CitySpring – SGX
Basslink acquisition to raise DPU by 16.7%
Long-term, predictable revenues from 25-year contract
Singapore, 20 September 2007 – Following the completion of its acquisition of 100% of Basslink on 31 August 2007, CitySpring Infrastructure Management Pte. Ltd. (“CSIM”), trustee-manager of CitySpring Infrastructure Trust (“CitySpring”), has announced that it expects the acquisition to raise distribution per unit (“DPU”) to 7 cents (on an annualised basis) for the period from the completion of equity fund raising (referred to below) until 31 March 20091. This is a 16.7% increase from the projected DPU of 6 cents for the current financial year ending 31 March 2008.
Basslink is an electricity interconnector between the island of Tasmania and mainland Australia. A high-quality and unique asset, it is expected to provide long term, regular and predictable revenues derived from a 25-year contract with Hydro Tasmania, the electricity generating company wholly owned by the State of Tasmania.
Revenue from Basslink is largely based on availability of the interconnector and other guaranteed payments and is not dependent on the utilisation rate. Since commercial operations began in April 2006, Basslink has achieved an average availability of 99.5%.
Mr Fai Au Yeung, CEO of CSIM, said: “We are pleased with the progress we have made with this acquisition. This is a significantly yield accretive transaction and perfectly fits our investment mandate of acquiring projects with long term predictable cashflows. Part of Basslink’s revenues are indexed to increase with inflation. In addition, there is upside from possible telecommunications revenue associated with the commercialisation of the fibre optic cable incorporated in Basslink as well as from an enhancement of the asset life through additional capex. We intend to explore these opportunities to extract fully the value of this asset.”
Funding for the Basslink acquisition has been obtained through the issue of bonds and bridge financing. The Australian-dollar non-recourse bonds, guaranteed by MBIA Insurance Corporation, are rated AAA and Aaa by Standard & Poor’s and Moody’s respectively. An equity bridge facility for S$370 million has been also been obtained as part of the financing package.
CitySpring intends to repay the bridge financing with funds raised from an equity issue. Temasek supports the transaction and intends to participate in the equity issue. An extraordinary general meeting will be called to seek unitholders’ approval to ratify the acquisition and the related equity fund raising as soon as practicable.
CitySpring has posted on the SGXNet (at www.sgx.com) its presentation to analysts in relation to the Basslink acquisition.
1 Based on a range of assumptions, including exchange rate, to be outlined in more detail in a circular to unitholders to convene the extraordinary general meeting referred to below.
Source : SGX