Mig Assets Value Slashed $1.7b
Sydney Morning Herald
Friday August 22, 2008
MACQUARIE Infrastructure Group has suffered one of its worst one-day drubbings after the toll road group slashed the book value of its assets by $1.7 billion.
Securities in MIG fell 14c to $2.49, slumping as much as 17 per cent, or 44c, in morning trade, after the company shocked investors by announcing the book value of its portfolio of toll roads had fallen from $10.2 billion to $8.6 billion in the second half. This had led to a fall in MIG's net asset value per share from $4.59 to $3.84. The company blamed the devaluation on changing "risk premiums" on several of its roads. A day after Macquarie Airports sold down stakes in two key airports to an unlisted Macquarie vehicle to fund a $1 billion buyback of its shares, MIG also announced it would sell its 50 per cent stake in Sydney's M7, which would help fund the buyback of 10 per cent of its stock. But MIG's chief executive, John Hughes, denied it was part of a wider strategy by Macquarie which would eventually see its underperforming funds delisted. "We've told the market for two odd years that we're a developer of roads," said Mr Hughes, arguing that MIG never intended to hold on to its 50 per cent stake in the M7 into the long-term. The share price fall was exacerbated by MIG reporting a bigger than expected 55 per cent fall in net profit to $767 million. But MIG said its final distribution would be unchanged at 10c a security. The biggest impact of the $1.7 billion cut in the value of MIG's roads was the slashing of the book value of its stake in Britain's longest toll road - the M6 - from $3 billion to $2.2 billion, which was partly blamed on poor traffic numbers. MIG said it expected to conclude the sale of its Sydney M7 stake - worth $802 million on its books - by January. It also plans to divest its stake in the Portuguese Lusoponte toll road, worth $188 million. Mr Hughes rejected speculation MIG could also sell its remaining stake in its various US toll roads. There are mixed views as to whether MIG could seek to privatise. "They are unlikely to delist MIG as a whole," said Austock Securities analyst Andrew Chambers. "Clearly what's happened is there's a huge valuation difference between where the listed stock is trading and the price [MIG] could get in a trade sale." He said one reason MIG could remain listed was that eventually investors could again see value in the liquidity that listed infrastructure stocks bring.
© 2008 Sydney Morning Herald
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