Transurban Group has acquired BrisConnections-owned tollroad AirportLinkM7 for $1.87 billion. As revealed by this column on Monday night, Transurban, which already owns Brisbane's five other tollroads, was in the box-seat to win the auction.
As Street Talk also revealed, UBS and Morgan Stanley will handle the accompanying raise which is a renounceable rights issue of just over $1 billion. The price is $9.60 which is a 5 per cent discount to the last close of $10.32.
An announcement is expected shortly.
Transurban last raised equity at $6.75 a share in April last year, to fund the Queensland Motorways acquisition. That deal included a $2.3 billion renounceable rights issue and a $400 million selective placement.
Multiple calls to UBS-advised Transurban were not returned.
The under-bidder is a rival consortium headed by Australian infrastructure manager CP2. CP2's bid was backed by Canadian pension fund manager PSP Investments and Dutch asset management giant APG and put together with the help of RBC Capital Markets' advisory team.
Compared to the eye-popping toll road multiples being paid around the world - Australia's IFM Investors' 32-times earnings for an American tollroad in March for example - sources said that even at the upper end of the $1.8 billion to $2 billion range, the price reflected a solid outcome for Transurban Queensland.
Macquarie Capital and Fort Street are running the auction. Insolvency firm PPB Advisory is BrisCon's receiver and is acting on behalf of a group of BrisCon's lenders and hedge funds who bought the debt on the secondary market.
UBS analysts said in October that there may be a $1.7 billion equity hole at Transurban should the tollroad operator be successful in acquiring AirportLinkM7 and develop Victoria's Western Distributor.
Following Transurban's annual general meeting, the UBS research team said Transurban may need $600 million to $700 million for AirportLink and up to $1.7 billion for the Western Distributor.
"This assumes the company would be willing to take its senior interest coverage ratio down to 2.5 times from its last reported 3.5 times," the analysts told clients.
"If funded through the DRP this could equate to circa 30 per cent of gross distributions versus the recent c.17-20 per cent take up."
Macquarie Group, which owns more than one-third of BrisCon's $3.6 billion debt pile, agreed to support a sale in May. As revealed by Street Talk, Macquarie's support prompted receiver PPB to write to the bankrupt toll road owner's other creditors saying Macquarie was in favour of a sale and seeking their support to launch the transaction in June.
Other lenders include ANZ Banking Group, Belgium's KBC, United Overseas Bank and UniCredit Group.
Hedge funds, including global firm Och-Ziff Capital Management and Solus Alternative Asset Management, and several investment banks' proprietary trading desks, also have minority stakes in BrisCon's debt stack.
BrisConnections went into receivership in February 2013 and PPB was appointed receiver.
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