Macquarie Power & Infrastructure Income Fund Investor enewsletter

Transcription

1 Macquarie Power & Infrastructure Income Fund Investor enewsletter September 2010 Macquarie Power & Infrastructure Income Fund s bi-monthly investor newsletter brings you updates about MPT s assets and activities as well as our views on news and market developments. To subscribe, us at mpt@macquarie.com. Quick Facts Ticker Symbols MPT.UN; MPT.DB.A 52-week High/Low $ $4.50 Trust Units Outstanding 49,911,369* Average Monthly Volume ~2 million units Recent Trading Price $7.13 (as at August 31, 2010) Number of Unitholders ~18,000 * As at June 30, 2010, including 3,249,390 Class B Exchangeable Units of MPT LTC Holding LP, a subsidiary of the Fund Feedback We encourage readers to share their feedback and ideas for future enewsletters or our investor relations website. Let us know what you think by ing us at mpt@macquarie.com. Website Visit MPT s website at to read more about our portfolio of assets and to access investor relations information. Disclaimer Certain of the statements contained in this Investor enewsletter are forward-looking and reflect management s expectations regarding the Fund s future growth, results of operations, performance and business based on information currently available to the Fund. 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 These statements are subject to significant 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, accordingly, should not be read as guarantees of future performance or results. The forward-looking statements in this Investor enewsletter 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 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 Review ( SEDAR ) at 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 Fund 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 and that there will be no unplanned material changes to the Fund s facilities, equipment and contractual arrangements. Although the Fund 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; contract performance; development risk; technology risk; default under credit agreements; land tenure and related rights; regulatory regime and permits and force majeure) and the Fund (changes in federal tax rules for flow through entities; other tax related risks; variability of distributions; geographic concentration and non-diversification; dependence on the Manager and potential conflicts of interest; insurance; environmental, health and safety regime; availability of financing; unitholder dilution; volatile market price for units; international financial reporting standards; nature of units; unitholder liability). For a more comprehensive description of these and other possible risks, please see the Fund 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 of the Fund with the Canadian securities regulators. These filings are available on SEDAR at 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 Fund as at the date of this Investor enewsletter and speak only as at the date of this Investor enewsletter. The Fund does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law. This Investor enewsletter 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 Fund, 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. The Fund is not a trust company and is not registered under applicable legislation governing trust companies as it does not carry on or intend to carry on the business of a trust company. The Units are not deposits within the meaning of the Canada Deposit Insurance Corporation Act and are not insured under the provisions of that act or any other legislation None of the entities noted in this Investor enewsletter 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 Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of these entities.

2 MPT breaks ground on Amherstburg Solar Park Helical piles, or steel poles, are being installed to act as support for the foundation of each SunPower Tracker T20 system. Work on the 20-megawatt Amherstburg Solar Park, acquired by MPT in June, is now underway. We are delighted to see this project start on schedule, said Michael Bernstein, President and Chief Executive Officer of the Fund, on a visit to the solar park site on August 17th. We greatly appreciate the significant local municipal and stakeholder support for this project. Both the Town of Amherstburg and the owner of the land we are leasing have demonstrated real leadership in renewable energy with this project. We look forward to being part of this community in the years ahead. The project is being designed and built by U.S.-based SunPower, a world leader in solar power with a 10-year track record of establishing successful commercial-scale facilities in Spain, Portugal, Germany, Italy and the United States. Upon the start of commercial operations, anticipated to be in June 2011, SunPower will also operate and maintain the facility on MPT s behalf under a long-term contract. The Amherstburg Solar Park will use SunPower s solar photovoltaic (PV) panels, which generate up to 50% more electricity than conventional solar panels and up to four times as much power as thin-film solar technology. The facility will also use the SunPower Tracker T20 system, which follows the sun during the day thereby increasing daily energy production by up to 30% more than fixed-tilt installations. Through June and July, the activity on this project included the procurement of materials and components, the ongoing development of system control, data acquisition and monitoring software systems, and finalizing contracts with subcontractors. Major civil works activity kicked off at the end of August, including the construction of internal service roads on the site, which will be followed by the construction of perimeter fencing. In September, helical piles, or steel poles, are being installed to support the foundation for each SunPower Tracker T20 system. Additionally, concrete pads will be formed for motors that will allow the Tracker T20 system to follow the sun throughout the day. Electrical work will also begin in the fall with the burying of the electrical collection system and the placement of the electrical equipment onto the concrete pads throughout the site. SunPower has engaged local subcontractors to complete the facility. The construction phase of the project is expected to create about 100 jobs, with a majority of the labour sourced locally. Under the O&M contract, SunPower will be staffing the facility with a plant manager and two remote monitoring technicians. In addition, annual property taxes are expected to be in the range of $200,000, making the Amherstburg Solar Park an important contributor to local community services. When completed in June 2011, the Amherstburg Solar Park will be one of the largest solar power facilities in Canada. It is expected to produce about 37,600 megawatt hours (MWh) of electricity annually, which is enough to power approximately 4,000 homes. Peak solar PV output coincides with the high power demand during the day in the summer months. Conversely, peak production for wind power facilities typically occurs in the fall and winter months while hydro power facilities are the most productive in the spring and fall months. As a result, the Amherstburg Solar Park will help to further diversify MPT s portfolio.

3 Erie Shores holds annual landowner BBQ MPT is committed to maintaining positive community relationships. On August 12, 2010, Erie Shores Wind Farm held its annual landowner appreciation BBQ. This event is our opportunity to thank our landowners for their continuing support of Erie Shores Wind Farm, said Dennis Haggerty, Plant Manager. It s also to thank the broader community for its leadership in green energy. Wind power has become part of the region s identity, serving as both a tourist attraction and source of tax dollars. In September 2010, Erie Shores will be exhibiting at the 2010 International Plowing Match near St. Thomas, Ontario to help showcase the region s progressiveness in welcoming wind energy. Michael Bernstein, the Fund s Chief Executive Officer, pointed to the Macquarie Group s global experience in power infrastructure development to highlight an important point. Developing a wind power facility can be complex and there are a lot of variables in the mix, he said. The biggest factor that determines whether a project will be successful is enthusiastic support from landowners, local governments and other members of the community. We are fortunate to have that here at Erie Shores. In July 2010, Erie Shores Wind Farm internalized operations and maintenance activities following the expiry of the facility s O&M contract with GE Canada. As a result, Erie Shores has created high-skilled job opportunities for nine local employees.

4 MPT releases second quarter results MPT held a conference call and webcast on August 10, 2010 to discuss second quarter results. On August 9th, MPT announced solid operational performance in the second quarter of 2010 with high availability across its power generation facilities, a 7.4% increase in electricity production despite unfavourable wind and hydrological conditions, and an 8.9% increase in revenue. The Fund s EBITDA, funds from operations and distributable cash to date in 2010 reflect two significant one-time impacts, namely the sale of our interest in Leisureworld and higher than normal or non-recurring administrative costs related to our corporate conversion process, the implementation of International Financial Reporting Standards and higher business development activity, said Michael Smerdon, the Fund s Chief Financial Officer. When the impact of the Leisureworld sale in late March is excluded, the Fund s adjusted EBITDA in the second quarter was up 18.1% over the second quarter last year. For the year-to-date period, both adjusted EBITDA and FFO have demonstrated a positive year-over-year trend. This illustrates the improvement of the power assets and the solid base from which to grow as we deploy the cash proceeds from the Leisureworld sale. For 2010, the Fund expects improved performance from its portfolio compared with 2009, which will be partially offset by an increase in Fund-level administrative and interest costs. Despite these increased expenses, the Fund s operating cash flow is expected to be higher in 2010 than in Our main priority in 2010 is to grow our portfolio, said Michael Bernstein, President and Chief Executive Officer. Following the acquisition of the Amherstburg Solar Power project, we now have access to about $100 million in capital. This includes the amount available under our credit facility and remaining cash on hand. And with our lower distribution we expect to accumulate about $10 million in cash per year that we can put towards growth. I believe that MPT offers investors an attractive income stream and a unique value proposition through its focus on core infrastructure assets. To listen to the second quarter webcast, visit our website. Opportunities that MPT could pursue include toll roads, utilities, airports, P3s and power generation in Canada, the United States and internationally, encompassing both development projects and operating assets.

5 Whitecourt Power launches new website Whitecourt Power has been delivering green energy to Albertans since In July, Whitecourt Power launched a new website to highlight the environmental benefits of biomass power generation. Biomass power generation is considered to be carbon neutral because the amount of carbon dioxide arising from combustion is equal to what would be emitted if the wood waste was to decompose naturally. As a result, biomass power is an environmentally-friendly form of electricity generation. In 1997, Whitecourt Power became the first power generation facility in Canada to earn the EcoLogo. This certification reflects the quality of the facility and its leadership and contribution to the environment and human health through the efficient, controlled deployment of wood waste. To learn more, visit Every year, Whitecourt Power generates enough green electricity to power approximately 20,000 households.