Toll road giant Transurban is on the hunt for new assets and will raise up to $700 million from investors to take full ownership of a section of the M5 toll road in Sydney.
Transurban said buying the 34.62% of the M5 West it does not already own for $468 million would enable “operational synergies” and for the road to be included in the Transurban tax consolidated group.
The M5 West will form part of the WestConnex M5 concession after 2026, and Transurban owns a quarter of WestConnex (and analysts reckon the company will try to lift that stake in coming years).
Transurban raising would be made through a fully underwritten pro-rata institutional offer at $14.70 a share, which is a 3.5% discount to its closing price on Tuesday.
The company will also ask other shareholders for $200 million through a share purchase. Shareholders will be able to buy up to $15,000 of securities each.
The securities fell 2.5% to $15.23, the now normal reaction from investors when a company announces a major deal or share issue.
The raising was unveiled on Wednesday morning as the company announced its full-year profit after tax had fallen 63.7% to $170 million from $468 million in 2017-18.
It also forecast distributions of 62 cents for each security for 2019-20 which is higher than the 59 cents a security delivered for 2018-19.
A final distribution of 30 cents will be paid on 9 August with 2 cents fully franked.
Revenue for the 12 months to June 30 rose 26.3% to $4.166 billion, but amortisation and depreciation costs jumped by $324 million largely due to new assets including a stake in WestConnex and completion of projects.
Profit fell because of the impact of those higher charges plus stamp duty and other costs relating to its acquisition of WestConnex and consolidation of the M5 West, and the cycling of tax boosts in the US in the prior year.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 4.4% to $1.6 billion. Excluding significant items relating to acquisitions, EBITDA increased 12% to $2 billion.
