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

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

TORONTO, July 4, 2013 /CNW/ - 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. 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 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, he served 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 held a joint conference call and webcast (with accompanying 
slides) on July 3, 2013 at 12:45 p.m. EDT to discuss the Transaction. 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.

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

Renewable Energy Developers Inc. Jeff Jenner, CA, CBV President and Chief 
Executive Officer Tel: (416) 943-6387 Email:jjenner@red-inc.ca

SOURCE: Renewable Energy Developers Inc.

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/July2013/04/c5548.html

CO: Renewable Energy Developers Inc.
ST: Ontario
NI: CONF 2575 WNEWS 

-0- Jul/04/2013 21:24 GMT


 
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