DBRS Assigns Rating of Pfd-3 (low) to Capital Power Corporation’s Preferred Share Issue

DBRS has today assigned a rating of Pfd-3 (low) with a Stable trend to the preferred share offering by Capital Power Corporation (CPC). The $125 million cumulative redeemable rate reset preference shares, Series 1 (Preferred Shares) will yield 4.60% per annum for the initial five-year period. The dividend rate will reset on December 31, 2015, and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 2.17%. The Preferred Shares are redeemable by CPC on December 31, 2015, and on December 31 every five years thereafter.

The Preferred Shares are being issued pursuant to a preliminary short-form prospectus and are expected to settle on or near December 16, 2010.

Net proceeds from the offering will be loaned to affiliate Capital Power L.P. (CPLP) pursuant to a subordinate debt agreement. CPLP will use the funds to repay a portion of the outstanding debt balance under its credit facilities which were used to fund the acquisition of Island Generation Facility, and for general corporate purposes. DBRS currently rates CPLP’s Senior Unsecured Debt at BBB with a Stable trend.

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

The applicable methodologies are Rating North American Energy Utilities (Electric, Natural Gas and Pipelines) and DBRS Preferred Share and Hybrid Criteria for Corporate Issuers (Excluding Financial Institutions), which can be found on our website under Methodologies.