Capstone Infrastructure Corporation Provides 2014 Outlook

  Capstone Infrastructure Corporation Provides 2014 Outlook

Business Wire

TORONTO -- December 12, 2013

Capstone Infrastructure Corporation (TSX: CSE; CSE.DB.A; CSE.PR.A; RDZ.DB –
the “Corporation”) today provided its financial outlook for fiscal 2014 and an
update on Bristol Water’s recent regulatory submission.

“Capstone’s diversified portfolio of core infrastructure businesses is
performing in line with expectations. In addition, in 2013 we advanced our
growth strategy, acquiring a complementary portfolio of wind power facilities
and development projects that are expected to enhance Capstone’s cash flow as
operations commence in 2014 to 2016,” said Michael Bernstein, President and
Chief Executive Officer. “Over the past two years, we introduced lower risk
and growing utilities to our portfolio, thereby improving the quality,
stability and value of our company while strengthening our long-term cash flow
profile. We have also successfully positioned our company, through the
establishment of Capstone Power Development and acquisition of Renewable
Energy Developers Inc., to access earlier stage power opportunities with the
potential to deliver higher returns for shareholders. While Cardinal’s
re-contracting has not yet been resolved, I am confident Capstone has strong
fundamentals and a bright future.”

Outlook for 2014^1
The Corporation expects continuing stable performance from its portfolio of
power generation and utilities businesses. Adjusted Earnings before Interest,
Taxes, Depreciation and Amortization (“Adjusted EBITDA”) in 2014 is
anticipated to be approximately $140 million to $150 million compared with the
2013 outlook of $120 million to $130 million. The assumptions underlying the
Corporation’s 2014 outlook include but are not limited to:

  *A full year of contribution from the operating wind power facilities
    acquired from Renewable Energy Developers Inc. (“ReD”) on October 1, 2013;
  *That the Corporation’s internally generated cash and credit is deployed
    into its new development projects and that the projects proceed as
  *That the Swedish krona to Canadian dollar and British pound to Canadian
    dollar exchange rates remain consistent with recent rates;
  *That Bristol Water plc implements its allowed real 3.8% (plus retail price
    index, or “RPI”) price increase effective April 1, 2014; and
  *Business development activity that is consistent with historical levels.

Bristol Water Submits Proposed AMP6 Business Plan
The Corporation also provided an overview of the proposed five-year asset
management plan (“AMP 6”) submitted on December 2, 2013 by Bristol Water to
the Water Services Regulation Authority (“Ofwat”), which regulates the water
and sewerage sectors in England and Wales. The Corporation holds a 50%
interest in Bristol Water.

Highlights of Bristol Water’s proposed business plan for AMP 6, which
commences on April 1, 2015 and concludes on March 31, 2020, include:

  *A capital investment program totaling GBP 347 million (approximately CAD
    $585 million) to be funded by Bristol Water using internally generated
    cash flow and credit resources;
  *Expected real regulated capital value (“RCV”) growth of approximately 30%;
  *A forecast real weighted average cost of capital (vanilla) of 4.6%^2;
  *Anticipated total dividends for the five-year period paid by Bristol Water
    plc of approximately GBP 71 million (approximately CAD $120 million); and
  *Average bills for customers that increase by less than inflation over the
    five-year period, reflecting Bristol Water’s commitment to delivering
    value for money.

“Bristol Water’s business plan, which was developed in consultation with its
customers, delivers increased investment, improved services and bills that
rise by less than inflation, thereby balancing value for customers and
shareholders,” said Mr. Bernstein. “With its sustainable long-term cash flow
and strong growth profile, we expect Bristol Water to be a significant driver
of value for Capstone’s shareholders in the years ahead.”

Bristol Water’s proposed business plan is subject to change upon review by
Ofwat, which will publish its final rate determinations at the end of 2014
with new prices taking effect on April 1, 2015.

About Capstone Infrastructure Corporation
Capstone’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 comprises investments in Canada’s
power infrastructure, including gas cogeneration, wind, hydro, biomass and
solar power generating facilities, representing approximately net 439
megawatts^3 of installed capacity, and contracted wind power development
projects totaling an expected net 79 megawatts of capacity. Capstone also
invests in utilities, including 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 for more

1 – See Notice to Readers.
2 – Pre-tax cost of debt combined with post-tax cost of equity.
3 – Reflects Capstone’s economic interest in its various power facilities.

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 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 "Message to Shareholders" and “Results of Operations”
concerning the guidance provided on the Corporation's post transaction
profile. 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

Other potential 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 will deploy its internally generated cash and
credit into its new development projects as expected and that there will be no
material delays in the Corporation's power infrastructure development projects
achieving commercial operation; that the Corporation's power infrastructure
facilities will experience normal wind, hydrological and solar irradiation
conditions, and ambient temperature and humidity levels; an effective
TransCanada pipeline ("TCPL") gas transportation toll of approximately $1.65
per gigajoule in 2014 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
material delays in obtaining required approvals and no material changes in
rate orders or rate structures for the Corporation's power infrastructure
facilities, Värmevärden or Bristol Water, no material changes in environmental
regulations for 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 ("DCR") escalator under the power purchase agreement ("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 ("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

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 the Corporation's securities (dividends on common shares and preferred
shares are not guaranteed; volatile market price for the Corporation's
securities; shareholder dilution; and convertible debentures credit risk,
subordination and absence of covenant protection); risks related to the
Corporation and its businesses (availability of debt and equity financing;
default under credit agreements and debt instruments; geographic
concentration; foreign currency exchange rates; acquisitions and development
(including risks related to the integration of the business operated by
Renewable Energy Developers Inc.); environmental, health and safety; changes
in legislation and administrative policy; and reliance on key personnel);
risks related to the Corporation's power infrastructure facilities (power
purchase agreements; operational performance; fuel costs and supply; contract
performance; land tenure and related rights; environmental; and regulatory
environment); risks related to Bristol Water (Ofwat price determinations;
failure to deliver capital investment programs; economic conditions;
operational performance; failure to deliver water leakage target; service
incentive mechanism ("SIM") and the serviceability assessment; pension plan
obligations; regulatory environment; competition; seasonality and climate
change; and labour relations); and risks related to Värmevärden (operational
performance; fuel costs and availability; industrial and residential
contracts; environmental; regulatory environment; and labour relations). For a
comprehensive description of these risk factors, please refer to the “Risk
Factors” section of the Corporation’s Annual Information Form dated March 21,
2013 as supplemented by risk factors contained in any material change reports
(except confidential material change reports), business acquisition reports,
interim financial statements, interim management’s discussion and analysis and
information circulars filed by the Corporation with securities commissions or
similar authorities in Canada, which are available on the SEDAR website at

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
investor. 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.


Capstone Infrastructure Corporation
Michael Smerdon, 416-649-1331
Executive Vice President and Chief Financial Officer
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