DBRS Comments on Capital Power L.P.

DBRS notes that Capital Power Corporation (CPC or the Company) and Capital Power Income L.P. (CPILP or the Partnership) jointly announced today that CPILP will initiate a process to review its strategic alternatives. The Company’s subsidiary, Capital Power L.P. (CPLP, rated BBB with a Stable trend) is the 30% indirect owner and manager of CPILP.

The decision is the result of strategic review processes, undertaken by each of a Special Committee of CPILP Independent Directors and CPC, to explore alternatives for maximizing value for both CPILP unitholders and CPC shareholders. The process to review strategic alternatives is anticipated to take place over the next several months. CPC has advised the Special Committee that it will support the review of strategic alternatives and that if the process results in a determination to proceed with a sale of the Partnership, CPC (and, therefore, CPLP) does not intend to participate as a prospective buyer. At this time there is no impact on the rating of CPLP, given the modest contribution of CPILP to CPLP and the uncertainty as to the outcome of the review. DBRS would assess the impact of any resulting transaction on CPLP’s credit profile if and when such a transaction is announced. At current market values, CPLP’s units of CPILP are worth approximately $310 million in total.

Concurrently, the ratings of CPILP have been placed Under Review with Negative Implications. See the separate DBRS press release published today for further details.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating North American Energy Utilities (Electric, Natural Gas, and Pipelines), which can be found on our website under Methodologies.