Abstract
Australian rail and port operator Asciano in mid-June called off its proposed
asset sale, and is instead
planning to raise around AUD$2bn in new equity
through a share sale. The move will enable the
company to retain all
assets and existing management. The announcement followed an offer from
investment bank UBS to underwrite the share sale, which includes a proposal
for AUD770mn rights
issues to existing shareholders at a 40% discount and
an AUD230mn underwritten placement. In addition,
there are plans for a
further AUD1bn placement, which will be conditional on shareholder
approval,
according to The Australian. Earlier, on June 9, BMI reported
that Asciano had received four final
proposals for the acquisition of
either the entire company or a number of its assets. These had come from
private equity company Carlyle Group, private investment firm TPG Group and
Global Infrastructure
Partners – which was set up by Credit Suisse
and General Electric. Further details of the bids, and the
identity of the
final bidder, were not available at the time. Asciano has now decided not to
move forward
with the asset sale, and instead will raise much-needed funds
through a share sale. The company has been
having financial difficulties
due to high levels of debt since it was created in 2006 from the
restructuring
of Toll, which separated the ports and rail business under
Asciano and its logistics division under Toll
Holdings. The latest move is
good for Asciano, as it enables the company to retain all assets at a time
when the market value for some of its transport infrastructure would have been
depressed for a number of
reasons.
Despite a number of positive
fundamentals, BMI sees the global economic slowdown having an ongoing
impact on the Australian freight sector. Demand for some of the
country’s key mineral and agricultural
exports has eased back, and
the pressure on parts of its road, rail, and port systems has reduced during
the
course of 2009. According to our latest forecasts, Australian GDP will
fall by 1.5% this year, and growth
will average 1.4% in the period of
2009-2013. We expect freight carried to grow by an annual average of
2.1%
during the five-year forecast period. The total value of transport and
communications GDP will rise
to US$74.9bn in nominal terms by 2013,
representing 5.7% of Australia’s GDP.
In advanced economies, freight
transport tends to grow at roughly the same pace or slower than the
economy as a whole. In Australia, however, we believe there is continuing
upside potential in the freight
sector. This reflects the size of the
country’s infrastructure development opportunities and the strong
potential, once the current recession has been negotiated, for the continuing
growth of mineral exports.
Airfreight, affected by the current downturn in
the global market, will see 2.1% average annual growth in
freight carried.
We now expect rail freight to grow by 1.9% per annum, with strong mining
exports and
infrastructure development coming into play after the current
adverse international conditions improve.
Road haulage freight carried
will achieve average annual growth of 1.8%, a figure that takes account of
a
fairly slow 2009/10. Growth in sea freight, influenced by a big downturn
in 2009, will average 2.6% over
the next five years.
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