Macquarie, Eiffage disagree on French road

The two firms are at odds on how to service debt for French toll road APRR, which they jointly own through vehicle Eiffarie. Eiffage wants to inject €80m in equity in the vehicle, through a capital increase, in order to preserve its credit rating. But Macquarie has so far not agreed to this solution.

French infrastructure group Eiffage and Australian investor Macquarie are at odds on how to pay off debt for French toll road APRR, in which they own just over 81 percent through joint vehicle Eiffarie, Eiffage’s chief executive said during the company’s recent results presentation.

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.

Macquarie views the flow of finances in one direction – from the infrastructure to the investment fund.

Jean-François Roverato

Eiffage wants to inject some €80 million in equity by the end of June this year, via a capital increase, to allow the toll road vehicle to comfortably service its debt and maintain its credit rating in the investment grade category. Eiffage’s chief executive, Jean-François Roverato, says the equity injection is necessary in light of ratings agencies’ tougher rules on servicing debt in the aftermath of the financial crisis. But Macquarie has so far not agreed to the capital increase, Roverato said.

“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. In the long term, Roverato estimates that up to €320 million in equity will have to be injected in the toll road vehicle to meet its debt covenants, he said during the results presentation.

Macquarie has veto power and might block the capital increase, which can dilute its position in the toll road vehicle.

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.