Macquarie International Infrastructure Fund

(10-05-2012, 06:43 AM)KopiKat Wrote: The 'optimization' is described in Pg10 (Section 2.2) of this circular dated 10 Apr 11. Macquarie parent made a tidy sum arranging this

From the circular, the TBC debt before 'optimization' already has a ballooning debt repayment profile, significantly increasing in 2017. The 'optimization' makes it even more pronounced. Financial engineering X 2.

(10-05-2012, 10:41 AM)swakoo Wrote:

(10-05-2012, 06:43 AM)KopiKat Wrote: The 'optimization' is described in Pg10 (Section 2.2) of this circular dated 10 Apr 11. Macquarie parent made a tidy sum arranging this

From the circular, the TBC debt before 'optimization' already has a ballooning debt repayment profile, significantly increasing in 2017. The 'optimization' makes it even more pronounced. Financial engineering X 2.

The 'optimization' delays repayment to 2013 and more significantly so only from 2014. From now till 2014, perhaps we can expect TBC to pay out the bulk of their EBITDA to MIIF as dividends and MIIF shareholders keep the bragging rights (fool ourselves) of getting 9.5%+ yield!

Note : Do stay alert (or even call to bugger their IR) when it's closer to 2014 to see if they plan to do another 'optimization' exercise. It can after all be a win-win situation (assuming they have not used up all their cash to do regular top-ups if their incoming cash flow is insufficient) as shareholders get their Hi Yield and Macquarie parent gets paid their 'optimization' arranger fees..

(10-05-2012, 10:52 AM)KopiKat Wrote: Note : Do stay alert (or even call to bugger their IR) when it's closer to 2014 to see if they plan to do another 'optimization' exercise. It can after all be a win-win situation (assuming they have not used up all their cash to do regular top-ups if their incoming cash flow is insufficient) as shareholders get their Hi Yield and Macquarie parent gets paid their 'optimization' arranger fees..

..... but how long can they keep kicking the can down the road?

I guess they can either keep refinancing their debt indefinitely like most REITs or raise equity via shareholders rights issue which will cause MIIF to inject cash inside etc. TBC F/S in their asset book is really complex.

(Not Vested)

(10-05-2012, 11:56 AM)Nick Wrote: I guess they can either keep refinancing their debt indefinitely like most REITs .....

The difference is that most reits do not have a ballooning debt repayment profile. In the early days of the HK reit market, some of the HK reits resorted to using debt with ballooning debt repayment profiles and were severely punished by the market. It really distorts the headline yield and is very deceiving.

Not vested too. Used to be long ago.

(10-05-2012, 11:00 AM)swakoo Wrote:

(10-05-2012, 10:52 AM)KopiKat Wrote: Note : Do stay alert (or even call to bugger their IR) when it's closer to 2014 to see if they plan to do another 'optimization' exercise. It can after all be a win-win situation (assuming they have not used up all their cash to do regular top-ups if their incoming cash flow is insufficient) as shareholders get their Hi Yield and Macquarie parent gets paid their 'optimization' arranger fees..

..... but how long can they keep kicking the can down the road?

Correct me if I'm wrong...

My perception of how MIIF look for acquisition targets are done by sitting on their butts and waiting for their parent entity to present them with one of their unwanted asset for evaluation and consideration...

In such a case, it'd be very highly unlikely that MIIF will be able to find an asset that's good enough to be acquired, in order to generate a good additional stream of income, that may help lessen shareholders' anxieties.

So, I guess it's likely going to be a case of them continuing to kick the can down the road till either,

1) The can disappears through wear and tear eg. all the lease / rights to operate expires
2) The can disappears, by dropping into a shxx hole eg. their over-leveraged assets become economically unfeasible (something like MaoLi Winds) without throwing in more good $$ to reduce debt levels

So, either we should just stay clear of MIIF as we're more afraid of (2) or for those who enjoys sleepless nights, then to keep a close eye on the can. The moment it looks like the can is going to disappear, you'd better be able to disappear 1st before it does!

DBSV released a report today:

http://kfc1973-stock.blogspot.com/2012/0...-dbsv.html [Report]

Note that they factored in a cut in toll rates for HNE and expect 5.0 cents dividends annually.

(Not Vested)

(10-05-2012, 01:11 PM)KopiKat Wrote: Correct me if I'm wrong...

My perception of how MIIF look for acquisition targets are done by sitting on their butts and waiting for their parent entity to present them with one of their unwanted asset for evaluation and consideration...

In such a case, it'd be very highly unlikely that MIIF will be able to find an asset that's good enough to be acquired, in order to generate a good additional stream of income, that may help lessen shareholders' anxieties.

So, I guess it's likely going to be a case of them continuing to kick the can down the road till either,

1) The can disappears through wear and tear eg. all the lease / rights to operate expires
2) The can disappears, by dropping into a shxx hole eg. their over-leveraged assets become economically unfeasible (something like MaoLi Winds) without throwing in more good $$ to reduce debt levels

So, either we should just stay clear of MIIF as we're more afraid of (2) or for those who enjoys sleepless nights, then to keep a close eye on the can. The moment it looks like the can is going to disappear, you'd better be able to disappear 1st before it does!

Permit me to add:
3) The can disappears, when a credit crunch tornado suddenly appears out of the blue and sucks up the can into the great big sky

After reading the 'optimization' maneuver u highlighted, strikes me it's the same old MIIF at work.

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(10-05-2012, 01:30 PM)Nick Wrote: DBSV released a report today:

http://kfc1973-stock.blogspot.com/2012/0...-dbsv.html [Report]

Extract from DBSV report:

Quote:Recommendation: Yield of 9.5% is hard to ignore.

Nothing at all in report about KopiKat's note on the 'optimization' of TBC debt repayment. So easy to get a good recommendation from analyst by using financial engineering to generate a high headline yield.

I think the optimization is old news. This was mentioned in the circular a year ago about debt repayment being delayed allowing for excess cash to be repaid as dividend. The debt repayment schedule was provided in both the circular and in the MIIF Asset Book. Not sure whether this is sustainable - technically, they can keep refinancing loans since their assets are not concession based but this boils down to ability to find new credit at attractive rates. TBC is the main attraction point behind MIIF - cos HPHT deals with ports and CMPH deals with toll roads already. Share price been steady since results were released so I guess Market has been expecting it as well.

(Not Vested)

(10-05-2012, 02:14 PM)Nick Wrote: technically, they can keep refinancing loans since their assets are not concession based but this boils down to ability to find new credit at attractive rates.

Not sure if I understand correctly about your statement on concession, but for HNE, refer to Pg5 of Macquarie presentations,

Exclusive tolling rights for 27 years from 1999 (expiring in 2026)

Have not found anything to suggest that CXP is on concession, though, after checking their official site and PUC site (another stake holder). IIRC, for HPH Trust, they operate their China ports under concession. The only reason I can think of for CXP not being operated under concession, is the local govt is also a stake holder.

As for TBC, I'm at the moment assuming they're also not on concession, much like SCV (?).