Macquarie Infrastructure Group may find it hard to refinance some of its poorer assets – to be thrown into Active MIG after a split – but it is likely to find the going much easier for the assets in Mature MIG.

Mature MIG’s most prized asset is its 30 per cent stake in Canada’s 407 tollway, held via an interest in 407 International.
407 International has this week filed a prospectus with the Canadian regulator that will allow it to raise $C2 billion of medium-term debt when the conditions are right.

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An analyst at Desjardins Securities told Canada’s Globe and Mail that current market conditions were very favourable for borrowers.

In a detailed note on the 407, UBS said the company had about $C1 billion of medium-term notes maturing by 2011. Presumably the debt raised with the latest prospectus would replace that debt.

The 407 is considered a very valuable asset because unlike Australian toll roads, price increases are not limited to inflation and the like. The 407 is allowed to raise the toll above inflation as long as the traffic growth exceeds 1 per cent a year, and there are 90 years remaining on the concession.

UBS values MIG’s stake in the road at $2.9 billion, or $1.25 a share. MIG shares closed 1.5 cents higher at $1.365 yesterday, and it plans to make a 10 cent capital return as part of its plans to split into Active MIG and Mature MIG. Not surprisingly based on those metrics, UBS has a "buy" on the stock.


The Australian Competition and Consumer Commission has given BHP Billiton the green light to proceed with its $204 million acquisition of iron ore junior United Minerals.

The competition regulator concluded that with respect to the global seaborne markets, the proposed acquisition would represent only a very small potential increase in BHP Billiton's share of the supply of iron ore and there would also continue to be significant alternative suppliers of iron ore.

Also, it determined that in relation to national markets, the proposed acquisition would not materially impact on the domestic supply of iron ore given that the majority of Australia's iron ore production is exported and United Minerals was unlikely to be an alternative domestic supplier in Australia.

BlueScope and OneSteel are the only major domestic consumers of iron ore, and OneSteel produces enough of its own product to meet its own needs and service the export market.

The ACCC has yet to deliberate over BHP’s proposed iron ore joint venture with Rio Tinto because the miners have not yet filed all of the necessary documentation. But the competition regulator last year gave the green light to a full merger between the pair, so it is not believed to be a potential hurdle to the deal.

The biggest hurdle to the production joint venture is likely to be the European Commission, and Chinese and Japanese competition regulators have also taken an interest in the issue.


The minister in charge may have changed but the process remains exactly the same. Or at least that is the initial message from those close to the NSW electricity privatisation process now that the Treasurer, Eric Roozendaal, has taken over the responsibility from former finance minister Joe Tripodi.

Expressions of interest from potential bidders are due at 1pm today and the word yesterday was that some had been lodged already, with more expected to flood in.

The process, run by Lazard and Credit Suisse, has attracted interest from domestic and overseas players.

In addition to the most obvious bidders - Origin Energy and AGL Energy - overseas companies such as Britain's International Power, Hong Kong's TRUenergy, New Zealand's Infratil, France's GDF Suez and AES of the United States are expected to weigh in.

However, there are suggestions that most of the international players are more interested in the useful free information that can be gleaned from entering the data room than in lodging binding bids. Interested parties need to show they are genuinely interested in buying the assets but they do not need to have funding arranged before entering the data room.

Handy details to be disclosed there include the duration of coal supply contracts, the estimated cost to produce coal from the Cobbora project and generation site remediation obligations.

But despite all the talk of interested parties, most industry insiders doubt that many - if any - companies apart from Origin and AGL will lodge binding bids. In particular, there are concerns that banks will be unwilling to provide finance for the generation trading rights because they will not have control of the underlying physical assets. The data rooms should be open by early February.


In investment banking - a business built on personal relationships - retention of top staff is key. Yet Macquarie Group's talks to acquire the European investment banking operations of Sal Oppenheim have reportedly fallen over after the Australian bank was unwilling to pay at least €200 million ($320.5 million).

Sal Oppenheim apparently thought the price did not properly value the staff or their relationships.

But after its recent mixed luck in retaining those key people or relationships in other acquisitions, such as Tristone Capital and Fox-Pitt Kelton, perhaps Macquarie had second thoughts about paying top dollar.

Most of the bankers at Tristone's London and Houston offices have reportedly defected since Macquarie's purchase in May, while FPK's Asian bankers left en masse shortly after its recent purchase.

Macquarie's proposed remuneration changes place an even higher priority on retention than its previous arrangements.

Employees who join a competitor within two years after leaving Macquarie now lose the rights to the vested portion of their retained bonuses, up from the previous period of six months.

The new arrangements will also apply to its employees overseas.


The South Korean pension fund may have company when eyeing the $700 million Aurora Place building.

Insider has heard two Australian wholesale funds are also keen on further due diligence. Possible contenders include Lend Lease's Australian Prime Property Fund and GPT's Wholesale Office Fund.

Lend Lease's chief executive, Steve McCann, has made it clear he wants to expand APPF's operations and inventory of iconic buildings. Lend Lease would be familiar with Aurora Place - it owned the building briefly at the time of development.

GPT also aims to expand its funds management, particularly now that its debt is decreasing and its asset sales are nearing completion.

The Aurora Place price tag appears high yet the funds seem keen to open their wallets and take a stab at the Sydney office market.

And brokers say there is anecdotal evidence from agents that multiple buyers are now bidding on assets and sellers are holding out for better prices, which means valuations may have bottomed as of June 30.


It appears Archer Capital's coming float of Ascendia Retail - to be renamed Rebel Group - will be able to back up its marketing material with a set of solid recent sales and profit figures.

In accounts filed with the corporate regulator, Ascendia reported a 6.4 per cent increase in sales to $711.2 million from its Rebel Sport and Amart All Sport retail chains in the financial year ended June 27.

Its earnings before interest and tax - the key measure of profit for private equity-owned groups because debt is restructured after a float - was $59.8 million, compared with $37 million the previous year.

But potential investors will have to wait until a prospectus is released to see specific figures on like-for-like sales growth - said to be positive - and the number of existing and planned stores. Ascendia has been rebranding stores to the stronger brand in each region, with Victoria favouring Rebel and Queensland favouring Amart, for example.

Archer has hired Goldman Sachs JBWere, UBS and Merrill Lynch to manage the float and already has accountants and lawyers poring over details to help prepare a prospectus.

A final decision on whether to proceed is expected early next year, after the Christmas sales figures are tallied. No doubt the promoters also will keep a close eye on of Kathmandu's trading performance.

Nov 16, 2009 (The Australian Financial Review - ABIX via COMTEX) -- JLL | Quote | Chart | News | PowerRating -- An estimated $A2bn of commercial property, hotels and department stores will change hands in Australia this year. As at November 2009, negotiations are underway regarding the sale of Aurora Place in Sydney. The property is being marketed by Josh Cullen and Rick Butler, of CB Richard Ellis, and by Simon Storry and John Talbot, of Jones Lang LaSalle. There is speculation The Carlyle Group and South Korea's National Pension Service could buy the property for $A700m