BRISTOL WATER acquired by ICON INFRASTRUCTURE

Capstone Infrastructure sold its 50% indirect interest in Bristol Water to iCON Infrastructure Partners III, its ultimate parent entity, completing the transaction on December 15, 2016. The sale transferred Capstone's holding in the regulated UK water utility to iCON III, which already held an indirect stake. The transaction was reviewed and approved by a special committee of independent directors of Capstone. Proceeds were used to eliminate $194 million of the outstanding $291 million balance of a promissory note issued by Capstone to Irving Infrastructure Corp. on April 29, 2016, leaving approximately $97 million outstanding. Capstone stated that the sale reduced corporate debt, lowered regulatory and foreign currency exposure, and allowed management to focus on its Canadian power business. The company noted that following the challenging price review for the 2015-2020 period, dividends from Bristol Water were expected to be materially lower than originally anticipated, and the asset's cash flow profile no longer matched its investment objectives. The purchase price represented a premium to Capstone's net investment of approximately £90 million, reflecting growth in regulatory capital value during the holding period. Capstone realised a total return in Canadian dollars of approximately 8% per annum, including about £16 million of dividends received and capital appreciation from the sale.