Macquarie To Acquire Remaining Stake In International-Matex For $1.025 Bln

(RTTNews) - Macquarie Infrastructure Co LLC (MIC) Monday agreed to acquire the 50 percent stake in International-Matex Tank Terminals it does not currently own. Macquarie will purchase the remainder interest from members of the business' founding family for $910 million in cash and $115 million in stock.

Macquaire acquired its initial 50 percent stake in International-Matex in May of 2006.

Macquarie believes that the proposed acquisition of the remaining interest in International-Matex provides shareholders with a number of benefits, including an opportunity to improve operations at International-Matex; a simplification of the Macquarie structure and financial reporting; elimination of a double layer of taxation; ability to offset future taxable income; improved efficiency in allocation of capital to growth opportunities; and enhanced dividend growth.

"Our acquisition of the remainder of International-Matex represents a unique, strategic opportunity for investors, customers and employees of International-Matex," said James Hooke, chief executive officer of Macquarie.

Macquarie expects the acquisition to be accretive to its Free Cash Flow per share in 2014. The company now expects its underlying 2014 Free Cash Flow - excluding transaction-related expenses - to be about $4.55 per share, or 11.2% higher than in 2013.

In connection with the announcement, Macquarie has also introduced guidance for underlying Free Cash Flow in 2015 of $5.10 per share.

Macquarie intends to distribute the majority of the Free Cash Flow generated by its businesses, including International-Matex, to investors in the form of a quarterly cash dividend.

With the signing of the acquisition agreement, the Macquarie board has authorized an increase in the company's quarterly cash dividend. The dividend payable for the second quarter of 2014 will be $0.95 per share, or $3.80 annualized, up 1.3% from the dividend paid for the first quarter of 2014.

The anticipated accretion takes into consideration the proposed funding of the acquisition of International-Matex using $115 million of new shares to be issued to the sellers, new shares and convertible senior notes expected to be issued to the public, and cash on hand.

The company said that it is also putting in place a $250.0 million revolving credit facility at the Macquarie holding company level that will provide it with additional liquidity and financial flexibility. The availability of the new facility is conditioned on the completion of the acquisition.

Assuming the revolving credit facility is undrawn at closing, Macquarie has indicated that pro forma for the transaction its leverage ratio is expected to be under 4.00 times net debt to EBITDA (excluding its CP&E segment).

The growth in EBITDA has been a function of both pricing power and deployment of capital in growth projects at the business. Macquarie has participated in the development of approximately $800 million worth of growth projects to date and sees opportunity to promote additional growth in the future.

The deal will result in the retirement of Thomas Coleman, current chief executive officer of International-Matex, James Coleman, chairman, and James Coleman, head of government relations, each of whom are members of the founding family.

Macquarie Chief Executive CEO James Hooke will initially take on the additional role as the head of International-Matex. Macquarie's International-Matex asset director, James May, will become the chief financial officer.

The transaction is expected to close as soon as practical following the conclusion of the capital raising and is subject to satisfaction of conditions including receipt of certain regulatory approvals.

Macquarie stock closed Monday at $61.17, down $0.50 or 0.81%, on a volume of 155k shares on the NYSE. In after hours, the stock gained 0.54%.