the end of the third quarter of 2013.

Management and Directors
Following the completion of the Transaction, it is anticipated that Mr. Uwe
Roeper, currently a member of ReD’s Board of Directors, will join Capstone’s
Board of Directors. Since 1999, Mr. Roeper has served as President of ORTECH
Consulting Inc., a consulting and advisory business that provides technical
consulting services related to development and operation of wind power and
water power facilities. From 2000 to 2005,heserved as Director and
Co-founder of Canadian Renewable Energy Corporation, a developer, builder and
operator of a hydroelectric project in Ontario and numerous other projects,
including several hundred megawatts of wind and small hydro developments. Mr.
Roeper currently serves on the boards of several private power project
development companies. He holds a Bachelor of Science degree in Geological
Engineering and Master of Science degree in Water Resource Engineering from
the University of Manitoba and is a Professional Engineer.

Capstone expects to integrate members of ReD’s team to help oversee the
development of the combined company’s project pipeline and to fulfil asset
management responsibilities at the operating facilities. ReD’s President and
Chief Executive Officer, Jeffrey Jenner, will support the integration of the
two businesses and continue to oversee development and delivery of the project
pipeline for the balance of 2013. The current executive management team of
Capstone, including Michael Bernstein as President and Chief Executive Officer
and Michael Smerdon as Executive Vice President and Chief Financial Officer,
will be unchanged.

V. James Sardo, Chairman of the Board of Directors of Capstone, said, “This
transaction represents the next phase in Capstone’s growth, providing
shareholders with exposure to a larger and more diversified portfolio of wind
power facilities and promising development projects. I believe this
transaction improves the investment profile of our company and positions us to
deliver increasing value for shareholders.”

Commenting on the Transaction, John Varghese, Chairman of the Board of
Directors of ReD, said, “Our corporate mandate has continually been to deliver
growth to ReD shareholders. By combining with Capstone, we will be able to
offer a 20% increase to our existing quarterly dividend and a meaningful stake
in a larger, well-funded company. The Board of Directors is in favour of this
transaction and believes it is in the best interests of ReD’s shareholders.”

Transaction Details
The Transaction will be completed by a plan of arrangement, resulting in ReD
becoming an indirect, wholly-owned subsidiary of Capstone.

The Transaction is subject, among other things, to the approval of 66-2/3 per
cent of ReD common shares voted at a special meeting of ReD shareholders and a
majority of Capstone common shares voted at a special meeting of Capstone
shareholders. The Transaction is also subject to regulatory approvals, court
approvals, required consents and other customary closing conditions. Assuming
the requisite approvals and consents are received and other conditions are met
or waived, the plan of arrangement is expected to be completed in September.

Under the Agreement, ReD has agreed to a non-solicitation restriction and a
right for Capstone to match any superior proposals. ReD and Capstone have each
agreed to pay a break fee of $4 million in certain circumstances.

Certain members of management, directors and key shareholders of ReD,
including Sprott Power Consulting Limited Partnership, and certain members of
management and the directors of Capstone have entered into voting support
agreements under which they have agreed, among other things, to vote their
common shares in favour of the Transaction.

Prior to closing, holders of ReD’s outstanding 6.75% convertible debentures
will be entitled to convert their debentures into ReD common shares in
accordance with their terms and participate in the Transaction on the same
basis as other ReD shareholders. In accordance with the terms of these
debentures, holders may also require that their convertible debentures be
purchased at a price equal to 101% of the principal amount plus accrued and
unpaid interest for a period following closing of the Transaction. Following
closing, holders of the convertible debentures will be entitled to convert
their debentures into common shares of Capstone based on the exchange ratio
contemplated by the Transaction. In addition, following closing, holders of
common share purchase warrants of ReD expiring March 6, 2014 will be entitled
to exercise their warrants for common shares of Capstone based on the exchange
ratio contemplated by the Transaction.

Full details of the Transaction will be included in Capstone’s and ReD’s
respective information circulars, which are expected to be filed with
securities regulatory authorities and mailed to Capstone and ReD shareholders
in July. It is anticipated that the shareholders’ meetings of Capstone and ReD
will be held in late August. The Transaction is expected to close in
September.

This news release is not a solicitation of a proxy from any security holder,
nor is this communication an offer to purchase or a solicitation of an offer
to sell securities.

Advisors to the Transaction
Capstone has engaged Origin Merchant Partners and RBC Capital Markets to act
as financial advisors in connection with the Transaction. RBC Capital Markets
and Origin Merchant Partners have provided opinions to the Board of Directors
of Capstone that, as of the date of the Agreement, the consideration to be
paid by Capstone under the Transaction is fair, from a financial point of
view, to Capstone.

ReD has engaged Canaccord Genuity Corp. to act as financial advisor in
connection with the Transaction. Canaccord Genuity has provided an opinion to
the Board of Directors of ReD that, as of the date of the Agreement, the
consideration to be received under the Transaction is fair, from a financial
point of view, to the shareholders of ReD.

Conference Call and Webcast
Capstone and ReD will hold a joint conference call and webcast (with
accompanying slides) on July 3, 2013 at 12:45 p.m. EDT to discuss the
Transaction. 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 July 17, 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 Renewable Energy Developers Inc.
ReD Inc. is dedicated to the development, ownership and operation of renewable
energy projects. Through project development efforts, acquisitions,
partnerships and joint ventures, ReD provides its shareholders with income and
growth from the renewable power generation sector of the energy industry.

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. Capstone’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 information presented in this news release contains forward-looking
statements and forward-looking information under applicable securities laws.
Except for statements of historical fact, certain information contained herein
constitutes forward-looking statements, which include management’s assessment
of Capstone’s and ReD’s future plans and operations and are based in each
company’s current internal expectations, estimates, projections, assumptions
and beliefs, which may prove to be incorrect. The material factors or
assumptions that were applied in formulating Capstone’s, ReD’s or the combined
company’s financial outlook contained herein include or relate to the
following: that the business and economic conditions affecting Capstone’s or
ReD’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 Transaction
will be completed by the end of the third quarter of 2013; that the power
infrastructure facilities will experience normal wind, hydrological and solar
irradiation conditions, and ambient temperature and humidity levels; an
effective TransCanada pipeline gas transportation toll of approximately $1.95
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 Capstone’s or ReD’s facilities, equipment
or contractual arrangements, no material changes in the legislative,
regulatory and operating framework for Capstone’s or ReD’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 direct customer rate
escalator under the PPA for the Cardinal facility and price escalators under
the PPAs for 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 British pound to Canadian dollar exchange
rates; and that Bristol Water will operate and perform in a manner consistent
with the regulatory assumptions underlying asset management plan 5, 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.

Some of the forward-looking statements may be identified by words such as
“expects”, “anticipates”, “believes”, “projects”, “plans” and similar words or
descriptions. These statements are not guarantees of future performance and
undue reliance should not be placed on them. Such forward-looking statements
necessarily involve known and unknown risks and uncertainties, which may cause
Capstone’s and ReD’s actual performance and financial results in future
periods to differ materially from any projections of future performance or
results expressed or implied by such forward-looking statements. Additional
information regarding such risks and uncertainties may be found in Capstone’s
Annual Information Form and ReD’s Revised Annual Information Form. There can
be no assurance that forward-looking statements will prove to be accurate as
actual results and future events could differ materially from those
anticipated in such statements. Capstone and ReD undertake no obligation to
update forward-looking statements if circumstances or management’s estimates
or opinions should change except as required by applicable securities laws.
The reader is cautioned not to place undue reliance on forward-looking
statements.

Non-GAAP Performance Measures
Adjusted EBITDA and EBITDA are non-GAAP financial measures and do not have any
standardized meaning prescribed by International Financial Reporting
Standards.

Capstone calculates Adjusted EBITDA as revenue less operating and
administrative expenses plus interest income and dividends or distributions
received from equity accounted investments. Amounts attributed to any
non-controlling interest (“NCI”) are deducted. Adjusted EBITDA for the
investment in Bristol Water is included at Capstone’s proportionate ownership
interest. For the period from October 5, 2011 to May 10, 2012, Capstone held a
70% ownership interest. This ownership interest was reduced to 50% upon the
partial sale of Bristol Water on May 10, 2012. Adjusted EBITDA is reconciled
to EBITDA by removing equity accounted income, other gains and losses (net),
foreign exchange gains and losses, net pension interest income and removing
the NCI portion of Adjusted EBITDA.

Capstone defines EBITDA is net income (loss), including that net income (loss)
related to NCI and interest income and net pension interest income excluding
interest expense, income taxes, depreciation and amortization. EBITDA
represents Capstone’s continuing capacity to generate income from operations
before taking into account management’s financing decisions and costs of
consuming tangible capital assets and intangible assets, which vary according
to their vintage, technological currency, and management’s estimate of their
useful life. EBITDA is presented on the consolidated statement of income.

The securities described herein have not been, and will not be, registered
under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act")
or any U.S. state securities laws, and may not be offered or sold in the
United States or to, or for the account or benefit of, United States persons
absent registration or any applicable exemption from the registration
requirements of the U.S. Securities Act and applicable U.S. state securities
laws. This news release shall not constitute an offer to sell or the
solicitation of an offer to buy securities in the United States, nor shall
there be any sale or issuance of these securities in any jurisdiction in which
such offer, solicitation, issuance or sale would be unlawful.

^1 The weighted average remaining PPA term of ReD’s operating facilities is
15.8 years. Weighted average remaining PPA term is calculated as at June 30,
2013.

^2 See also “Non-GAAP Performance Measures” below.

Contact:

Capstone Infrastructure Corporation
Sarah Borg-Olivier, 416-649-1325
Senior Vice President, Communications
sborg-olivier@capstoneinfrastructure.com
or
Renewable Energy Developers Inc.
Jeff Jenner, CA, CBV, 416-943-6387
President and Chief Executive Officer
jjenner@red-inc.ca