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CIF sells Arqiva for $A266.5 million


Challenger Infrastructure Fund (CIF) has sold its 6.5 per cent stake in Arqiva, the UK-based broadcast transmission and wireless company, to Macquarie Group Ltd's European infrastructure funds for STG129.8 million ($A266.5 million).

The sale was part of a strategy to sell off minority assets to fully repay fund level debt and partially realise net asset value, providing securityholders with a sustainable long-term distribution profile, CIF said.

Challenger Listed Investments Ltd (CLIL), the responsible entity for CIF, said money from the sale would be used to complete the repayment of the fund's debt facility and to further strengthen its balance sheet.

It said CIF still expected to make a distribution of 34 cents per security in the 2008 financial year, and the group expected to make a distribution of 35.7 cents per security in fiscal 2009.

"Importantly, the FY2009 distribution will no longer be partially debt funded and is expected to be more than 90 per cent funded from operating cashflow, with the balance funded from retained cash balances held by the fund and its assets," CLIL said.

CLIL also said it would not continue talks with Arkmile, a subsidiary of Consensus Business Group which made a takeover approach for CIF in March, as it did not anticipate receiving an acceptable proposal in the near term.

CLIL chairperson Brenda Shanahan said a formal proposal had not been received.

"Whilst there has been extensive discussions and correspondence with Arkmile and its advisers, CLIL has not yet received a formal proposal in a form capable of being put to shareholders," Ms Shanahan said.

"The CLIL board does not anticipate receiving an acceptable proposal in the near term and has decided not to continue discussions with Arkmile in relation to its approach."

She said Consensus Business Group had signalled it would continue to assess its options and it remained a supporter of CIF, in which it has an 18.57 per cent stake.

CLIL said the Arqiva sale price would deliver a profit of STG10.9 million ($A22.33 million).

CIF chief executive Steve Bickerton said the collective sale price of Arqiva, and other earlier divestments, Northern Gas Networks and Wales and West Utilities - above their net asset valuation - was a great result in the current market environment.

"With the sale of Arqiva, CIF is in a position where the ongoing focus will be on three key areas of importance, optimising CIF's performance, maximising the organic growth in our portfolio of high quality infrastructure assets and the continued emphasis on capital management flexibility," Mr Bickerton said.

CIF now holds an 80.4 per cent stake in Inexus, 66.2 per cent stake in LBC and 23.4 per cent of Southern Water.

Mr Bickerton said CIF's financial position now was much improved from February when the trust reported its first half results.

CIF's gearing level would be reduced to nil in September 2008 after the financial close of the Arqiva sale, compared with the gearing level it had in December 2007 of 23.4 per cent, the trust said.

© 2008 AAP