Daily ShareChat: Infratil

By Jenny Ruth

Tuesday 30th June 2009

Infratil will probably reduce its debt within a shorter time frame than previously expected following two offers for 32%-owned Energy Developments and an agreement to underwrite $110 million of its warrants, says Matt Henry at Goldman Sachs JB Were.

Australia-based Energy Developments accounts for about 10% of Infratil's assets and has recently attracted a "highly conditional and incomplete proposal" for a 100% takeover bid, although no price has been disclosed, and an about $A280 million ($NZ350.2 million) offer for its British and French landfill gas assets.

While the 28% lift in Energy Developments' share price represents only about four cents a share, the offers are likely to lead to Infratil receiving cash and they have improved sentiment and make it more likely its warrants will be exercised, Henry says.

On June 22, Infratil had 81.6 million warrants exerciseable at $1.62 by July 10 compared with Monday's $1.75 share price. First NZ Capital is underwriting the exercise of 68 million of the warrants. By June 26, further warrants had been exercised, reducing their number to 80.5 million.

These two transactions and the exercise of Infratil's option to sell back Luebeck Airport will reduce the company's net debt to enterprise value from 54% to between 42% and 44% by June 2010, Henry says.

BROKER CALL: Goldman Sachs JB Were rate Infratil (NZX: IFT ) as buy (upgraded from hold).

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