Eiffage drops capital increase for French road

Eiffage has dropped the idea of a capital increase to service debt for toll road APRR while preserving its credit rating. This was a solution that Macquarie, which jointly owns APRR with Eiffage, did not support. The two firms have now agreed on a dividend payment that will allow them to service some €80m in debt.

French infrastructure group Eiffage and Australian investor Macquarie have agreed that their jointly owned toll road in France – APRR – will pay a dividend of €0.84 per share in order to service a forthcoming €80 million debt payment.

APRR: Eiffage and
Macquarie temporarily

APRR operates over 2,200 kilometres of road across France. The majority of APRR (81.5 percent) is owned by Eiffarie, a vehicle jointly owned by Eiffage (50 percent plus one share) and Macquarie (50 percent minus one share) through fund Macquarie Atlas Roads.
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.
But while the dividend payment will allow APRR to repay Eiffarie’s €80 million in debt by the end of June, the two partners will again have to sit down and negotiate how they intend to service a similar repayment scheduled for the end of this year.
APRR is rated Baa3 by Moody’s with a stable outlook while S&P’s 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.