Plain plane pain

21 August 2008 By Lauren Silva

Babcock & Brown has run into trouble. And one of Macquarie s funds is selling assets to pay down debt. That looks like a reasonable precautionary measure. But it shows that even good infrastructure investments can suffer if they have too much debt.

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Macquarie Airports stated plans to sell a 50% of its interest in Copenhagen Airport and 42% of its interest in Brussels Airport, which will result in Map retaining a 26.9% interest in Copenhagen and a 36% interest in Brussels.

We considered a range of portfolio combinations and third party sale options but, for a number of reasons, decided that this option would deliver the best result for security holders, a Map spokesperson said. It will generate full value for partial interests and, significantly, ensure that we continue to meet all our obligations under the sale agreements with Governments and lenders at the airports. A sale to a third party would have required renegotiation of those agreements and led to a more difficult and protracted sale process. Importantly we maintain influence over and exposure to both Brussels and Copenhagen Airports, and preserve the value of our remaining stakes in both airports.

Map will retain joint control of both airports and there will be no reduction in its day to day involvement in all aspects of the business. The sale is subject to Map shareholder approval. Map plans on receiving $1.5bn of cash from the sale. Approximately $950m will be used to buy back debt. Map will also buy back $1bn in shares.

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