Capstone water sale will reduce debt

Capstone will pay off debt using cash generated from its sale of 20% of Bristol Water. The UK water utility marked the first-ever non-energy Capstone investment.

Capstone Infrastructure Corporation will put $68 million generated from its 20 percent sale of Bristol Water toward paying down debt, the Toronto-headquartered publicly listed company announced Thursday.

The transaction will let Capstone fully repay a $29 million balance outstanding on its senior credit facility, as well as help the company chisel $39 million off a $119 million debt on CPC-Cardinal, a senior credit facility maturing in June.

Capstone will establish a new corporate facility to pay CDC-Cardinal its outstanding $80 million balance, the company said.

Capstone president and chief executive Michael Bernstein in a statement identified purchaser ITOCHU Corporation, a conglomerate from Japan, as “a new partner…with a broad scope of businesses”. He also praised ITOCHU for its “considerable infrastructure development and investment expertise”.

Capstone, still holding 50 percent of Bristol Water, will retain a controlling interest. AGBAR, or Sociedad General de Aguas de Barcelona, a subsidiary of Paris-based Suez Environnement, is owner of the remaining 30 percent of the utility.

In October, Capstone bought 70 percent of Bristol Water from AGBAR for $215 million, marking its “platform investment” in water and wastewater management. Originally Macquarie Power & Infrastructure Income Fund,  Capstone launched in 1994 to invest in energy transmission.

Bernstein called Bristol Water essential to help “shift the mix, duration and cash flow” for energy specialist Capstone.

Established in 2009 from Capstone subsidiary Cardinal Power, CPC-Cardinal helped Capstone afford its acquisition of Bristol Water, a UK water and wastewater company serving 1 million people.