The impact of COVID-19 and lockdowns across Europe and the US has forced toll road operator Atlas Arteria to cancel its dividend and look to raise nearly half a billion dollars to help tide it over the current slump.
The company says the pandemic and lockdown saw large falls in traffic on its toll roads and it is now looking to bolster its finances against more of the same in coming months, despite an easing in the tightness of the lockdown.
The company, which operates four toll roads in France, Germany and the US, says its deferred dividend for the second half of 2019 has now been cancelled.
The savings will be used to repay a 350 million euro loan from MIBL Finance of Luxembourg.
And the equity raising will include an institutional placement of $420 million and a security purchase plan of up to $75 million. That will take the amount raised since last November to more than $1.8 billion.
The placement will offer shares at $6.20, which management said was a 7.5% discount on the last traded price of $6.70.
The share purchase plan will offer securities at a price that is the lower of the placement price, and the volume-weighted average price of Atlas Arteria securities during the five trading days up to, and including, the plan closing date less a 2.0% discount.
CEO Graeme Bevans said the business was well-positioned to weather the pandemic.
He said the easing of restrictions in Europe had helped improve traffic volumes in recent weeks.
Artemis said it had “received unanimous support overnight from its MIBL Lenders for leverage lock-up and default covenant waivers as at 30 June 2020 and 31 December 2020.”
“(H)owever the Boards have made the strategic decision to raise equity and repay the MIBL Facility
“The equity raising will position Atlas Arteria with a stronger, more flexible balance sheet to support growth opportunities as they arise, particularly in France, where Atlas Arteria expects the French government to look for ‘shovel ready’ projects to stimulate the French economy post the relaxation of COVID-19 restrictions
“The balance sheet restructure will allow Atlas Arteria to distribute APRR free cash flows to securityholders without the need to satisfy increasingly restrictive debt covenant tests,” Artemis said in yesterday’s statement
While the current deferred dividend has been cancelled, Artemis said its “objective is to reinstate distributions once the operating environment is more certain. Dividends from APRR will form the basis of any Atlas Arteria distributions for H1 2020”
“Looking forward, Atlas Arteria may consider establishing a more flexible corporate debt facility with terms that better meets the needs of its growing business<“ the company added.
Last November, Artemis (a former Macquarie infrastructure group) raised $1.35 billion to lift its stake in APRR to 31.1% (a rise of 6.1%), making it the second-largest shareholder.
Before November’s deal, APRR was already the biggest contributor to Atlas Arteria’s earnings, and before the COVID – 19 epidemic, generated 88% of its group revenues.
Listed French engineering and construction group Effiage, which lifted its APRR stake by 2%, owns 52% and remain the French toll road’s biggest investor.
Artemis’ other interest is in toll roads in the US around Washington DC.
Aerial mapping provider Nearmap has surged 21 per cent to a four-month high after it flagged it has experienced only minor COVID-19 impacts to date.
The company said ACR (annualised contract revenue) guidance has been narrowed from and range between $102 million and $110 million to $103 million. But it also confirmed that it expects to be cash flow break-even this financial year ending June 30.
“While trading conditions in the global economy have become more challenging since the outbreak of COVID-19, Nearmap has performed well and continued to grow its portfolio month-on-month across its key industry segments,” the company said.
Shares in the firm were 20.83 per cent higher at $2.32 by 10.55 am AEST – a four-month high.