APRR delisted as Eiffarie seeks full control

Eiffarie, the joint venture between French developer Eiffage and Australian investment group Macquarie Atlas Roads, announced a delisting tender offer for French toll road network APRR at the end of last week.

Eiffarie, which already owns a 96.04 percent stake in Euronext-listed APRR, announced a delisting tender offer in an attempt to acquire the remaining shares at a price of €54.16 per share.

The move was flagged last month when Eiffarie spent almost €854 million to acquire a further 14 percent stake in APRR from investors Elliot Management Corporation and Sandell Asset Management Corporation. Following that transaction, Eiffarie held just over 95 percent of APRR, which operates over 2,200 kilometres of roads in France.

“The acquisition will be fully equity funded and represents a substantial deleveraging of Eiffarie,” said Peter Trent, chief executive of Macquarie Atlas Roads (MQA), at the time. “This, together with the additional cash flows resulting from the increased ownership of APRR, significantly improves Eiffarie’s financial strength and positions it well for its refinancing due in 2013,” he added.

Eiffage and MQA agreed to pay a dividend of €0.84 per share in order to service an €80 million debt repayment at the end of June.

However, the two firms had previously been at odds on how to service debt for the road, with Eiffage wanting to do an initial capital increase of €80 million to cover the repayment – a solution Macquarie did not favour. Macquarie has veto power to block a capital increase, which can dilute its position in the toll road vehicle.

Jean-François Roverato, Eiffage’s chief executive, had previously defended the need for the equity injection in light of ratings agencies’ tougher rules on servicing debt in the aftermath of the financial crisis:

“Macquarie views the flow of finances in one direction – from the infrastructure to the investment fund. We think the pumps work both ways,” Roverato told French newspaper Le Figaro earlier this year. In the long term, he estimates that up to €320 million in equity will have to be injected in the toll road vehicle to meet its debt covenants.

APRR is rated Baa3 by Moody’s with a stable outlook while S&P rates it at BBB – with the rating on negative watch. Its net profits in 2009 rose by 12 percent to €349 million and it currently has over €11 billion in debt.

Following the announcement of the delisting tender offer, AMF, the French stock market regulator, said APRR stock would remain suspended until further notice.