MAp to Save Millions after Separating from Parent

Submitted by Jim Thesiger on 8 September, 2009 - 07:44

Macquarie Airports (MAP) is expected to reduce its annual cost from an average $78 million a year to only $11.5 million after the company went for internationalisation. Macquarie Airports was forced to pay the previous amount to the parent Macquarie Group for the last seven years. According to an analyst report published on Monday, Macquarie Airports’ $345 million worth of cash payment to purchase the management rights from Macquarie was quite reasonable and is within the $321 million to $400 million valuation range. The independent directors of the company have recommended the bid which is going to be funded through equity capital entitlement offer. Shareholders will go for voting on the deal on the 30th of September.

The explanatory memorandum which was sent to the investors yesterday revealed that Macquarie Airports will be able to boost up its earning by $32 million on a yearly basis after internationalising the management rights and getting independent from Macquarie control. In addition, this will also help MAp to save as much as $42 million worth of base fees that it was paying for all these years to Macquarie on top of the performance fees. According to the MAp authority, the company has paid $546.6 million as performance and base fees to Macquarie in last seven years. Trevor Gerber, the chairman of the independent board committee of MAp stated that it was disingenuous to raise questions regarding the management rights payment, whether the company was actually forced to pay a higher fee as the internationalisation deal was in progress. The reputation of MAp in the corporate world now will enable the company to go for further development and to create value for the securities of the fund as a stand alone entity in the open market, he added.

Macquarie Airport currently has debt worth of $4 billion with the lending syndicate of 40 banks. The syndicate can recall the debt or can go for renegotiation with fresh interest margins as much as 3 percent higher which can annually add up to $120 million to the repayment rates of the fund.