Rivercity Motorway gets 'zero' price target from Macquarie Equities
From: The Australian, November 30, 2010
MACQUARIE Equities has driven a stake through the heart of embattled Rivercity Motorway by giving it a price target of zero.
Brisbane group Rivercity raised $724 million in August 2006 at $1 a unit to build what is now the Clem 7 Tunnel, a north-south bypass ? and now it's almost all gone.
They?re still trading at 0.9 cents a unit but, as Macquarie puts it under the ominous heading "ceasing coverage", the most likely outcome is that RCY will either enter receivership, or a debt restructure.
The culprit? Low traffic numbers that are showing no sign of lifting enough to make a material difference to the tunnel's loss-making status.
Analysts say that the much touted opening of the nearby Airportlink tunnel will be "too little, too late" unless RCY's banks provide a standstill agreement.
"Irrespective of the agreement, shareholder investment is at best described as an option," they say.
"RCY has no equity value," they add. "Given that debt is trading at a deep discount to face value, it is improbable that any value will be realised."
We hear from other sources that RCY has Goldman Sachs and Korda Mentha?s 333 division doing their best to trying to negotiate a two-year standstill with lenders.
RCY Price at posting:
0.9¢ Sentiment: Sell Disclosure: Not Held
