Independent proxy advisory firms Glass Lewis & Co LLC and Institutional Shareholder Services Inc have recommended that shareholders of Capstone Infrastructure Corp approve the previously announced acquisition of the Toronto-based infrastructure investor. The deal, which will see Capstone sold to an affiliate of U.K.-based iCON Infrastructure LLP for $480 million, will be subject to a vote on March 10. It is expected to close in April.
Capstone Infrastructure Announces Two Independent Proxy Advisory Firms Recommend Voting in Favour of Plan of Arrangement
Special Meetings of Securityholders to be held on March 10, 2016 to approve announced Plan of Arrangement
TORONTO, ONTARIO–(Marketwired – Feb. 22, 2016) – Capstone Infrastructure Corporation (“Capstone” or the “Corporation”) (TSX:CSE)(TSX:CSE.DB.A)(TSX:CSE.PR.A) (TSX:CPW.DB) announced today that Glass, Lewis & Co., LLC (“Glass Lewis”) and Institutional Shareholder Services, Inc. (“ISS”), two leading independent proxy advisory firms, have both recommended that Capstone shareholders vote FOR the previously announced arrangement (the “Arrangement”) that provides for Irving Infrastructure Corp., a subsidiary of iCON Infrastructure Partners III, L.P. (“iCON III”), a fund advised by London, UK-based iCON Infrastructure LLP (“iCON Infrastructure”), to acquire all issued and outstanding common shares of Capstone (“common shares”) and Class B exchangeable units of Capstone’s subsidiary MPT LTC Holding LP (“Class B units”) for $4.90 cash per share or unit, as applicable. The acquisition will be completed by way of a plan of arrangement under the British Columbia Business Corporations Act (“BCBCA”).
Glass Lewis summarized its recommendation FOR the Arrangement as follows: “In light of our analyses and the fairness opinions of the financial advisors, we believe the financial terms of the acquisition are fair for Capstone shareholders. The purchase price represents significant premiums above the Company’s recent and historical share prices, representing a four-year high. In addition, the purchase price implies multiples that are generally higher than those observed among comparable transactions […] We believe the Capstone board appropriately considered the Company’s strategic and transaction alternatives after recognizing and attempting to overcome the Company’s standalone strategies. Ultimately, the proposed transaction is the result of a competitive bidding process involving two willing and able buyers, which in the end yielded an attractive offer […] Accordingly, we recommend that shareholders vote FOR this proposal.”
ISS summarized its recommendation FOR the Arrangement as follows: “The Arrangement is the result of arm’s length negotiations between the company, the acquirer, and their respective advisors. Management has conducted a comprehensive transaction process and the final cash offer consideration represents a considerable premium to the unaffected share price prior to the announcement of the transaction. In light of the above, a vote FOR this resolution is warranted.”
Capstone’s Board of Directors has unanimously approved the Arrangement and recommends that securityholders vote FOR the Arrangement.
The Special Meetings of Securityholders of the Corporation (the “Meetings”) to consider the proposed Arrangement will be held at 1 King West Hotel, located at 1 King Street West, Room 1400, Toronto, Ontario, on Thursday, March 10, 2016 at 10:00 a.m. (Toronto time).
The securityholders entitled to vote at the Meetings are those holders of Common Shares, Class B Units and 6.75% extendible convertible unsecured subordinated debentures of Capstone Power Corp., (the “CPC 2017 Debentures”) due December 31, 2017, as of the close of business (Toronto time) on January 22, 2016 and the holders of Capstone’s 6.50% convertible unsecured subordinated debentures due December 31, 2016 (the “Capstone 2016 Debentures”) as of the close of business (Toronto time) on February 3, 2016 (together, the Capstone securityholders).
Capstone securityholders are urged to carefully review Capstone’s management information circular dated February 9, 2016 and accompanying materials, which contain important information about the Arrangement and its consequences to Capstone securityholders.
Registered Capstone securityholders who are unable to attend the Meetings are encouraged to complete, date, sign and return their Form of Proxy so that as large a representation of Capstone Securityholders as possible may be had at the Meetings.
Beneficial holders of Common Shares and Debentures as at the applicable Record Date wishing to vote their Common Shares and/or Debentures at the Meetings must provide instructions to the broker, dealer, bank, trust company or other nominee through which they hold their Common Shares and/or Debentures in sufficient time prior to the holding of the Meetings.
Capstone securityholders are encouraged to complete and submit either (i) the Form of Proxy to Computershare Trust Company of Canada, 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1, Attention: Proxy Department, no later than 10:00 a.m. (Toronto Time) on March 8, 2016, or 48 hours (not including Saturdays, Sundays and holidays) prior to the commencement of any adjournment or postponement of the Meetings (or otherwise in accordance with the instructions printed on the Form of Proxy) or (ii) Voting Instruction Form in accordance with the instructions printed on the Voting Instruction Form.
Your vote is important regardless of how many securities you own. Securityholders who have questions or require assistance in voting their proxy may direct their inquiry to Capstone’s proxy solicitation agent, D.F. King, toll-free in North America at 1-800-229-5716, or at 1-201-806-7301 outside of North America, or by email at email@example.com.
About Capstone Infrastructure Corporation
Capstone’s mission is to provide investors with an attractive total return from responsibly managed long-term investments in core infrastructure in Canada and internationally. The company’s strategy is to develop, acquire and manage a portfolio of high quality utilities, power and transportation businesses, and public-private partnerships that operate in a regulated or contractually-defined environment and generate stable cash flow. Capstone currently has investments in utilities businesses in Europe and owns, operates and develops thermal and renewable power generation facilities in Canada with a total installed capacity of net 468 megawatts. Please visit www.capstoneinfrastructure.com for more information.
About iCON Infrastructure
iCON Infrastructure is an independent investment firm focused on investments in infrastructure businesses across Europe and North America with over EUR1 billion under management. In April 2015, iCON closed its most recent infrastructure investment fund iCON III, with commitments of over EUR800 million from a diversified group of leading institutional investors from Europe, North America, the Middle East and Asia. iCON Infrastructure’s other funds manage a diversified portfolio of investments in the energy, regulated utilities and transportation sectors across Europe and North America. Further information in relation to iCON Infrastructure and its investments is available at www.iconinfrastructure.com.
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 Capstone Infrastructure Corporation (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”, “intend”, “estimate”, “plan”, “believe” or other similar words. 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, 2014 under the heading “Results of Operations”, as updated in subsequently filed MD&A of the Corporation (such documents are available under the Corporation’s SEDAR profile at www.sedar.com).
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 preferred shares will remain outstanding and that dividends will continue to be paid on the preferred shares after completion of the plan of arrangement (the “Arrangement”) and that the listing of the preferred shares will not be affected by the Arrangement; that the meeting of securityholders will occur on March 10, 2016; that the Arrangement will be completed in the second quarter of 2016, that there will be no material delays in the Corporation’s wind 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; that there will be no material changes to the Corporation’s facilities, equipment or contractual arrangements; that there will be no material changes in the legislative, regulatory and operating framework for the Corporation’s businesses; that there will be no material delays in obtaining required approvals for the Corporation’s power infrastructure facilities, or Värmevärden; that there will be no material changes in rate orders or rate structures for Bristol Water; that there will be no material changes in environmental regulations for the power infrastructure facilities, Värmevärden or Bristol Water; that there will be no significant event occurring outside the ordinary course of the Corporation’s businesses; the refinancing on similar terms of the Corporation’s and its subsidiaries’ various outstanding credit facilities and debt instruments which mature during the period in which the forward-looking statements and financial outlook relate; market prices for electricity in Ontario and the amount of hours Cardinal is dispatched; the price Whitecourt will receive for its electricity production considering the market price for electricity in Alberta, the impact of renewable energy credits, and Whitecourt’s agreement with Millar Western, which
includes sharing mechanisms regarding the price received for electricity sold by the facility; the re-contracting of the power purchase agreement (the “PPA”) for Sechelt; that there will be no material change from the expected amount and timing of capital expenditures by Bristol Water; that there will be no material changes to the Swedish krona to Canadian dollar and UK pound sterling to Canadian dollar exchange rates; and that Bristol Water will operate and perform in a manner consistent with the regulatory assumptions underlying the Competition and Market Authority’s (“CMA”) final determination, including, among others: real and inflationary changes in Bristol Water’s revenue, Bristol Water’s expenses changing in line with inflation and efficiency measures, and capital investment, leakage, customer service standards and asset serviceability targets being achieved.
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, development and integration; 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; completion of the Corporation’s wind development projects; operational performance; contract performance and reliance on suppliers; land tenure and related rights; environmental; and regulatory environment); risks related to Värmevärden (operational performance; fuel costs and availability; industrial and residential contracts; environmental; regulatory environment; and labour relations); risks related to Bristol Water (Ofwat price determinations; failure to deliver capital investment programs; economic conditions; operational performance; failure to deliver water leakage target; SIM and the serviceability assessment; pension plan obligations; regulatory environment; competition; seasonality and climate change; and labour relations); and risks related to completion of the Arrangement. For a comprehensive description of these risk factors, please refer to the “Risk Factors” section of the Corporation’s annual information form dated March 24, 2015, as supplemented by disclosure of risk factors contained in any subsequent annual information form, 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 the securities commissions or similar authorities in Canada (which are available under the Corporation’s SEDAR profile at www.sedar.com). There can be no assurance that the Arrangement will occur. The proposed Arrangement is subject to various regulatory approvals, including approvals under the Competition Act (Canada) and Investment Canada Act, and the fulfillment of certain conditions, and there can be no assurance that any such approvals will be obtained and/or any such conditions will be met. The proposed Arrangement could be modified, restructured or terminated.
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 investors. 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.
Photo courtesy of Capstone Infrastructure Corp