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## CAPITAL POWER CORPORATION 

Notes to the Consolidated Financial Statements 

(Tabular amounts in millions of Canadian dollars, except share and per share amounts) 

31. Capital management, continued: 

The following table represents the total capital of the Company: 

<img src='content_image/232283.jpg'>

The Company, through its subsidiary CPLP, has the following externally imposed requirements on its capital as a result of its credit facilities and certain debt covenants: 

 Maintenance of modified consolidated net tangible assets to consolidated net tangible assets ratio, as defined in the debt agreements, of not less than 0.8 to 1.0; 

 Maintenance of senior debt to consolidated capitalization ratio, as defined in the debt agreements, of not more than 0.65 to 1.0; 

 Limitation on debt issued by subsidiaries; and 

 In the event that CPLP is assigned a rating of less than BBB- by S&P and BBB (Low) by DBRS, CPLP would also be required to maintain a ratio of net income before interest, income taxes, depreciation and amortization to finance expense, as defined in the debt agreements, of not less than 2.5 to 1.0. 

These capital restrictions are defined in accordance with the respective agreements. 

For the year ended December 31, 2012, the Company and its subsidiaries complied with all externally imposed capital restrictions. 

To manage or adjust its capital structure, the Company can issue new loans and borrowings, issue common or preferred shares, redeem preferred shares, issue new CPLP units, repay existing loans and borrowings or adjust dividends paid to its shareholders. 

32. Investments in joint ventures: 

## Investments in jointly controlled assets 

The Company holds 50% interests in the Genesee 3 Project and the Keephills 3 Project, and holds a 40% interest in the Joffre Cogeneration Project. 

Under the terms of the Company’s interest in the Genesee 3 project and the Keephills 3 Project, the Company and its respective partners have guaranteed financial and performance obligations under the joint arrangements limited to $50 million and $50 million respectively. 

## Investments in jointly controlled entities 

The Company holds a 33% interest in the partnership established to develop, construct and operate the Kingsbridge 2 wind power project (K2 Wind). As at December 31, 2012, the Company has recorded its equity investment in the jointly controlled entity of $3 million (December 31, 2011 - $1 million) within non- current other financial assets. The Company recorded equity losses on its interest in K2 Wind of $1 million during the year ended December 31, 2012 within other administrative expenses (year ended December 31, 2011 - nil). 

There are no contingent liabilities relating to Capital Power's interest in the joint ventures described above. 

