22 Jan 2001
22 January 2001
Infratil announced today that it has become the majority shareholder in a consortium that has acquired Glasgow Prestwick International Airport ("Prestwick") from Stagecoach Group. The purchase price is £26.1 million plus repayment of inter-company loans of £7.3 million and acquisition costs. Signing of the unconditional sale and purchase contract and settlement occurred simultaneously on 21 January 2001 (NZ time).
The consortium has contributed £22 million of equity to the purchase. Infratil and The Special Utilities Investment Trust PLC ("SUIT"), through a joint venture vehicle that owns 90% of Prestwick, have provided £14.8 million and £5 million respectively of equity to the consortium. In addition, Omniport plc, a specialist local Scottish investor and service provider to regional airports, has invested £2.2 million for a 10% shareholding in Prestwick and holds options to subscribe for an additional 10% of the capital. These options have a term of 3 years and the exercise price escalates at 15% per annum.
The remainder of the purchase price is funded with non-recourse bank debt.
Glasgow Prestwick International Airport is a Scottish regional airport 35 minutes from Glasgow city centre. Prestwick handled just over 900,000 passengers in the year to 31 December 2000, an increase of 28% on the previous year. Prestwick provides comprehensive airport services, with virtually all key airport activities operated utilising Prestwick's 400 in-house staff, including passenger, baggage and cargo handling, retail and catering operations, security and local air navigational services.
Two million people live within a one-hour drive of Prestwick and approximately four million people live within a two-hour drive of the airport. The airport has its own railway station with trains operating every half-hour between Prestwick and Glasgow city centre with a journey time of approximately 40 minutes.
Prestwick's earnings before interest depreciation and tax (EBITDA) are expected to be approximately £3.0 million, before any abnormal costs, for its current financial year to 30 April 2001.
Kevin O'Connor, Infratil's Chairman, said "From its current base we expect Prestwick to show sound earnings growth, given both the underlying prospects for further expansion in passenger and freight volumes and the scope for operating efficiencies."
Further background information on Prestwick is attached to this release or visit: http://www.glasgow.pwk.com.
The £14.8 million (NZ$48.5 million) investment in Prestwick will represent approximately 10% of Infratil's investing portfolio. The purchase is consistent with Infratil's strategy of acquiring influential positions in quality operating businesses in its core areas of expertise.
Infratil's manager, Morrison & Co, has been involved in assessing a number of European airport investments over the last 3 years. By utilising this knowledge base, and working with local partners that add complementary skills, Prestwick provides an appropriate risk profile for Infratil's first offshore investment.
Kevin O'Connor, Infratil's Chairman said "The acquisition of Prestwick flows from Morrison & Co's in-house airport expertise and Infratil's experience with Wellington International Airport. It provides an exposure to the high growth UK regional airport sector which is benefiting from the increasing market share of low cost carriers in the European aviation market."
Kevin O'Connor also said "Infratil will continue to review its total international exposure and, in the medium term, international investments are unlikely to exceed 20% of Infratil's total portfolio. "
Prestwick is expected to provide Infratil with a positive earnings per share contribution from calendar 2002.
Prior to completion of the acquisition Infratil was granted waivers by the New Zealand Stock Exchange from Listing Rules 7.3 and 9.2.
The waivers were granted so as to allow: (a) SUIT (a substantial security holder in Infratil) to participate in the same consortium as Infratil; and (b) to allow the consortium to partially re-imburse costs, and provide for the issue of options in the Infratil and SUIT vehicle to HRL Morrison & Co for services outside the scope of the management agreement. HRL Morrison & Co is a company associated with the manager of Infratil. Morrison & Co will be entitled to subscribe for options equivalent to 10% of the equity of the Infratil and SUIT investment vehicle. These options have a term of 5 years and the exercise price escalates at 20% per annum.
© Copyright Infratil