BrisConnections: No delay on A$390m capital call(2)

Shareholders in the developer of a greenfield concession in Brisbane are obligated to make payments of A$1 per share next month. Watchdogs argue it should delay the payment given uncertainty about its major shareholders’ and underwriters’ intentions to fund the call.

BrisConnections, a listed consortium that is building an airport toll road and related infrastructure projects in Brisbane, is dismissing calls for it to delay an A$390 million (€197 million; $250 million) capital call from its shareholders amid fears that they will not fund the A$1 per share payment due next month.

The Australian Shareholders Association, a non-profit watchdog, has argued that BrisConnections should delay the capital call due to the uncertainty about its future viability and its underwriters’ and major shareholders’ intentions to fund the call.

BrisConnections:
uncertain future

Purchasers of the company’s listed shares are obligated to make future installments of A$1.0 per share in April 2009 and January 2010. But given the company’s Australian Stock Exchange-listed shares are currently trading at the lowest allowed price of A$.001, shareholders are reluctant to make good on those obligations.

One significant BrisConnections shareholder, Australian Style Investments, has called for a special shareholder meeting to vote on whether to wind-up the company. In response, BrisConnections has filed a court order asking that the meeting request be declared invalid and that Australian Style Investments, which has a 12.3 percent stake in BrisConnections, be wound up.

A total of A$390 million is due from BrisConnections’ shareholders in April for their second installment of payments for the securities. A spokesperson for the BrisConnections said the second installment notes were mailed on 2 March and stated the firm opposes delaying the installment. BrisConnections has an underwriting agreement with Macquarie Group and Deutsche Bank for future installments, the spokesperson added.

The ASA has argued that BrisConnections cannot rely on the underwriters to cover the shortfall.

“It is difficult to ascertain how much of the installment shortfall the likes of Macquarie Capital Advisers can sustain. It is also unclear what happens if it cannot pay . . . a bailout cannot be automatically assumed,” the ASA said in a statement.

Macquarie Capital Advisers, a subsidiary of the Australian investment bank, along with Australian construction companies Thiess and John Holland and engineering firms Arup and Parsons Brinckerhoff, formed part of the BrisConnections consortium, which in May 2008 was named the preferred bidder for a 45 year concession to build and operate Brisbane’s Airport Link and related projects costing approximately A$4.9 billion.

Macquarie helped BrisConnections debut on the Australian Stock Exchange on 31 July 2008, acting as the sole book-runner to its initial public offering.  Its shares have steadily plummeted since then and in November Macquarie sold its remaining 7.2 percent interest in the consortium.

At 31 July, Macquarie owned under various affiliates 60.4 million BrisConnections shares, according to a regulatory filing. 

A Macquarie spokesperson did not return a call seeking comment.