ConnectEast seeking $350m in capital after weak trafficFont...

ConnectEast seeking $350m in capital after weak trafficFont Size: Decrease Increase Print Page: Print John Durie | November 19, 2008
Article from: The Australian
MELBOURNE toll-road operator ConnectEast Group is looking to raise over $350 million to ease its capital position after traffic on the new road has fallen short of expectations.

The company went into a trading halt at lunchtime with an official statement due tomorrow confirming news of the capital raising.

Its size will shock some in the market as $350 million-plus would effectively increase its shares on issue by one third from the 1.7 billion on issue now and its $1.1 billion market capitalisation.

Like all toll roads early traffic numbers are down, but ConnectEast's 25 per cent short fall with a tight capital position is not exactly music to the market’s ears right now.

Merrill Lynch analyst Matt Spence has expressed surprise the company has not changed its distribution policy to cut its payment to reflect its operating performance.

The company is estimated to have around $81 million in cash on hand and could trade till 2010 with the present level of distributions.

Its stock price fell 4.3 per cent at 67 cents this morning before the trading halt.