Infratil to raise up to $250M in two bond offers

Monday 1st October 2018

Infratil wants to raise up to $250 million through two bond offers as the infrastructure investor tries to buy out minority shareholders in Tilt Renewables.

The company is selling $125 million of bonds in two tranches with the ability to accept a further $125 million. The six-year unsecured unsubordinated infrastructure bond pays annual interest of 4.75 percent. The 10-year note will pay 4.85 percent, resetting halfway through the term.

The offer is open to the public and Infratil will also let investors in a bond maturing next month exchange that debt for one of the new notes. The November 2018 bond has $111.4 million outstanding and paid annual interest of 6.85 percent. It last traded at a yield of 4.1 percent.

The funds raised will go towards general corporate purposes.

The six-year bond is priced 224 basis points above the equivalent swap rate, and the 10-year note is 197 basis points above the 10-year swap. When Infratil sold 5.5 year and eight-year bonds last year, the spread above the equivalent swaps was about 300 basis points.

Infratil is currently mounting a full takeover of Tilt Renewables with Mercury NZ, offering minority shareholders $2.30 a share. That will require Infratil to come up with $208.5 million, and Tilt will raise A$280 million to help fund the construction of its Dundonnell wind farm in Victoria. Tilt's independent directors have urged shareholders to reject the offer as too low.

In April, Infratil said it had headroom of more than $500 million in undrawn banking facilities and existing cash.

Separately, Infratil's target share price was affirmed at $3.10 by Morningstar Research analyst Adrian Atkins. The company last week raised its annual earnings guidance by $40 million to a range of $540 million to $580 million. That was largely from its Longroad Energy business in the US selling a solar project in Texas.

Infratil last traded at $3.565 and has gained 7.4 percent so far this year.

(BusinessDesk)

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