abn amro analyst view

Hot off the press:

BBI:
Market Cap: A$197m
Recommendation: Hold
Share price: A$0.077
Price target: A$0.05
Fair value: A$1.00 (SOTP methodology)



Babcock & Brown Infrastructure (ASX: BBI) announces today that it has agreed revised terms to the Share Subscription Agreement dated 22 December 2008 (“SSA”) pursuant to which a consortium of investors consisting of Antin Infrastructure Partners (acting in its capacity as manager of Antin Infrastructure Partners FCPR) (“Antin IP”) and Arcus European Infrastructure Fund I (“Arcus”)1 have agreed to invest in Euroports.

Key points:

1. Now selling a stake of 34% with free convertible option to 40% for €141.5m vs previous guidance of €121.5m

2. EBITDA multiple looks to be around 11.8x which is reasonable. However, there are conditions that have not been disclosed which could result in Antin and Arcus' share moving from 40% to a range between 34% and 65%. This could indicate why the multiple was quite high.

3. FY09 EBITDA will be down 8% on last year levels. Not too bad overall given severity of the downturn.

4. No cash proceeds will be applied to reducing any BBI debt. All cash proceeds from the sale (again not disclosed) will be kept within Euroports to meet any short to medium term needs.

5. Overall this is a positive announcement in that Euroports can now essentially be left alone. However once again a complicated deal with a lack of transparency will mean it is hard to analyse what the end outcome is.

6. BBI still needs to sell assets in order to may down corporate debt. This announcement doesn't change or help this."