why, page-25

http://www.news.com.au/couriermail/story/0,23739,24322805-3122,00.html

BRISBANE'S toll roads remain the dogs of the stockmarket, with RiverCity Motorway's suspension of dividends making Brisconnections unitholders nervous.

Their worry, despite the fact BrisConnections has cash in reserve to cover its early promised payouts, was that BrisConnections might in future be forced to follow suit – making another charade of the "high yields" that have been used to sell such highly geared infrastructure investments.

RiverCity had intended to make distributions equivalent to 6¢ a unit each year until 2011.

But taking advantage of the fine print in its prospectus, which said such distributions were not guaranteed – despite the fact that they were a major selling point of the group's float – RiverCity dumped that plan.

Chairman Bob Morris said it did so to preserve long-term unitholder value.

"My fellow directors and I recognise that the intended distributions during the FDP (the so-called fixed distribution period) were a primary attraction for investors during the construction and early operation of the toll road," Mr Morris said.

"We considered all possible options, but these alternatives failed to look after long-term unitholder value with adverse impacts from dilution of unit holdings and the cost of raising cash though the distribution reinvestment plan underwriting."

BrisConnections this week suggested it would not follow suit, saying it intended to pay a first dividend of 5.95¢ in March next year. Queried by the Australian Securities Exchange about its parlous share price, it said RiverCity's move "in no way affects BrisConnections".

It reiterated it had "15.27¢, rising to 24¢", in cash reserves set aside for dividends.

But like RiverCity it is banking on a distribution reinvestment plan to fund later promised FDP payouts. RiverCity's units, originally issued at $1 each – paid in two instalments– yesterday rose 0.5¢ to 18¢.

BrisConnections' $1 partly paid units – on which there are two $1 instalments due over the next 18 months – sank another 0.1¢ to 8.8¢. BrisConnections has promised unitholders about 15.27¢ for the period to June 2009 and an 8 per cent yield thereafter.

RiverCity dumped its redistribution because about 66 per cent of its unitholders (rather than an expected 30 per cent) were taking distributions as cash, rather than new units.