You are here

Keppel Infrastructure Trust inks deal for Australian group Ixom

Transaction could raise value of trust's portfolio to S$5.1b, from S$3.8 billion as at Sept 30

BT_20181116_ABXIOM16_3619305.jpg
Ixom's sulphuric acid plant at Port Kembla in New South Wales, which serves customers in the oil refining, water treatment and power generation industries.

Singapore

KEPPEL Infrastructure Trust will pay A$777 million (S$775 million) for Australian chemicals group Ixom, in a deal inked and announced on Thursday.

The agreement, which puts Ixom's enterprise value at A$1.1 billion, comes after more than a month of speculation about a billion-dollar buyout from Blackstone-managed funds. Blackstone Group bought Ixom for A$750 million in 2014.

Funding would come from a bridge facility of up to S$750 million, as well as a five-year senior term loan of A$532 million, said Keppel Infrastructure Trust's manager. But it plans to later pay off some of the debt with proceeds from equity fundraising.

sentifi.com

Market voices on:

Sponsor Keppel Infrastructure Holdings, which is wholly owned by Keppel Corp, has undertaken to take part in the equity fund-raising to maintain its 18.2 per cent stake.

Ixom supplies chemicals used in water treatment and industries such as agriculture, mining and construction. Its audited net profit was A$51 million for the year to Sept 30, 2017, while earnings before interest, taxes, depreciation and amortisation (Ebitda) was A$128 million.

The manager said the transaction could raise the trust's portfolio's value - mainly utilities assets in Singapore and Australia - to S$5.1 billion, from S$3.8 billion as at Sept 30 this year.

It also said that the trust's distribution per unit (DPU) for the nine months to Sept 30 would have stayed at 3.72 Singapore cents, if gross proceeds of S$600 million were raised in a preferential offering and placement at an issue price of S$0.43 a unit.

But the DPU would have dipped to 3.45 Singapore cents if the fundraising were to be done with a rights issue at an illustrative theoretical ex-rights price of S$0.40 a unit and an illustrative issue price of S$0.30 a unit.

Gearing would be raised from 40.2 per cent to 41 per cent in either pro forma case, said the manager.

DBS analyst Suvro Sarkar had previously told The Business Times that the trust's debt ratios do not leave headroom of more than S$300 million, so a price tag of more than A$1 billion for Ixom "could involve significant equity fundraising" for the trust.

Matthew Pollard, chief executive of the manager, said in a media statement that the proposed acquisition is DPU yield-accretive and a strategic move that would give the trust a foothold in the stable water industrial and specialty chemicals distribution.

"Ixom's infrastructure-like business and strong position provides the trust with stable and resilient cash flows that are driven by long-term customer relationships and a large, diversified customer base comprising many blue-chip companies and municipalities," he added.

The proposed purchase is slated for completion by the first quarter of next year, but needs the approval of the Australian Foreign Investment Review Board and the New Zealand Overseas Investment Office. Unit holders must also approve both the acquisition and the equity fundraising.

Keppel Infrastructure Trust's purchase vehicle can scrap the share sale agreement if any material adverse changes cannot be fixed to its reasonable satisfaction by March 31, 2019.

The counter last traded flat at S$0.46, before a trading halt.