Macquarie resorts to corporate shell game to "overcome US hostility to foreigners taking over US assets."
November 27, 2006
The Age (Australia)
Security holders of Macquarie Infrastructure Group have overwhelmingly approved the sale of half of its US toll road assets to another Macquarie Bank managed fund.
The international toll road operator also stuck to its distribution forecast for this financial year and extended it into 2008.
MIG stapled security holders now can expect to receive a distribution of 20 cents per stapled security in fiscal 2008 as well as in the current financial year.
The $US825 million sale of 50 per cent of MIG's interest in four US toll roads approved, was proposed after the fund came under pressure from investors who thought it had paid too much for the assets.
"We copped a bit of flack over whether we bought them for the right price," MIG chief executive officer Stephen Allen told AAP after the group's annual general meeting.
But Mr Allen told shareholders the sale will reap a 21 per cent initial rate of return.
He also reiterated that selling the assets to a US domiciled fund, also managed by Macquarie Bank, would help MIG overcome US hostility to foreigners taking over US assets.
"The US is quite an exciting market that could be quite large," he said.
"And if you raise too much money people are concerned that we are always looking to raise the next dollar and that can put some pressure on you security price."
Mr Allen said MIG would focus on its existing Australian, European and US assets for the next 12 months.
But after that, MIG will again turn to US toll roads, which Mr Allen said "will develop into the biggest market for what we do in the world".
He accepted increasing competition in the market will eventually push up asset prices.
"It is better to get in there sooner rather than later - it is likely the prices will go up," Mr Allen said.
"But we're the first people outside the US with a local partner, which will give us an advantage."
MIG security holders also approved the extension of a $500 million on market buyback to up to 17.5 per cent of MIG's stapled securities.
The proposed buyback is intended to equal the amount raised from the sale of the US toll road interests.
Mr Allen also told the meeting that MIG was performing well and in line with expectations this year with good revenue and earnings growth in the September quarter.
In July, MIG spun off its mature Sydney toll roads - the Eastern Distributor, M4 and M5 - into the separately-listed Sydney Roads Group.
MIG staples securities closed down one cent at $3.47 on Monday.
© 2006 AAP: