Macquarie Power & Infrastructure Income Fund
TSX : MPT.UN

Macquarie Power & Infrastructure Income Fund

April 15, 2007 17:43 ET

Macquarie Power & Infrastructure Income Fund Announces Proposal to Acquire Clean Power Income Fund

- Provides superior value for unitholders of Clean Power Income Fund - Supports MPT's long-term cash flow sustainability and growth platform - Expected to be accretive to unitholders in first year of combined operations

TORONTO, ONTARIO--(CCNMatthews - April 15, 2007) - Macquarie Power & Infrastructure Income Fund (TSX:MPT.UN)("MPT" or the "Fund"), which invests in essential infrastructure assets in North America, today announced it has submitted to the Board of Trustees of Clean Power Operating Trust ("CPOT"), the sole beneficiary of which is Clean Power Income Fund ("CPIF"), a proposal to acquire all of the outstanding units of CPIF for consideration consisting of 0.5581 MPT units and a contingency value receipt ("CVR"), as described below, for each unit of CPIF. This consideration represents a total value of approximately $6.39 per unit based on MPT's closing price of $11.11 on Friday, April 13, 2007, and a total value of approximately $6.28 per unit based on MPT's last 20-day volume-weighted average trading price, and assuming in each case payment of the maximum amount payable under the CVR (assuming no refunds are received from Commonwealth Edison Co.).

MPT's proposal represents a 15% premium over the $5.47 price currently being offered for the units of CPIF by Algonquin Power Income Fund ("APIF"), based on the last 20-day volume weighted average trading prices of the APIF units and the MPT units of $8.46 and $10.91, respectively, and including the maximum amount payable under the contingency value receipts under each respective offer (assuming no refunds are received from Commonwealth Edison Co.). MPT's proposal has been unanimously approved by MPT's Board of Trustees.

"We believe that Macquarie Power & Infrastructure Income Fund's proposal provides superior value for Clean Power unitholders as well as a compelling opportunity to participate in a stable, growing fund focused on long-life infrastructure assets," said Gregory Smith, Chief Executive Officer of MPT. "Moreover, the addition of CPIF's complementary energy assets would extend the average life of MPT's assets, significantly diversify our portfolio by asset type and geography, and generate a sustainable increase in distributable cash per unit. With this acquisition, MPT would strengthen its presence and growth opportunities in the North American power infrastructure arena while establishing a foothold in the attractive renewable energy sector."

Details of Proposed Acquisition

Under MPT's proposal, CPIF unitholders would receive 0.5581 units of MPT for each outstanding CPIF unit, representing a value equivalent of approximately $6.09 per unit based on the last 20-day volume weighted average trading prices of the MPT units. In addition, each CVR proposed to be offered by MPT would entitle the holder, subject to certain conditions, to a payment in cash of an amount up to approximately $0.19 per CPIF unit, provided that, if refunds are received from Commonwealth Edison Co., the maximum amount payable under the CVR would increase. The CVRs would represent the right to receive an amount equal to 80% of: the amount of the US$7.593 million reserve fund established by CPIF in connection with its sale of Gas Recovery Systems, LLC and any refunds received from Commonwealth Edison Co., after reduction for certain claims and costs and after specified adjustments.

The Board of Trustees of CPOT has informed MPT that its proposal constitutes a "Competing Transaction" that CPIF is prepared to accept under the terms of its current support agreement with APIF, subject to the rights of APIF under such agreement. MPT's proposal is conditional on CPIF accepting MPT's support agreement by April 19, 2007, following the termination, in accordance with its terms, of CPIF's support agreement with APIF. MPT's offer would be conditional upon, among other things, at least 66 2/3% of the outstanding CPIF units being validly deposited under MPT's offer and there not occurring any material adverse change in the business, facilities, operations, assets or liabilities of CPIF and its subsidiaries and affiliated entities. In the event that CPIF does not accept MPT's proposed support agreement within the specified period, CPIF has agreed to reimburse MPT for the out-of-pocket expenses incurred by MPT in connection with its proposal, up to a maximum of $850,000. In the event that CPIF accepts MPT's proposal, CPIF will pay MPT a break fee of $7,000,000 and reimbursement of MPT's expenses to a maximum of $1,500,000 under certain circumstances.

Merits of Proposed Acquisition

MPT's portfolio currently includes Cardinal, a 156 megawatt ("MW") gas-fired cogeneration plant located in Cardinal, Ontario, and a 45% interest in Leisureworld, a provider of long-term care, or social infrastructure, in Ontario. MPT believes that the combination of CPIF and MPT would result in a larger portfolio of diverse, long-life infrastructure assets, adding wind, water and biomass power generation assets, representing installed capacity of 303 MW:

- CPIF's assets deliver predictable, contracted cash flow under long-term power purchase agreements, and would thereby extend the average life of assets in MPT's portfolio.

- CPIF's assets would significantly diversify MPT's portfolio by asset type, fuel source and geography, and would thereby enhance the reliability of MPT's cash flow.

- CPIF's high quality assets would complement the stability and quality of MPT's portfolio.

- MPT would be a larger entity with a substantial platform for continuing growth in the power infrastructure sector.

- Management expects that MPT would be positioned to maximize unitholders' after-tax income under the federal government's proposed taxation policy for flow-through entities, including income funds, which is currently expected to be effective in 2011.

MPT's unitholders currently receive cash distributions of $1.03 per unit on an annualized basis. Management expects that the addition of CPIF's assets would be accretive to MPT's distributions per unit commencing in the first year of combined operations. Management would expect the Fund to maintain a payout ratio of 90% to 95% in 2007, which provides for stability of distributions while allowing for growth.

MPT is not currently contemplating making an offer for CPIF's outstanding 6.75% convertible debentures. However, if its proposed offer were successful, MPT is currently contemplating that a transaction would be undertaken that would result in such debentures becoming obligations of MPT.

This news release is not a solicitation of a proxy from any security holder of CPIF. Nor is this communication an offer to purchase or a solicitation of an offer to sell securities.

Conference Call and Webcast

The Fund will hold a conference call to discuss its proposal to acquire CPIF on Monday, April 16, 2007 at 8 a.m. ET. The conference call will be accessible via webcast on the Fund's website at www.macquarie.com/mpt and by telephone at 416-695-9701 (Canada) or 1-800-769-8320 (North America). A replay of the call will be available until April 23, 2007 by dialing 416-695-5275 or 1-888-509-0081 and entering the passcode 643201.

About the Fund

Macquarie Power & Infrastructure Income Fund invests in infrastructure assets with an emphasis on power infrastructure. MPT's strategy is to acquire and actively manage a high-quality portfolio of long-life infrastructure assets to improve their financial performance and provide growing and sustainable distributions to unitholders for the long term. MPT's infrastructure portfolio includes Cardinal, a 156MW gas-fired cogeneration power station in Ontario, and a 45% indirect interest in Leisureworld Senior Care LP, a leading long-term care provider in Ontario with over 30 years operating experience. MPT is managed by a wholly-owned subsidiary of Macquarie Bank Limited and a member of the Macquarie group.

Forward-looking Statements

Certain statements in this news release may constitute forward-looking statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results to be materially different from any future results expressed or implied by such forward-looking statements. Forward-looking statements use such words as "may", "will", "anticipate", "believe", "expect", "plan" and other similar terminology. These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this news release. 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. 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 possibility that a support agreement between CPIF and MPT will not be entered into or that any offer made by MPT will not be completed. The risks and uncertainties described above are not exhaustive and other events and risk factors including risk factors disclosed in MPT's filings with Canadian securities regulatory authorities could cause actual results to differ materially from the results discussed in the forward-looking statements.

The forward-looking statements contained in this news release are based upon information currently available and what Macquarie Power Management Ltd., the manager of MPT, currently believes are reasonable assumptions, however neither MPT nor the manager can 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 MPT and the manager assume no obligation to update or revise them to reflect new events or circumstances. MPT and the manager caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made.

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. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Power & Infrastructure Income Fund.

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