MIG restructuring moves closer

Macquarie Infrastructure Group’s proposal to divide itself into two listed groups separated according to risk profile has been recommended by the firm’s independent directors. It now moves on to a vote of security holders.

A restructuring at Macquarie Infrastructure Group (MIG), a subsidiary of Australia’s Macquarie Group, has taken a step forward after it was recommended by the firm’s independent directors.

The restructuring proposal was announced by the boards of MIG on 30 October 2009 and would see a dividing up of existing assets into two separate groups according to their risk profile.

According to an MIG statement, the independent directors voted unanimously in favour. The move was also recommended by an independent expert, Ernst & Young Transaction Advisory Services, which said the proposal “is in the best interests of MIG security holders”.

The restructuring would see security holders holding securities in two separate entities. Intoll would comprise MIG’s interests in the 407 ETR, a 108-kilometre toll highway running north of Toronto, Canada, and Westlink M7, a 40-kilometre stretch of the 110-kilometre orbital network around Sydney, Australia. These are described as “high quality assets” with “stable capital structures and cash flows”.

Meanwhile, Macquarie Atlas Roads (MQA) will hold the remaining MIG assets: the M6 toll in the UK; APRR, the Western European tolled motorway network; Chicago Skyway, the 12.5km connection between the Indiana Toll Road and Dan Ryan Expressway in Chicago; the Indiana Toll Road; South Bay Expressway, a toll road linking the San Diego highway network; Dulles Greenway, a toll road running from Dulles International Airport through Loudon County, North Carolina; Warnow Tunnel, a toll road linking East and West Rostock in Germany; and Transtoll, a global tolling solutions company based in Australia.

According to the statement, the MQA assets “require substantial operational and financial management to maximise value to security holders”.

Under the proposal, security holders would receive one Intoll security for every one MIG security, and one MQA security for every five MIG securities.

Mark Johnson, chairman of MIG, said: “The proposed restructure will result in the separation of MIG into two listed groups with different characteristics. The MIG boards believe that this restructure should unlock value in MIG as it provides security holders with greater clarity around the investment profile of the two separate portfolios.”

A general meeting of MIG security holders to consider the restructuring proposal will be held on 22 January 2010 in Sydney.