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 Capital Power Corporation’s (CPC or the Company) $150 million Cumulative Rate Reset Preference Shares, Series 3 (the Series 3 Preferred Shares). The Series 3 Preferred Shares will have an annual dividend rate of 4.60%, payable quarterly, for the initial fixed-term period ending December 31, 2018. The dividend rate will reset on December 31, 2018, and every five years thereafter at a rate equal to the five-year Government of Canada bond yield plus 3.23%. The holders of the Series 3 Preferred Shares will have the right, at their option, to convert their shares into Cumulative Floating Rate Preference Shares, Series 4 (the Series 4 Preferred Shares), subject to certain conditions, on December 31, 2018, and on December 31 every five years thereafter. Holders of the Series 4 Preferred Shares will be entitled to receive floating rate cumulative preferential cash dividends at a rate equal to the 90-day Government of Canada Treasury Bills yield plus 3.23% per annum. The Series 3 Preferred Shares are redeemable by the Company on December 31, 2018, and on December 31 every fifth year thereafter, in whole or in part.

The Series 3 Preferred Shares were issued under the prospectus supplement dated December 10, 2012, to the short-form base shelf prospectus dated February 16, 2012, and settled December 18, 2012. The Series 3 Preferred Shares rank on parity with the Preference Shares of every other series and in priority to the Common Shares and the shares of any other class ranking junior to the Preference Shares. An amount equivalent to the net proceeds from the offering will be loaned to Capital Power L.P. (CPL) pursuant to a subordinated debt agreement to be entered into between CPC and CPL. CPL will use the funds received from the Company to repay the outstanding balance under its credit facilities, which were used to fund the development of Quality and Halkirk wind facilities, to finance development projects (including the Port Dover and Nanticoke and the Shepard Energy Centre projects) and for general corporate purposes.

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

The applicable methodology is Rating Companies in the North American Energy Utilities (Electric and Natural Gas) Industry (May 2011), which can be found on our website under Methodologies.