Ailing Airport Link group slashes dividend Tony Grant-Taylor October 30, 2008 11:00pm
INVESTORS in Airport Link toll road group BrisConnections were yesterday hit with another bombshell to the group's disastrous stock exchange float.
It was enough to make the float look like highway robbery.
The group, which maintains its massive $4 billion-plus project remains on track and fully funded, slashed its foreshadowed first dividend from 5.95c a unit to 0.05c.
BrisConnections' $1 partly paid units yesterday closed at 0.1c, which would make any observer wonder about its financial health.
And the dividend cut, from a group which marketed its float as having a high ongoing yield underpinned by cash reserves, again raised eyebrows.
BrisConnections blamed the global market turmoil for the downgrade and deferral of the dividend, maintaining project funding was secure.
Investors will have to pay the next $1 instalment on units before the revised dividend is paid, with the final $1 instalment due in January 2010.
BrisConnections' float documents always reserved the right of directors to cut or suspend intended payouts.
But no investors, including a sophisticated funds with plenty of experience in infrastructure, could have foreseen its market fate.
A rash of institutions have abandoned BrisConnections since its stock exchange debut on July 31.
Chairman Trevor Rowe, who also chairs Queensland Investment Corp - which holds 38.9 million units in the toll road group - told The Courier-Mail the slashed payment and the group's market performance were "extremely disappointing".
In early September, Mr Rowe and his board reaffirmed the group's intention to pay the 5.95c dividend.
Mr Rowe yesterday said BrisConnections still had the reserves and was ploughing ahead with its big project.
But the global financial meltdown, with the "resultant extreme volatility of world capital and financial markets" - and the feeling that there were arbitrageurs buying its stock just to get the promised March dividend - had led BrisConnections to reassess its payout policy.
Mr Rowe said the decision "does not impinge on (our) financial structure or effect our debt position" with both fully underwritten.
"But our banks probably agreed (with cutting the dividend). It is sensible to be cautious in these uncertain times," he said.
BrisConnections said yesterday that with its units so low, investors appeared to be buying in "motivated by the disparity between the current unit price and the anticipated first distribution".
"This (the change in distribution policy) will deal with that problem," Mr Rowe said.
BCS Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
