Macquarie Power & Infrastructure Income Fund
TSX : MPT.UN
TSX : MPT.DB.A

Macquarie Power & Infrastructure Income Fund

January 19, 2010 16:15 ET

Macquarie Power & Infrastructure Income Fund Provides Outlook for Fiscal 2010

- Guidance for MPT's businesses in 2010 - Strong emphasis on growth for 2010 - Conversion to dividend-paying corporation to occur in December

TORONTO, ONTARIO--(Marketwire - Jan. 19, 2010) - Macquarie Power & Infrastructure Income Fund (TSX:MPT.UN)(TSX:MPT.DB.A) ("MPT" or the "Fund") today held an investor conference call to discuss the Fund's outlook for its power and social infrastructure businesses in 2010 as well as the Fund's growth strategy. The webcast is available on the Fund's website at http://www.macquarie.com/mpt/investor_centre/events.htm with accompanying slides.

"In 2009, we took a number of steps to strengthen the Fund's platform and improve our operations," said Michael Bernstein, President and Chief Executive Officer. "These initiatives included the early refinancing and extension of our credit facilities and convertible debentures as well as various value enhancement projects at our assets and the establishment of a new, sustainable distribution policy. We also successfully resolved operational challenges at our Whitecourt biomass facility, which is now running smoothly. We are entering 2010 from a position of strength with the financial flexibility to pursue growth opportunities that will create additional value for our investors."

Outlook for Businesses in 2010

The Fund's current outlook for 2010 is positive:

- Revenue at the Cardinal gas cogeneration facility ("Cardinal") in 2010 is expected to be higher than in 2009 due to less scheduled maintenance work and the continuing escalation in the Direct Customer Rate ("DCR"), which results in a higher power price under Cardinal's Power Purchase Agreement ("PPA"). Cardinal will conduct a combustion inspection in the second quarter of 2010, which typically requires about five days of outage. It is anticipated that higher power rates will partially offset the impact of higher gas transportation rates, which are currently expected to increase from $1.19 per gigajoule in 2009 to approximately $1.65 per gigajoule in 2010. As a result, cash flow from this facility is expected to be slightly higher than in 2009.

- Revenue at Erie Shores Wind Farm ("Erie Shores") is anticipated to be slightly higher based on the expectation of more normal wind patterns as well as improved availability resulting from improvements made at the facility in 2009. Erie Shores' annual long-term production target is 249,800 megawatt hours ("MWh"). At the end of July, Erie Shores will internalize operations and maintenance ("O&M") following the expiry of its existing O&M contract with GE Canada, which is expected to result in lower operating costs over time. As a result of the internalization, Erie Shores will incur approximately $800,000 in one-time capital expenditures primarily related to building up an inventory of spare parts as well as end-of-contract inspections. Erie Shores' cash flow in 2010 is expected to be slightly higher than in 2009.

- Revenue and cash flow from the Fund's hydro power facilities is anticipated to be higher based on the expectation of improved hydrological conditions as well as price escalators in the facilities' power purchase agreements ("PPA"). The average long-term annual production of the hydro power facilities is 166,360 MWh. Capital expenditures across the facilities are expected to be significantly lower than in 2009.

- Revenue and cash flow from the Whitecourt biomass facility ("Whitecourt") are expected to be significantly higher in 2010 than in 2009. Whitecourt is anticipated to achieve an availability factor of approximately 95% in 2010, which is in line with its historical performance. Whitecourt's turbine is expected to operate reliably until the facility's next scheduled major maintenance inspection in 2016. Approximately $1 million in capital expenditures is planned for 2010, including the replacement of the facility's boiler feedwater pumps and air compressor, which will support Whitecourt's continuing reliability. Whitecourt is currently expected to have a continuing stable and adequate supply of wood waste fuel in 2010.

- Leisureworld Senior Care LP ("Leisureworld") will continue to focus in 2010 on enhancing the quality of care and accommodation for residents. Leisureworld is expected to maintain full occupancy across its 26 long-term care homes and to continue to attract more residents to private accommodation, which contributes to operating profitability. In 2010, Leisureworld's annual distribution to the Fund will be $9.5 million compared with $10.4 million previously. This new distribution policy reflects management's current outlook for Leisureworld's financial performance in 2010.

The Fund expects higher administrative and interest costs in 2010 than in 2009. Administrative costs are expected to be higher due to the Fund's conversion to a dividend-paying corporation, the implementation of International Financial Reporting Standards, and increased business development activity as the Fund pursues its growth strategy. Increased interest costs in 2010 will reflect higher rates on the Fund's credit facility as well as the higher principal amount outstanding on the convertible debentures. Despite these costs, the Fund expects increased cash flow in 2010.

Growth Outlook

"A key focus for the team in 2010 is on diversifying the Fund's portfolio, extending our cash flow profile and building size, scale and liquidity for our investors," said Mr. Bernstein. "With the capacity we have under our credit facility and proceeds from our recent convertible debenture offering, we have approximately $100 million available to deploy. Further, we expect to retain approximately $20 million in cash over 2010 as a result of our lower payout ratio."

The Fund's growth strategy includes:

- A focus on regulated or contractually defined core infrastructure businesses, which typically generate stable cash flow throughout the economic cycle;

- An emphasis on operating businesses, although the Fund's shift to a corporate structure and lower payout ratio creates the potential to participate selectively in development projects;

- A preference to wholly own businesses with the flexibility to consider a minority position in quality businesses that are accompanied by a strong governance framework; and

- A continuing preference for Canadian businesses within a broader international mandate that could lead to opportunities in new geographic regions.

Mr. Bernstein continued, "We are continuing to evaluate a range of possible transactions, with a particular focus on renewable energy and public-private partnerships, where we believe there are attractive near-term opportunities. Additionally, we have the ability and expertise through our relationship with the Macquarie group to explore growth opportunities internationally in familiar jurisdictions where Macquarie has an established presence and relationships."

Sustainability of New Distribution and Plan for Corporate Conversion

The Fund's new monthly distribution is $0.055 per unit or $0.66 per unit annually. This distribution level, based on the Fund's current portfolio, is expected to result in an average payout ratio of approximately 70 to 75% of distributable cash(i) over a five-year period. Based on the Fund's current portfolio and outlook, management expects this distribution profile to be sustainable through 2014. Approximately 40% of distributions to unitholders in 2010 are expected to be tax-deferred as a return of capital. The Fund currently intends to execute its conversion into a dividend-paying corporation in December 2010.

Update on Contingency Value Receipts Held by Former Unitholders of Clean Power Income Fund

The contingency value receipts ("CVRs") formed part of the consideration paid to unitholders of Clean Power Income Fund ("CPIF"), which was acquired by the Fund in 2007. The CVRs relate to CPIF's sale of its investment in Gas Recovery Systems LLC ("GRS") in 2006 to Fortistar Renewables Group. Certain proceeds from this sale were deposited into an escrow account, which amounted to US$7.59 million at the time that CPIF was acquired by the Fund. The funds in escrow relate to an ongoing dispute over the methodology used by Commonwealth Edison Co. ("ComEd"), a customer of GRS, to historically calculate the amount paid to GRS under its PPA with GRS. At September 30, 2009, the balance in this account was approximately US$3.7 million.

The Fund has no control over the outcome of the dispute related to the escrow account, which involves several parties, legal and contractual considerations, and regulatory constraints. If the dispute is not resolved, the CVRs will expire on December 31, 2010. At this point in time, the Fund's view is that the funds in the escrow account will be fully paid to ComEd and that the CVRs are unlikely to have any value for holders.

Fiscal 2009 Investor Pack and Model

The Fund also announced the release of its 2009 Investor Pack and Model, which is intended to aid the investment community in valuing the Fund and is based on publicly available information. The Model permits users to input various metrics to model the Fund's financial performance based on the research, analysis and estimates of the user. Please contact the Fund's investor relations department at mpt@macquarie.com to request a copy of the Investor Pack and Model.

(i)Distributable cash is defined as cash flows from operating activities after removing changes in working capital and reflecting the impacts of cash taxes, releases from maintenance reserves, allocations to major maintenance and capital expenditure reserves, non-discretionary payments and receipts, and distributions from Leisureworld.

About the Fund

Macquarie Power & Infrastructure Income Fund invests in essential infrastructure assets in North America with an emphasis on power infrastructure. MPT's strategy is to acquire and actively manage a diverse, high quality portfolio of infrastructure assets to improve their financial performance and provide growing and sustainable distributions to unitholders. MPT's portfolio includes investments in gas cogeneration, wind, hydro and biomass power generating facilities, representing approximately 350 MW of installed capacity, and a 45% interest in Leisureworld Senior Care LP, a leading provider of long-term care, or social infrastructure, in Ontario. MPT is managed by a wholly-owned subsidiary of Macquarie Group Limited. Please visit www.macquarie.com/mpt for additional information.

Forward-looking Statements

Certain statements in this news release may constitute "forward-looking" statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from any future results expressed or implied by such forward-looking statements. When used in the this news release, such statements use such words as "may", "will", "expect", "believe", "plan" and other similar terminology. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. The forward-looking statements contained in this news release are based on information currently available and what the Fund currently believes are reasonable assumptions, including the material assumptions for each of the Fund's assets set out in the Fund's 2008 Annual Report under the headings "Outlook" on pages 23 to 24, as updated in subsequently filed quarterly Financial Reports of the Fund. However, the Fund cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release, and, except as required by law, the Fund does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The Fund cautions readers not to place undue reliance on any forward-looking statements contained in this news release. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

The forward-looking information contained in this news release is presented for the purposes of assisting investors and analysts in understanding the Fund's financial position and our stated priorities and objectives may not be appropriate for other purposes. The Fund cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, risks associated with: the operational performance of the Fund's assets; power purchase agreements; fuel costs, supply and transportation; default under credit agreements; regulatory regime and permits; land tenure and related rights; government regulation and funding; the ability to complete future acquisitions; LTC home ownership and operation; minority ownership interest in Leisureworld; reliance on key personnel; default under Leisureworld's long-term debt and credit facility; labour relations and cost; the variability of distributions; unitholder liability; dependence on Macquarie Power Management Ltd., the manager of the Fund, and potential conflicts of interest; insurance; and risks related to the environmental, health and safety regimes within which the Fund's assets operate. The risks and uncertainties described above are not exhaustive and other events and risk factors, including risk factors disclosed in Fund's filings with Canadian securities regulatory authorities, could cause actual results to differ materially from the results discussed in the forward-looking statements.

Macquarie Power & Infrastructure Income Fund is not an authorised deposit taking institution for the purposes of the Banking Act (Cth) 1959 and Macquarie Power & Infrastructure Income Fund's obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Power & Infrastructure Income Fund.

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