FAQs

Infrastructure is an essential part of any modern community, providing the underlying foundation of basic services, facilities and institutions. Infrastructure assets include roads and highways, bridges, power generation facilities, electricity transmission and distribution systems, long-term care, water distribution, hospitals, schools, sea ports and airports.

MPT's focus is on the type of regulated or contractually-defined infrastructure assets presented in the highlighted categories below, which are typically lower risk and generate stable cash flow.

MPT’s objective is to acquire and actively manage a high-quality portfolio of long-life infrastructure assets with an emphasis on power infrastructure. We are focused on improving the financial performance of our existing assets while seeking opportunities to further diversify our portfolio. Our objective is to deliver an attractive return to unitholders with the potential for capital growth.

Our portfolio currently includes power and social infrastructure assets that generate stable, predictable revenue as a result of long-term contracts or licences. MPT’s power portfolio includes gas cogeneration, wind, hydro and biomass power generation facilities in Canada representing approximately 350 MW of installed capacity. We also have a 45% interest in Leisureworld, a provider of long-term care, or social infrastructure, through 26 long-term care homes located in Ontario.

MPT is an unincorporated, open-ended limited purpose trust established by a declaration of trust dated March 15, 2004, as amended and restated as of April 16, 2004 under the laws of the Province of Ontario, and as further amended on February 21, 2006. MPT plans to convert into a dividend-paying corporation prior to January 1, 2011.

MPT is managed by Macquarie Power Management Ltd. (MPML). MPML is a member of Macquarie Group Limited, one of the world’s largest and most experienced managers of infrastructure with approximately $42 billion in infrastructure equity under management in 22 countries.

MPT is governed by a five-person Board of Trustees comprising:

• Derek Brown, Independent Trustee, Chairman
• Patrick J. Lavelle, Independent Trustee
• Stephen Mentzines, Manager-appointed Trustee
• François R. Roy, Independent Trustee
• V. James Sardo, Independent Trustee

More information about MPT’s governance structure is available in the Governance section of our website.

MPT is listed on the Toronto Stock Exchange under the symbol MPT.UN. Units in MPT can be purchased through any Canadian brokerage firm authorized to deal in Canadian securities. MPT’s convertible debentures are listed on the Toronto Stock Exchange under the symbol MPT.DB.A.

MPT currently has approximately 50 million units outstanding, including approximately 3.2 million Class B exchangeable units.

Our fiscal year end is December 31.

Our unit registrar is Computershare Investor Services Inc. Computershare’s toll-free number if calling within Canada or the United States is 1-800-564-6253. The international phone number is 514-982-7555.

All correspondence can be sent to:

Computershare Investor Services Inc.
1500 University Street, Suite 700
Montreal, Quebec H3A 3S9
Canada

Macquarie Power Management Ltd. can be reached by:

Mail
Macquarie Power Management Ltd.
Brookfield Place
181 Bay Street, Suite 3100
Toronto, Ontario M5J 2T3

Telephone
416-607-5009

Fax
416-607-5073

Email
mpt@macquarie.com

MPT distributes its available cash to unitholders through monthly cash distributions. Distributions are declared each month, approximately eight business days prior to the last business day of the month. Unitholders of record on the last business day of that month are entitled to the distribution. The declared distributions are paid out on the 15th or next closest business day of the following month.

Example

The Fund's distribution policy, effective January 2010 is to distribute $0.055 per unit monthly, or $0.66 per unit annually. Based on our current portfolio and outlook, we have good visibility on the sustainability of this distribution level through 2014.

MPT launched a DRIP in February 2007. More information is available in the DRIP section of this website.

Many income trusts, including MPT, use a tax deferral mechanism to enhance tax efficiency for unitholders whereby a portion of the distribution is considered to be a return of capital. Investors do not pay tax on the amount deemed to be return of capital, and the amounts received as return of capital serve to reduce the cost base of the original investment. This means that when investors sell their units, they pay capital gains tax on the difference between the sale proceeds and the adjusted cost base at the time of sale (in Canada, the capital gains tax rate is currently preferable to regular income tax treatment).

In 2004 and 2005, 100% of MPT’s distributions to unitholders were considered return of capital. In 2006, 79% of distributions were return of capital. In 2007, 70% of distributions were return of capital. In 2008, 60% of distributions were considered return of capital. For 2009, management currently expects that approximately 50% of distributions will be considered return of capital. For 2010, it is currently expected that approximately 40% of distributions will be considered return of capital.

Effective January 2010, MPT's monthly distribution is $0.055 per unit, or $0.66 per unit annually. Based on our current portfolio and outlook, we have good visibility on the sustainability of this distribution through 2014.

Based on our current operational outlook, for fiscal 2009 we expect to achieve a payout ratio of approximately 105%. If required, the Fund's general reserve account ensures our ability to support distribution to unitholders in 2009.

The Fund’s current outlook for 2010 is positive.

Revenue at the Cardinal gas cogeneration facility in 2010 is expected to be higher than in 2009 due to less scheduled maintenance work and the continuing escalation in the Direct Customer Rate (DCR), which results in a higher power price under Cardinal’s Power Purchase Agreement (PPA). Cardinal will conduct a combustion inspection in the second quarter of 2010, which typically requires about five days of outage. It is anticipated that higher power rates will partially offset the impact of higher gas transportation rates, which are currently expected to increase from $1.19 per gigajoule in 2009 to approximately $1.65 per gigajoule in 2010. As a result, cash flow from this facility is expected to be slightly higher than in 2009.

Revenue at Erie Shores Wind Farm is anticipated to be slightly higher based on the expectation of more normal wind patterns as well as improved availability resulting from improvements made at the facility in 2009. Erie Shores’ annual long-term production target is 249,800 MWh. At the end of July, Erie Shores will internalize operations and maintenance (O&M) following the expiry of its existing O&M contract with GE Canada, which is expected to result in lower operating costs over time. As a result of the internalization, Erie Shores will incur approximately $800,000 in one-time capital expenditures primarily related to building up an inventory of spare parts as well as end-of-contract inspections. Erie Shores’ cash flow in 2010 is expected to be slightly higher than in 2009.

Revenue and cash flow from the Fund’s hydro power facilities is anticipated to be higher based on the expectation of improved hydrological conditions as well as price escalators in the facilities’ PPAs. The average long-term annual production of the hydro power facilities is 166,360 MWh. Capital expenditures across the facilities are expected to be significantly lower than in 2009.

Revenue and cash flow from the Whitecourt biomass facility are expected to be significantly higher in 2010 than in 2009. Whitecourt is anticipated to achieve an availability factor of approximately 95% in 2010, which is in line with its historical performance. Whitecourt’s turbine is expected to operate reliably until the facility’s next scheduled major maintenance inspection in 2016. Approximately $1 million in capital expenditures is planned for 2010, including the replacement of the facility’s boiler feedwater pumps and air compressor, which will support Whitecourt’s continuing reliability. Whitecourt is currently expected to have a continuing stable and adequate supply of wood waste fuel in 2010.

Leisureworld Senior Care LP will continue to focus in 2010 on enhancing the quality of care and accommodation for residents. Leisureworld is expected to maintain full occupancy across its 26 long-term care homes and to continue to attract more residents to private accommodation, which contributes to operating profitability. In 2010, Leisureworld’s annual distribution to the Fund will be $9.5 million compared with $10.4 million previously. This new distribution policy reflects management’s current outlook for Leisureworld’s financial performance in 2010.

The Fund expects higher administrative and interest costs in 2010 than in 2009. Administrative costs are expected to be higher due to the Fund’s conversion to a dividend-paying corporation, the implementation of International Financial Reporting Standards, and increased business development activity as the Fund pursues its growth strategy. Increased interest costs in 2010 will reflect higher rates on the Fund’s credit facility as well as the higher principal amount outstanding on the convertible debentures. Despite these costs, the Fund expects increased cash flow in 2010.

MPT intends to convert into a dividend-paying corporation prior to January 1, 2011. Upon conversion, MPT will become taxable.

In 2011, a tax of approximately 29% will be applied to the Fund. Our current distribution level of $0.66 per unit on an annualized basis considers the impact of this tax. Based on our current portfolio and outlook, we have good visibility on the sustainability of this distribution level through 2014.

Our goal is to match the cash flow profile of our assets and the life of our power purchase agreements (PPAs) with investment-grade debt, which helps to minimize financial risk.

As at September 30, 2009, MPT’s long-term debt included:

• $90.5 million on our credit facility, which matures in June 2012; and
• Approximately $111 million in project debt for Erie Shores in three tranches that mature in 2011 and 2026, respectively.

In addition, Leisureworld has $310 million of 4.814% senior secured debentures due November 24, 2015 as well as a $60 million term loan which matures on January 31, 2011.

On December 22, 2009, MPT issued $50 million of 6.50% principal amount of convertible unsecured subordinated debentures due December 31, 2016. On January 5, 2010, MPT closed the over-allotment option for an additional $7.5 million of convertible debentures, bringing the gross proceeds of the offering to $57.5 million. On January 11, 2010, MPT used a portion of the proceeds of the offering to redeem its outstanding 6.75% convertible debentures, totalling $38.9 million.

MPT’s financial position is strong. As at September 30, 2009, MPT had positive working capital of $10.6 million. Cash on hand totalled $5.6 million and the general, maintenance and capital expenditure reserve accounts were funded in the amount of $10.5 million. At the end of the quarter, our debt to capital ratio was 47.2%, which is conservative relative to the low risk profile of our assets.

By definition, infrastructure assets meet critical community needs. That means consistent demand for the services that they provide.

All of our power infrastructure assets operate under long-term contracts with creditworthy customers. Similarly, Leisureworld operates within a regulated environment. In addition, about 60% of Leisureworld’s revenue is derived from the government through a clearly defined funding formula.

Overall, our portfolio is well diversified by asset type, fuel source and geography.

All of these factors help to ensure the stability of MPT’s cash flow throughout the economic cycle.

MPT has the financial strength to prudently execute a small to mid-sized transaction, or possibly two small transactions. We believe that there are attractive opportunities available that meet our investment and return criteria. With the capacity we have under our credit facility as well as proceeds from our recent convertible debenture offering, we have approximately $100 million available to deploy. Futher, we expect to retain approximately $20 million in cash over 2010 as a result of our lower distribution.

We continue to look at appropriate growth opportunities in a range of infrastructure categories, including renewable energy and public-private partnerships (P3s).

The Canadian Council for Public-Private Partnerships predicts that Canada will face an infrastructure deficit of $1 trillion in 60 years if current levels of underinvestment are allowed to continue. This growing deficit is spread across various sectors, including transportation, bridges, and water and wastewater.

The quality of a country’s infrastructure has a direct impact on its economic competitiveness, which is why infrastructure maintenance and renewal is increasingly a top priority for governments. The need for investment dollars is urgent and growing, which creates opportunities for an investor such as MPT.

MPT’s emphasis continues to be on power infrastructure, including existing power generation and electricity transmission and distribution facilities as well as smaller development opportunities. New infrastructure categories of interest include transportation, bridges, water and wastewater facilities, hospitals and schools.

A public-private partnership is a contractual arrangement between the public sector and a private sector participant to deliver essential infrastructure.

In a P3, the public sector retains ownership of asset while seeking private partners to provide a majority of the investment capital, to complete the construction work and to service the asset over the life of the contract. The public sector sets strict performance standards and requirements for the private partner, ranging from design specifications to community consultation to environmental enhancements.

For taxpayers, P3s have been proven to deliver significant savings and value for money while freeing up public funds for other priorities, such as health care. P3s also remove the risk of project delays and cost overruns. A key feature of any P3 is the transfer of risk away from the public sector and taxpayers to the parties who are best able to mitigate it.

As such, P3s represent contractually-defined infrastructure. Canada’s federal government has established a P3 agency as have many provincial governments, namely British Columbia, Ontario and Quebec.

The contingency value receipts formed part of the consideration paid to unitholders of Clean Power Income Fund (CPIF), which MPT acquired in 2007.

The CVRs relate to CPIF’s sale of its investment in Gas Recovery Systems LLC (“GRS”) in 2006 to Fortistar Renewables Group. Certain proceeds from this sale were deposited into an escrow account, which amounted to US$7.59 million at the time that CPIF was acquired by the Fund. The funds in escrow relate to an ongoing dispute over the methodology used by Commonwealth Edison Co. (ComEd), a customer of GRS, to historically calculate the amount paid to GRS under its PPA with GRS. The amount of money in the escrow account reflects the net present value of the difference between the high rate that CPIF expected under the PPA versus the lower rate that was actually being received at the time of the sale to Fortistar. Fortistar withdraws from this account monthly based on the amount of power produced. At September 30, 2009, the balance in this account was approximately US$3.7 million.

The Fund has no control over the outcome of the dispute related to the escrow account, which involves several parties, legal and contractual considerations, and regulatory constraints. If the dispute is not resolved, the CVRs will expire on December 31, 2010. At this point in time, the Fund’s view is that the funds in the escrow account will be fully paid to ComEd and that the CVRs are unlikely to have any value for holders.

A complete description of the CVRs is provided in MPT’s takeover bid circular dated May 18, 2007.

No. The CVRs cannot be redeemed and are non-tradable and non-transferrable.

As described on page 81 of our takeover bid circular dated May 18, 2007, on the date that the CVRs were delivered to former CPIF unitholders for tax purposes, each had a fair market value of approximately $0.04.

At this point in time, the Fund’s view is that the CVRs are unlikely to have any value for holders.

Any material change in the status of the CVRs will be publicly disclosed.