Macquarie Power and Infrastructure Corporation Updates Fiscal 2011 Outlook

TORONTO, ONTARIO--(Marketwire - Feb. 28, 2011) - Macquarie Power and Infrastructure Corporation (TSX:MPT)(TSX:MPT.DB.A) ("MPIC" or the "Corporation") today updated its outlook for the fiscal year ending December 31, 2011, previously provided on December 2, 2010, to reflect the impact of a higher than anticipated gas transportation toll on its Cardinal gas cogeneration facility ("Cardinal"). 

On February 24, 2011, the National Energy Board approved TransCanada Pipelines Limited's ("TCPL") proposed interim gas transportation toll of $2.24 per gigajoule ("GJ") effective March 1, 2011, which is a significant increase from the toll of $1.64 per GJ in 2010 and higher than the Corporation had anticipated, resulting in a $5.5 - $6.0 million increase in operating costs for Cardinal. Consequently, the Corporation expects earnings before interest, taxes, depreciation and amortization ("EBITDA") and funds from operations ("FFO") in 2011 will be lower than in 2010 based on its current portfolio. The Corporation previously expected that EBITDA and FFO in fiscal 2011 would be higher than in fiscal 2010. 

The Corporation's dividend of $0.66 per share on an annualized basis is expected to be sustainable through 2014 based on the Corporation's existing portfolio and outlook and barring any significant unexpected events. The Corporation currently anticipates that its payout ratio for 2011 will be approximately 100%¹, which is above the previously expected average payout ratio of approximately 70 - 75% over the 2011 to 2014 period. The 2011 payout ratio will reflect the impact of the higher gas transportation toll as well as a greater number of shares outstanding following the financing that was completed in December 2010. These factors will be only partially offset by cash flow from the Amherstburg Solar Park and Swedish district heating business² in the second half of the year. 

"We are disappointed with this outcome and join other industry participants in calling for the NEB and TCPL to restore the competitiveness of Mainline tolls," said Michael Bernstein, President and Chief Executive Officer. "The current settlement agreement expires at the end of 2011, which creates an opportunity for TCPL and the NEB to re-examine Mainline revenue forecasts and toll design. While we expect tolls will return to a more reasonable level for 2012 and in future years as a result of this process, we do not currently have sufficient information to provide guidance on our payout ratio beyond 2011. We will seek to prudently manage our costs to mitigate the toll increase while maintaining our emphasis on sound operational performance, which helps to support stable, predictable dividends for our shareholders. At the same time, we are continuing to pursue a range of opportunities to increase the diversity and value of our portfolio."

About Macquarie Power and Infrastructure Corporation

Macquarie Power and Infrastructure Corporation's mandate is to invest in core infrastructure businesses in Canada and internationally. MPIC aims to acquire and actively manage a high quality portfolio of long-life infrastructure businesses that will generate sustainable, long-term distributions and an attractive total return for investors. MPIC's portfolio currently includes investments in gas cogeneration, wind, hydro and biomass power generating facilities, representing approximately 350 MW of installed capacity. MPIC is also currently developing a 20 MW solar power facility in Ontario and has entered into an agreement to acquire a 33.3% interest in a district heating portfolio in Sweden. MPIC is managed by an affiliate of Macquarie Group Limited. Please visit www.macquarie.com/mpic for additional information.

Non-GAAP Financial Measures

EBITDA, adjusted EBITDA and funds from operations are non-GAAP financial measures and do not have any standardized meaning prescribed by GAAP. As a result, these measures are unlikely to be comparable to similar measures presented by other issuers. The Corporation's definition of EBITDA follows the customary definition of net income adjusted for interest expense, income tax expense (recovery), depreciation and amortization. The Corporation uses FFO to measure the performance of its controlled and non-controlled assets net of financing costs. FFO is defined as adjusted EBITDA (calculated as revenue less operating expenses and administrative expenses plus distributions from non-controlled investments) less interest expense.

Notice to Readers

This news release is not an offer or invitation for subscription or purchase of or a recommendation of securities. It does not take into account the investment objectives, financial situation and particular needs of the investor. Before making an investment in the Corporation, the investor or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult our investment adviser if necessary. 

None of the entities noted in this news release is an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of these entities.

Certain of the statements contained in this news release are forward-looking and reflect management's expectations regarding the Corporation's future growth, results of operations, performance and business based on information currently available to the Corporation. Forward-looking statements 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 use forward-looking words, such as "anticipate", "continue", "could", "expect", "may", "will", "estimate", "believe" or other similar words. The forward-looking statements in this news release are based on information currently available and what the Corporation currently believes are reasonable assumptions, including the material assumptions for each of the Corporation's assets set out in Macquarie Power & Infrastructure Income Fund's ("MPT" or the "Fund") 2009 Annual Report under the heading "Outlook" on page 42, as updated in subsequently filed Quarterly Financial Reports of the Fund (such documents are available on the Canadian Securities Administrators' System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com). Other material factors or assumptions that were applied in formulating the forward-looking statements contained herein include the assumption 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 there will be no unplanned material changes to the Corporation's facilities, equipment or contractual arrangements, and that the acquisition of the DH Business will be completed in as described in the Corporation's material change report dated December 21, 2010 (which is available on SEDAR).

Although the Corporation believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons, including risks related to: power infrastructure (operational performance; power purchase agreements; fuel costs and supply; contract performance; development risk; technology risk; default under credit agreements; land tenure and related rights; regulatory regime and permits; environmental, health and safety; climate change and the environment; force majeure); and the Corporation (tax-related risks; variability and payment of dividends, which are not guaranteed; geographic concentration and non-diversification; dependence on Macquarie Power Management Ltd. ("MPML" or the "Manager") and potential conflicts of interest; insurance; environmental, health and safety regime; availability of financing; shareholder dilution; and the unpredictability and volatility of the common share price of the Corporation). There are also a number of risks related to the Corporation's proposed investment in the DH Business, including: general business risks inherent in the district heating business; geographic concentration; minority interest; government regulation; termination of supply and customer contracts; possible failure to complete the acquisition; enforcement of indemnities against the vendors of the DH Business; environmental health and safety liabilities; liability and insurance; and reliance on key personnel.

For a more comprehensive description of these and other possible risks, please see the MPT's Annual Information Form dated March 25, 2010 for the year ended December 31, 2009 as updated in subsequently filed Quarterly Financial Reports and other filings with the Canadian securities regulatory authorities. These filings are available on SEDAR at www.sedar.com. 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. These forward-looking statements reflect current expectations of the Corporation as at the date of this news release and speak only as at the date of this news release. Except as may be required by law, the Corporation does not undertake any obligation to publicly update or revise any forward-looking statements.

¹Assumes an annualized TCPL gas transportation rate of approximately $2.14 per GJ, the anticipated contribution in 2011 from the Amherstburg Solar Park and the Swedish district heating business, and the increase in shares outstanding primarily as a result of the financing completed in December 2010.

²The Amherstburg Solar Park is expected to commence commercial operations in June 2011. MPIC's acquisition of a 33.3% equity interest in the Swedish district heating business is expected to close in March 2011.

Macquarie Power and Infrastructure Corporation is not an authorized deposit taking institution for the purposes of the Banking Act (Cth) 1959 and Macquarie Power and Infrastructure Corporation'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 and Infrastructure Corporation.