02 March 2009
Macquarie Group notes that on 27 February 2009, Macquarie Infrastructure Group (MIG) announced the completion of the sale of a 25% interest in Westlink M7 for $A402.5million, a 5% discount to the 30 June 2008 directors’ valuation, bringing the current MIG cash balance to approximately $A1billion.
Macquarie notes that MIG has also announced that a sales process for its remaining 25% interest in Westlink M7 is underway and that it will continue to consider opportunities to realise value from its portfolio for security holders.
Macquarie also notes that Macquarie Media Group (MMG) has today announced that it intends to seek security holders’ approval to utilise up to $A50million of its current $A329million cash balance to buy back securities via both an off market buyback tender and an on market buyback. This is in addition to the on market buyback of up to 10% of MMG’s securities already underway.
Macquarie notes these are continuing steps being implemented by a number of the Macquarie specialist listed funds to enhance security holders value. These steps have focussed on closing the gap between the current security prices and the value of the underlying businesses and on ensuring that the funds have an appropriate capital and funding structure for the current funding and economic environment.
In terms of debt funding arrangements, none of the businesses within the Macquarie ASX listed specialist infrastructure funds have any uncovered refinancing requirements for 2009. For the major listed real estate funds (Macquarie Office Trust and Macquarie CountryWide Trust), the 2009 refinancing requirements are currently anticipated to be covered by initiatives already completed or announced.
Specific Initiatives at Specialist Listed Funds
Since the beginning of 2008, Macquarie’s specialist listed funds have completed or announced a significant number of initiatives focussed on delivering value for fund security holders and ensuring an appropriate capital and debt structure, including:
The proceeds from these asset sales have been used to either repay debt facilities, returned to security holders or retained on the fund’s balance sheet as surplus cash.
Future Listed Specialist Fund Activity
Following on from these successful initiatives, Macquarie notes that a number of its major specialist listed funds have stated they are reviewing a range of further initiatives focussed on closing the gap between valuation and security market price and ensuring an appropriate capital structure for the overall fund and its underlying assets. These initiatives, while incomplete and confidential at this stage, may include major asset sales, further debt refinancing, fund privatisation, security buybacks and capital returns.
In accordance with the funds’ corporate governance policies and procedures, which ensure that each fund is managed on a standalone basis in the best interests of its security holders, all of these initiatives will require the approval of the fund’s Independent Directors and, in most cases, will also require approval by fund security holders prior to completion.
Macquarie Group and the Listed Specialist Funds
Macquarie’s listed specialist funds represent only a small part of the overall Group’s operations and earnings. Included within the outlook guidance provided at the Macquarie Operational Briefing on 5 February 2009, it is estimated that the listed funds will provide less than 5% of operating income before impairments for the Group for the year to 31 March 2009.
Macquarie has no outstanding capital commitments to its listed specialist funds. It has no plans to increase its investment in the listed funds. The successful conclusion of the initiatives noted above is likely to result in a return of capital from the listed funds over the next 6 months.
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