Capstone Infrastructure Corporation Sells its Interest in Varmevarden

TORONTO, ONTARIO--(Marketwired - Feb. 21, 2017) - Today Capstone Infrastructure Corporation ("Capstone" or the "Corporation") (TSX:CSE.PR.A) announced that, alongside its co-shareholder Macquarie European Infrastructure Fund 2 ("MEIF2"), it has agreed to sell 100% of the Värmevärden group ("Värmevärden") to institutional investors advised by J.P. Morgan Asset Management. Capstone expects to receive approximately $140 million in net proceeds for its 33.3% indirect interest in Värmevärden.

The purchase price represents an attractive valuation which is the result of a competitive sales process, as well as the hard work by Värmevärden management team and its shareholders over the past 6 years to develop, de-risk and grow the business. Since its investment in 2011, Capstone has realized a total return for Värmevärden in excess of 22% per annum. A portion of the proceeds from the sale will be used to eliminate the remaining outstanding balance of the promissory note issued by Capstone to Irving Infrastructure Corp. on April 29, 2016. This leaves Capstone with a simpler capital structure going forward.

This transaction provides several additional benefits to Capstone including a material reduction in corporate debt, minimizing exposure to foreign currency risk, and re-focusing the business as a pure-play independent power producer which positions Capstone for future sustainable growth in the sector in North America.

The Capstone power portfolio reported adjusted EBITDA ("AEBITDA") and Adjusted Funds from Operations ("AFFO")¹ over the 12 months ending September 30, 2016, of $82.5 million and $32.5 million, respectively (excluding net contributions from OEFC proceeds awarded for retroactive payments to Cardinal and the Ontario hydro facilities). Capstone's power portfolio is strong and growing with a weighted average remaining contractual life left on its power purchase agreements ("PPAs") of 14.5 years which has increased in length with the completion of recent wind farm development projects.

¹ AEBITDA and AFFO are non-GAAP financial measures that assist management and stakeholders in analyzing the cash flow available for future growth capital investments, acquisitions and dividends available to the preferred shareholders and Capstone's common shareholder. For reconciliations of AEBITDA and AFFO to Net Income, see management's discussion and analysis of the Corporation's interim financial results as at and for the three and nine months ended September 30, 2016, which is available under the Corporation's profile on www.sedar.com.