Macquarie International Infrastructure Fund

[lonewolf]

MIIF AGREES TO SELL ENTIRE INTEREST IN CHANGSHU XINGHUA PORT

Macquarie International Infrastructure Fund Limited (“MIIF”) today announced that it has agreed to sell its 38.0 per cent effective interest in Changshu Xinghua Port (“CXP”) for a total cash consideration of S$112.2 million (the “Proposed Divestment”). The Proposed Divestment will be made to a wholly-owned subsidiary of Pan-United Corporation Ltd and Petroships Investment Pte Ltd, both of which are existing shareholders of CXP.

The amount of net proceeds to be distributed to Shareholders as a return of capital from the Proposed Divestment is expected to be 9.5 Singapore cents per share.

[Nick]

Certainly good news that it could divest it at book value. Now all that remains is divesting HNE at book value of $152 million - that will give upside to the current share price.

[tanjm]

I believe it sold above book value hence 9.5 cents per share. On a proportionate basis, it more than justifies the jump in price today though I think it might have a bit more problem selling HNE at a good price.

[weijian]

I believe it sold above book value hence 9.5 cents per share. On a proportionate basis, it more than justifies the jump in price today though I think it might have a bit more problem selling HNE at a good price.

- Now that TBC/CXP has been sold at decent prices ( 522+112 = 634mil), Mgt does not need to sell HNE at a premium anymore to hit threshold value=695mil (15mil bonus) or board valuation=731.5mil. (15mil + 20% of excess). In fact, it is going to net another 5mil if HNE sells at 0.8NAV, or another 11mil if HNE sells at NAV.
- Based on my calculations, net of all fees, each MIIF share is worth 18cents and 20cents if HNE is sold at 0.8NAV or 1.0NAV. Including the 0.7cents dividend declared, Mr Market seems to value it closer to 0.8NAV, which seems to be close to MIIF's historical discount.
- EBITDA at HNE seems to be improving. In 2Q13, EBITDA was ~6.7% lower PCP, compared to 3Q12 of ~18% lower PCP when the toll restrictions/slip roads recalculation kicked in. (Of course, this decline does not include the impact of the toil-free holidays). From CMPacific thread, i got the impression that toll road owners are currently lobbying for a longer lease period, in order to compensate for the toil rate standardization --> so, we might be looking forward towards some upside??

(vested)

[Nick]

I believe it sold above book value hence 9.5 cents per share. On a proportionate basis, it more than justifies the jump in price today though I think it might have a bit more problem selling HNE at a good price.

- Now that TBC/CXP has been sold at decent prices ( 522+112 = 634mil), Mgt does not need to sell HNE at a premium anymore to hit threshold value=695mil (15mil bonus) or board valuation=731.5mil. (15mil + 20% of excess). In fact, it is going to net another 5mil if HNE sells at 0.8NAV, or another 11mil if HNE sells at NAV.
- Based on my calculations, net of all fees, each MIIF share is worth 18cents and 20cents if HNE is sold at 0.8NAV or 1.0NAV. Including the 0.7cents dividend declared, Mr Market seems to value it closer to 0.8NAV, which seems to be close to MIIF's historical discount.
- EBITDA at HNE seems to be improving. In 2Q13, EBITDA was ~6.7% lower PCP, compared to 3Q12 of ~18% lower PCP when the toll restrictions/slip roads recalculation kicked in. (Of course, this decline does not include the impact of the toil-free holidays). From CMPacific thread, i got the impression that toll road owners are currently lobbying for a longer lease period, in order to compensate for the toil rate standardization --> so, we might be looking forward towards some upside??

(vested)

Will the sale of CXP affect the 2H 2013 dividend guidance of 1.2 cents ? Thanks.

[weijian]

Will the sale of CXP affect the 2H 2013 dividend guidance of 1.2 cents ? Thanks.

2H13 dividend guidance of 1.2cents is supposed to be paid out from CXP and HNE distribution in Sept2013.
Just re-read through 1H13 results/presentation/PR again. Strangely Mgt did NOT affirm any 2H13 dividend guidance, which they would normally do so. The Sept date to hold the SGM to vote on CXP sale has not been fixed nor is there any transaction date been mentioned in the sale PR.

I THINK it should NOT be affected in this case, but i would be sorely annoyed if it does. (Previously, MIIF shareholders who elected cash had already been technically shortchanged when there was cash retained at TBC to pay out to APTT shareholders for 1H13 distribution)

[KopiKat]

The Sept date to hold the SGM to vote on CXP sale has not been fixed nor is there any transaction date been mentioned in the sale PR.

From PUC SGX Annc,

5. CONDITIONS

5.1 Completion under the Sale and Purchase Agreement ("Completion") is conditional upon the shareholders of MIIFL in a general meeting passing resolution(s) approving the sale by MIHL of the Sale Shares in accordance with the terms of the Sale and Purchase Agreement.

5.2 If the condition stated in paragraph 5.1 shall not be fulfilled on or before 30 September 2013 or such other date as the parties to the Sale and Purchase Agreement may mutually agree in writing, the Sale and Purchase Agreement shall ipso facto cease and determine and no party shall have any claim against any other party for costs, damages, compensation or otherwise.

5.3 The date for Completion is the date falling one (1) business day after the date on which the condition set out in paragraph 5.1 above is fulfilled or such other date as PUI, MIHL and Petroships may mutually agree in writing.

[Nick]

MIIF typically receives the CXP and HNE distributions in 3Q 2013 - we are currently in this period and it may have already received the dividend income from the two underlying assets ?

[weijian]

Hi KopiKat, Thanks for the update.

hi Nick,
based on the latest 1H13 report link (http://www.macquarie.com/dafiles/Interne...rt.pdf?v=2), the DECLARATION of payment is in September. So my previous statement of payment (of cash) in Sept is incorrect.

I took a look at the trade receivables for 3Q statements of FY12/11 results to understand how declaration and actual payment dates varies. Found in pg25 note E(ii) of both reports (hey! this exercise just made me realized how standardized their reports are!), trade receivables increased substantially due to TBC+2nd installment from CXP for 3Q12, and due to TBC+2nd installment from HNE for 3Q11 - It seems like it is not fixed for CXP. I have sent this question to their IR.

[weijian]

Will the sale of CXP affect the 2H 2013 dividend guidance of 1.2 cents ? Thanks.

2H13 dividend guidance of 1.2cents is supposed to be paid out from CXP and HNE distribution in Sept2013.
Just re-read through 1H13 results/presentation/PR again. Strangely Mgt did NOT affirm any 2H13 dividend guidance, which they would normally do so. The Sept date to hold the SGM to vote on CXP sale has not been fixed nor is there any transaction date been mentioned in the sale PR.

I THINK it should NOT be affected in this case, but i would be sorely annoyed if it does. (Previously, MIIF shareholders who elected cash had already been technically shortchanged when there was cash retained at TBC to pay out to APTT shareholders for 1H13 distribution)

SGM slides are out at http://infopub.sgx.com/FileOpen/MIIFSGMP...eID=257280

The divestment of CXP will affect 2H13 distributions, because Sept payment from CXP will not proceed. Mgt has revised guidance from 1.2cents to 0.8cents for 2H12 distributions. Mgt has also revised capital return to 9.7cents from 9.5cents.

With this, Mgt has once again short changed shareholders and rather than a purported 5.3% premium above 1Q13 valuation, the effective price has almost no premium and is on the lower end of the indicative price range published by the independent valuer.