MIC offloads stake in energy business

Macquarie Infrastructure Company will sell 49.99% of Thermal Chicago to an affiliate of the John Hancock Life Insurance Company for $29.5m. Sale proceeds will be used to repay MIC’s revolving debt facility of $66.4 million, which matures on 31 March 2010.

Macquarie Infrastructure Company, the New York Stock Exchange-listed investment fund managed by Australia’s Macquarie Group, is selling a minority stake in one of its assets in an effort to pare down its debt.

MIC said in a press release that it will sell a 49.99 percent interest in Thermal Chicago, an energy business, to an affiliate of the John Hancock Life Insurance Company for $29.5 million.

The sale proceeds will be used to repay MIC’s revolving debt facility of $66.4 million, which matures on 31 March 2010.

Thermal Chicago is a provider of so-called “district energy services,” where chilled water, steam or hot water is piped to customers from a centralised plant for cooling and heating purposes. Thermal Chicago operates five such plants in downtown Chicago and another one elsewhere in the city, which together service approximately 100 high-rise buildings.

Thermal Chicago operates a similar business in Las Vegas.

In past conference calls with analysts, MIC chief executive officer James Hooke repeatedly praised the district energy business for its strong cash generation. For the most recent quarter, the business generated $5.8 million in cash, versus $4.9 million a year earlier.

The business was one of MIC’s seed assets that were acquired at the time the company began trading on the New York Stock Exchange in December 2004. MIC debuted trading at $25 per share.

MIC shares jumped nearly 3 percent to $9.33 per share on the announcement of the sale.