News & Analysis

BrisConnections ‘partial’ shareholders flee(3)

The Australian toll road developer has secured only 25 percent of required capital from holders of ‘partially paid shares’. Underwriters Deutsche Bank and Macquarie Capital will have to cover the shortfall if more shareholders don’t meet their obligations in the next few days.

-

Shareholders of BrisConnections, a troubled developer of an airport toll road and related infrastructure projects in Brisbane, have so far ponied up A$102 million (€56 million; $75 million), or just over 25 percent of an A$390 million capital call due 29 April.

BrisConnections: difficult
road ahead

It was the second of three capital calls required under the terms of the firm’s shareholder agreement with regard to so-called “partially paid shares,” which dictates that owners of BrisConnections stock pay A$1 per share on each occasion in order to be eligible for dividend distributions.

The call came amid heated debate about whether the firm should wind up or at least postpone the installment. Shareholders have been frustrated by its disastrous performance on the Australian Stock Exchange after shares collapsed from A$1 to A$.001 in the weeks after its initial float last summer. This has made many of them reluctant to put more capital at risk in future installments.

Macquarie Capital Advisers and Deutsche bank are underwriters for the capital calls. They will each cover 50 percent of any shortfalls. Their payments for the shortfall for this capital call are due in two installments on 6 May and 17 June, according to a statement.

BrisConnections said in a statement that the shareholders who have not met the capital call have until 5 pm on Tuesday, 12 May to make their payments; failure to do so will result in suspension of their voting rights and entitlement to dividends. BrisConnections has also proposed holding a public auction for their defaulted shares on 5 June.

In May 2008, the BrisConnections consortium, consisting of Macquarie Capital Group, Australian construction companies Thiess and John Holland and engineering firms Arup and Parsons Brinckerhoff, was named the preferred bidder for a 45 year concession to build and operate the Brisbane Airport Link and related projects estimated to cost about A$5 billion.

The final instellment of A$1 is due January 2010.