"cui...

"cui bono?"

http://www.news.com.au/heraldsun/story/0,21985,23725323-664,00.html

BrisConnections shares expected to soar

John Beveridge

May 20, 2008 12:00am

ANY motorists who will drive along Brisbane's new airport link should grab some BrisConnections shares.

At least that way they will be gaining on the swings what they lose on the lack of roundabouts and traffic lights.

One of the major selling points for the $1.2 billion BrisConnections float will be a stellar internal rate of return of around 17 per cent.

That compares with a more traditional IRR in recent years of around 12 per cent.

When you add on a 14 per cent yield for the first year, followed by an 8 per cent guaranteed yield for six years as the second and third instalment payments are made, it could make paying the tolls for 45 years easier to swallow.

It is also the reason why Leighton subsidiaries John Holland and Theiss plan to park themselves on the share register on the same terms as other shareholders.

And why a list of around 17 institutions, including consortium member Macquarie Capital, are already in the queue to pick up shares in the offer, which is due to list late this year.

The public offer to be revealed in the next couple of weeks is also underwritten by Macquarie Capital, Credit Suisse, Deutsche and JP Morgan.

The reason behind such a strong yield and rate of return is simply that the twin 6km road tunnels to the airport are guaranteed to grab a large slice of Brisbane traffic.

Quite simply, the link will be one of those irresistible and difficult to avoid pieces of infrastructure that link various parts of Brisbane together.

Which means traffic projections that will support the $4.8 billion project, with a total two-way toll on current dollars of $7.50.

That provides a highly predictable and CPI-adjusted revenue stream on which the project hangs.

It is also enough to keep the debt providers happy at current market yields - which are substantially higher than when previous Australian PPPs were written.

Thiess and John Holland will need to perform to compete the fixed-price contract by the middle of 2012.

However, the Leighton Holdings subsidiaries will reap the rewards in two ways - as constructors and on the other side of the equation as equity holders in BrisConnections.

Have Your Say
Latest Comments:

Great work from John "Nostradamus" Beveridge. I can see a Walkley Award coming up for this one in the field of corporate advocacy. More seriously we should be asking questions regarding the investment by the Queensland Investment Corporation in this lemon given the commonality of managers/directors between the two.
Posted by: Archimedes of Investorville 4:01pm today

BCSCA trading at 0.1cents today: down 99.9%...wipeout
Posted by: julie knotes of brisbane 1:17pm November 17, 2008

Nothing like the benefit of hindsight, BCSCA trading at .12cents today, down 88% from list price ! Bet this article would be written differantly today. The market is very wary of debt.
Posted by: Rob Winter- Cooke of 1:50pm September 02, 2008

Yes as truthman states the Toll business around the country is doing very well with Victorias Eastlink due to open soon and the continuing Tolls on the Tulla and Monash freeways copious amounts of our money going to someones pockets the only bright side for me and gloom for the Brissy people is i am a Leighton Shareholder
Posted by: SleepingDave of Irishtown 10:23am May 20, 2008