Transurban declines right to acquire Westlink stake

In the absence of a deal with Transurban, the seller, Macquarie Infrastructure Group, will offload its 50% stake in the Sydney toll road to another MIG-owned investment vehicle for A$805m. Transurban cited ‘funding options in this current market’ as a factor in declining to acquire the stake.

The Transurban Group, a Sydney Stock Exchange-listed toll road developer, has declined to buy Macquarie Infrastructure Group’s (MIG’s) 50 percent interest in the Westlink M7 toll road in Sydney, leaving it with a deal to sell the stake to another investment vehicle it owns.

Transurban already has a 50 percent interest in Westlink. Its right to preemptively acquire the remaining 50 percent was set off last month when MIG accepted a binding offer to sell 100 percent of its interest in the toll road to the Western Sydney Roads Group (WSRG) for A$805 million (€415 million; $556 million).

The WSRG is an investment vehicle jointly owned by MIG and QIC Private Capital, the private investment arm of institutional investment manager Queensland Investment Corporation.

“Any acquisition of additional equity in the Westlink M7 at the price created by the formation of WSRG would not have been value creative for Transurban security holders given the funding options in this current market,” Transurban chief executive officer Chris Lynch said in a statement.

MIG acknowledged Transurban’s decline to exercise its preemptive right and said that it intends to complete the sale of its interest to WSRG. Financial close is expected in the first quarter of 2009. It intends to carry on discussions with third parties regarding a sell-down of its interest.

The Westlink is a 40 kilometre motorway in western Sydney that opened to traffic in December 2005. Most recently, it reported December toll revenue of A$40.2 million for the quarter ended 31 December 2008, 8.1 percent higher than the quarter ended 31 December 2007.

MIG originally acquired a 40 percent equity interest in the Westlink Group, the concessionaire that in February 2003 won the right to finance, design, build, operate and maintain the Westlink, for A$392 million. The concession expires in 2037.