Macquarie International Infrastructure Fund

[Nick]

Thanks Weijian. Now we are just left with HNE before MIIF is wind up (though APTT lives on).

Miaoli Wind: $0.094 million
TBC: $522.1 million
CXP: $112.2 million
Total Proceeds: $634.39 million

The success fee of $15 million depends on total proceeds reaching $694.915 million and if it exceeds this figure, there is a formula taking into account the difference with the threshold fees. Basically, there is an incentive to sell HNE at > $60 million (1H 13 Valuation: $152 million) or > $97 million to exceed the Board Valuation of $731 million.

MIIF Share Price: 19.9 cents
2H 13 Dividend: (0.8 cents)
CXP Return of Capital: (9.7 cents)
Remaining Market Value: 9.4 cents or approx $108 million.

Please correct any errors in the figures.

(Not Vested)

[lonewolf]

A lot of announcement from MIIF today:

1) MIIF REACHES FINANCIAL CLOSE ON SALE OF CHANGSHU XINGHUA PORT CO., LTD AND DECLARES A RETURN OF CAPITAL

2) CAPITAL RETURN OF SGD 0.097 PER 1 ORDINARY SHARE

3) Dividend Guidance

MIIF is confirming a revised final dividend guidance of 0.8 Singapore cents per ordinary share (“cps”) for the six months ending 31 December 2013

[Nick]

Actually, once HNE has been sold and the return of capital announced with MIIF liquidation, it will be interesting to calculate what was the IRR for IPO investors.

[weijian]

Interesting to note that HNE seems to be 'turning around' with latest 3Q13 results.

- Total traffic volumes had +18% pcp for 9M13. Toll revisions were implemented in the 2nd half of 2012. Despite have 3 quarters of toll revision impact for 9M13, compared to only 1 quarter of impact for 9M12, EBITDA only had -2.3%. This is because of a strong 3Q13, where EBITDA had rebounded strongly +23.8%. For one, i am not too sure whether any seasonality or one-time events had made 3Q13 looked really good. There is of course, still the National Day toll-free holiday that will show its impact in the full year.
- Previously in 1H12, Mgt had written down HNE by ~96mil (8cts/share) from 244mil to 141mil and anticipated revenue to reduce by 20-25%.
- MIIF closed at 11.2cents today, pretty strong despite substantial shareholders like LIM Advisors selling down recently. At this price, seems like Mr Market is pricing in that HNE will be sold at close to current NAV (152mil)...

http://www.macquarie.com/mgl/miif/news/2013/20131113b (9M13 ppt slide 10)

[Nick]

Macquarie International Infrastructure Fund Limited (MIIF or Company) today announced its financial results for the 12 months ended 31 December 2013.

The key highlights are:

- Net income of S$14.2 million
- Dividend declared of 0.8 Singapore cents per share (cps) for the six months to 31 December 2013

http://infopub.sgx.com/FileOpen/MIIFPres...eID=276390 [Slides]

http://infopub.sgx.com/FileOpen/MIIFSGXF...eID=276391 [Report]

Fairly good operating results from HNE in 4Q 2013 to generate over RMB 100 million EBITDA. I did expect this to be one of the first assets to be divested since there are numerous toll road companies listed in Asia. I guess the high leverage is an issue. MIIF needs to generate net income of $11.5 million to pay a 1 cent dividend in 2014.

(Not Vested)

[mm63]

I am surprised that they did not make any provision for the success fee ($15mil++) due to MIMAL if the total divestment exceeds $694.9mil. TBC ($522mil) plus CXP ($111.5mil) already adds up to $633.5mil. Given that the valuation of HNE is $155mil, it seems extremely likely that the $695mil threshold will be broken.

Assuming that they sell HNE at $155mil, does that mean that the success fee of $15mil++ will come out of the $155mil? Which means it eats substantially into the capital returns to the shareholders?

[Nick]

I am surprised that they did not make any provision for the success fee ($15mil++) due to MIMAL if the total divestment exceeds $694.9mil. TBC ($522mil) plus CXP ($111.5mil) already adds up to $633.5mil. Given that the valuation of HNE is $155mil, it seems extremely likely that the $695mil threshold will be broken.

Assuming that they sell HNE at $155mil, does that mean that the success fee of $15mil++ will come out of the $155mil? Which means it eats substantially into the capital returns to the shareholders?

1) There is no guarantee they will be able to divest HNE at that valuation or even at a valuation that will hit the $695 million figure.

2) Yes, The success fee will come from the sale proceeds. The previous divestments did not lead to a retaining of cash for the success fee ie shareholders benefited from the full payout.

[mm63]

Thanks for your comments. Another thing that puzzles me is that the income from HNE dropped from $17.4mil in 2012 to $12.1mil in 2013. However, HNE revenue increased from RMB117.9mil in 2012 to RMB139.6mil in 2013. Why is there such a substantial drop in income despite the increased revenue?

1) There is no guarantee they will be able to divest HNE at that valuation or even at a valuation that will hit the $695 million figure.

2) Yes, The success fee will come from the sale proceeds. The previous divestments did not lead to a retaining of cash for the success fee ie shareholders benefited from the full payout.

[Nick]

Thanks for your comments. Another thing that puzzles me is that the income from HNE dropped from $17.4mil in 2012 to $12.1mil in 2013. However, HNE revenue increased from RMB117.9mil in 2012 to RMB139.6mil in 2013. Why is there such a substantial drop in income despite the increased revenue?

1) There is no guarantee they will be able to divest HNE at that valuation or even at a valuation that will hit the $695 million figure.

2) Yes, The success fee will come from the sale proceeds. The previous divestments did not lead to a retaining of cash for the success fee ie shareholders benefited from the full payout.

1) The dividend income MIIF receives from HNE is based on the previous year earnings ie FY 2013 distribution income MIIF receives is derived from HNE results in 2012. HNE suffered a 6.5% decline in EBITDA in FY 2012.

2) IIRC, HNE has substantial debts and it amortizes its debt on a ballooning profile. So every year, the debt amortization figure increases. Since the recent EBITDA hasn't grown due to the toll rate standardization, I suspect the distributable income has suffered due to higher amortization.

(Not Vested)

[pattanispirit]

anyone know why the latest result released on 12 Nov, indicated zero income from HNE ?

The operating expense + director fees + management fee is S$1.888 mil.

The 3 month Revenue ended 30 Sep 14 indicating RMB 159.8 mil, but zero distribution goes to MIIF.

Even last year's same period reap RMB 139.2 mil, there are RMB 12.1 mil went to MIIF distribution.

Last year EBITDA was RMB 111.4 mil - only 10.86% went to MIIF distribution.

where was the rest of 89.14 % went to ?

currently, with one asset remaining, the number of directors remain to be 6 and the directors fees exceeded last year's to almost double ! !

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