Infratil eyes bond issues, ASX listing

By Gareth Vaughan Infrastructure investor Infratil, which will hold a special shareholders meeting in June to vote on plans to dual list on the Australian Stock Exchange,  is considering fresh public bond issues including one from its newly acquired Shell New Zealand business. Infratil, which released its annual results today, said it was assessing the potential for a bond issue by Aotea Energy, the holding company of the Shell operating business, to extend Aotea's debt profile. The Wellington-based company said it would also prepare the way to roll over its infrastructure bonds that mature in 2011. "Work is underway to ascertain the availability and cost of bond funding as this represents a source of longer term debt, which is intrinsically more suited to Infratil’s assets. Infratil’s last bond issue closed in May 2007," Infratil said. Infratil, whose investments include TrustPower, Wellington Airport and NZ Bus, disclosed plans late last Friday to seek a dual listing on the Australian Stock Exchange as it seeks to  access that country's bigger capital markets. It bought Shell's New Zealand distribution and retail business in partnership with the New Zealand Superannuation Fund for NZ$696.5 million in April. About NZ$276.5 million of this was loaned by banks with Infratil and the Super Fund providing NZ$420 million of equity towards the deal. Infratil's share of this was NZ$210 million. The banks are also providing a working capital facility to accommodate the fluctuating inventory of the Shell business. This was valued at more than NZ$208 million when the deal settled in April. Normal net working capital levels are estimated to average NZ$250 million during a 12 month period, Infratil said. Infratil reduced net debt to NZ$830 million from NZ$1.212 billion in the year to March. As of March 31, Infratil had net bank debt of just NZ$82 million, down from NZ$463 million a year earlier as it sold assets including Fullers Ferries, three Auckland bus depots, Lubeck Airport, plus Auckland International Airport and Energy Developments stakes with an aggregate book value of NZ$264 million for NZ$392 million. The group also has fixed maturity bonds on issue worth NZ$509 million, unchanged from a year ago, and NZ$239 million of perpetual bonds, down NZ$1 million. Last June Infratil, founded by Lloyd Morrison and now led by former Telecom CFO Marko Bogoievski, also exercised warrants issued to its shareholders in 2004. This, and an associated underwriting arrangement, saw 48.3 million shares issued raising NZ$98 million. A further 38.1 million warrants were extended to May 21, 2010. Exercising them then is expected to raise another NZ$43 million. Annual group earnings before interest, taxes, depreciation, amortisation and revaluation of financial derivatives (ebitdaf) rose to NZ$363 million from NZ$357 million. Infratil predicted ebitdaf would rise to between NZ$390 million and NZ$430 million in the year to March 2011 based on the addition of Shell, investment and the strong positioning of its key businesses. Meanwhile, Infratil recorded a bottom line annual profit of NZ$29 million versus a NZ$191 million loss last year. Its 3.75 cents per share final dividend takes total dividends to NZ$115 million up from NZ$103 million. Operating Earnings rose 16% to NZ$90 million from NZ$78 million boosted by higher earnings and an NZ$18 million fall in interest costs.