Investor support for MIG split MATT O'SULLIVAN January 23, 2010
Investors have given an overwhelming endorsement to Macquarie Infrastructure Group's split of its toll-road businesses, but not before some small shareholders questioned the benefit of the restructure.
More than 95 per cent of votes were cast in support of the MIG demerger at a general meeting in Sydney yesterday.
It was the latest chapter in the Macquarie Group's abandonment of its model of developing specialised infrastructure.
The split of the toll roads into two ASX-listed funds avoided the controversy surrounding Macquarie Airports' break from Macquarie late last year.
"Bad" MIG has been renamed Macquarie Atlas Roads and has retained Macquarie Group as its manager. Its investments include the M6 in Britain, the APRR in France, the Chicago Skyway, the Indiana Toll Road and the South Bay Expressway in San Diego.
"Good" MIG will be known as Intoll and includes Sydney's M7 motorway and the Canadian tollroad 407. It will have its own management team, which will be led temporarily by Murray Bleach.
Despite the vote in favour, MIG's chairman, Mark Johnson, faced a barrage of questions from retail shareholders with doubts about the benefits of the split.
A spokesman for the Australian Shareholders Association said the MIG model had served security-holders well because of its distributions.
"If the model ain't broken, does it need fixing?" he asked.
Another shareholder said he was not convinced a split was the right course to take. "I just wonder whether this is like reshuffling the deck chairs on the Titanic."
Mr Johnson said while he could not give a guarantee that the two listed entities would deliver more than the single MIG, the board had reached the conclusion that it was best to split.
I dont know when the good old days will return ... but if the market improves and Intolls own share price improves, it will have the ability to become part of new projects and to add to its portfolio.
Mr Johnston said it was difficult to see any distribution paid by Macquarie Atlas Road in the next four to five years because cash flows would be insufficient to make payments. However, he said he expected Intoll to make contributions to distributions from day one.
He also made clear that splitting the business in two could make one of them more attractive to potential bidders in the future.
Before the meeting, MIG announced that the value of Macquarie Atlas Roads assets had fallen by almost 12 per cent to $1.28 billion, while Intolls value had risen by 4 per cent to $3.8 billion.
Intoll will begin trading on February 2 and Macquarie Atlas Roads on February 9.
