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     holycow
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Username: holycow
Post Number: 879
Registered: 08-2004Rating: N/A
Votes: 0
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| | Wednesday, March 02, 2005 - 10:25 am: |  
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I am not so sure about "trumping" the rival - but, this comes across to be a case of OVERBIDDING! In fact, way over bidding! Now this doesn't come across to reflect MIG has done enough footwork or has gathered enough good "market intelligence" in this deal.
Do you still think they are a good operator?
MIG trumps Chicago underbidder by $1.27bn
By Rod Myer
March 2, 2005
Macquarie Infrastructure Group and its bidding partner Cintra paid about $US1 billion ($A1.27 billion) more than the second bidder when it bought the Chicago Skyway toll road late last year for $US1.8 billion.
The City of Chicago, which sold the 45-year-old roadway, released the bid prices following requests from the Chicago Tribune. The newspaper reported that second bidder Chicago Skyway Group offered $US700 million and Spanish infrastructure group Albertis, $US505 million, for the 99-year lease on the road.
MIG chief executive Steve Allen said that while MIG's bid had been much larger than its competitors', the deal stacked up financially and the lower bids would not have been accepted.
He said bid prices were influenced by two main factors. "What you think other people might bid and equally importantly, in a situation like this where the city wasn't a forced seller, what price they might sell at," he said.
City of Chicago budget director John Harris said: "We weren't going to let anybody steal it from us. The other bids were not serious. Either they didn't put the time and effort into it or they didn't understand the value of the asset."
Mr Allen said the bid price stacked up against other MIG deals. "We've got a 6.5 per cent risk premium (in the price), which for a 40-year-old asset is quite high." The 6.5 per cent risk premium meant the overall rate of return on the deal would be about 10.5 per cent, he said. Risk premiums on roads under construction were about 8.5 per cent, roads in ramp-up stage 3-6 per cent and mature roads 2-3 per cent, he said.
HC
"... if you've got a chart, I have an opinion!"
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holycow
Member
Username: holycow
Post Number: 1783
Registered: 08-2004Rating: N/A
Votes: 0
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| | Saturday, October 08, 2005 - 09:56 am: |
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MIG Weekly
HC
"... if you've got a chart, I have an opinion!"
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holycow
Member
Username: holycow
Post Number: 1802
Registered: 08-2004Rating: N/A
Votes: 0
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| | Monday, October 10, 2005 - 09:35 pm: |
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Will Oil Prices Scupper Toll Roads?
October 10 2005 - Australasian Investment Review – (AIR)
While the operators of Sydney’s newly opened cross-city tunnel nervously debate price reductions and/or occasional toll-free days in order to get someone – anyone – to drive through the damned thing, seasoned toll road financiers Macquarie Infrastructure Group (MIG) has received its first real scare on the release of its global traffic figures for September.
From wobbly beginnings, Macquarie Infrastructure has gone from strength to strength to be a globally-recognised lead player. It has, however, recently had a couple of problems with recalcitrant highways, in particular the M6 in the UK and Highway 407 in Canada. These problems largely centred around toll increases.
Now it would seem the truth has hit home. While drivers were initially slow to accept the cost of the toll, they’re now quick not to accept the price of the fuel. Or so September figures would indicate.
This may be a bit of a temporary knee jerk reaction. Broker response to the recent figures was muted, with most electing to hold firm on targets and recommendations, while putting Macquarie’s toll roads on a watch list. Will disappointing traffic figures prove to be a longer term trend?
...
*** other than praying that car owner will not stop using their car for personal transport, MIG has the additional task of facing the wrath of its investors waking up to the fact that they have paid US$1 billion more than the closest bidding rival in the Chicago deal. This is US1,000,000,000.00 btw, and not Japanese Yen or Indonesian Rupiah we are talking about. There sure are some very generous people running MIG at the moment. Too bad it's the investor's money they are giving away and not their personal bonus. Otherwise I would be writing to GWB asking him to award a similar metal of honour (like the one he gave John Howard) for such generous Aussie contribution and mateship.
With friends like this, I think the US of A should not worry about declaring more wars. May be they should start one with Iran afterall that country has one of the largest oil reserve and the women folks there make funny noise with their tongue when they are happy or cheering. They make the same kind of noise when they are sad. Surely, they can't be civilised?
Oops! Sorry, got side-tracked...
Yes, MIG, a great stock! Bah! Humbug!
HC
"... if you've got a chart, I have an opinion!"
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holycow
Member
Username: holycow
Post Number: 1803
Registered: 08-2004Rating: N/A
Votes: 0
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| | Monday, October 10, 2005 - 09:47 pm: |
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MIG Daily
HC
"... if you've got a chart, I have an opinion!"
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holycow
Member
Username: holycow
Post Number: 1807
Registered: 08-2004Rating: N/A
Votes: 0
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| | Tuesday, October 11, 2005 - 09:57 am: |
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warning... this one may be due for a bounce today, so watch your short!
HC
"... if you've got a chart, I have an opinion!"
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holycow
Member
Username: holycow
Post Number: 1823
Registered: 08-2004Rating: N/A
Votes: 0
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| | Wednesday, October 12, 2005 - 09:39 am: |
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... the humbug continues... just waiting to see when the panic selling will start, but this will depend a great deal on interest rate and inflation and oil hike - all three threats are present at the moment, so just hang tight for the good show.
Indebted toll roads divide opinion
By Rod Myer
Infrastructure Reporter
October 12, 2005
INVESTORS in toll roads are becoming uncomfortable with the high levels of debt the sector is carrying and at least one analyst has placed a sell rating on Transurban.
One fund manager told The Age: "The market is pretty split on these sorts of companies.
"They are paying dividends from borrowings and I was never happy with that. But I can put up with it if there is escalation in traffic growth that erodes overall debt more quickly than has been expected."
However, rising fuel costs seem to be reducing traffic on at least some Australian toll roads. "MIG's (Macquarie Infrastructure Group's) latest figures showed some sluggishness. If fuel costs stay at this level for another six months there will be a change in usage patterns," the fund manager said.
Alison Booth, an infrastructure analyst with Goldman Sachs JBWere, agreed, saying: "Traffic growth is showing itself as elastic, especially on the weekends, as drivers are discouraged by fuel prices.
"They will be able to pay their distributions but the cracks are starting to appear."
Ms Booth has had a sell rating on Transurban for some time. "They are regearing assets and paying (the proceeds) out to shareholders. If you own a house and increase the mortgage, that doesn't increase the value of your house," she said.
Toll road companies typically pay dividends out of debt in the early years of operations in an attempt to smooth cash flows and give shareholders an early returns. Deutsche analyst Clinton Wood said the principle of smoothing was sensible as long as it was not overdone.
Already the markets have slugged toll road companies in recent times, with MIG down 13 per cent, ConnectEast down 10 per cent and Transurban down 8 per cent.
The falls accompanied the market shake-out of the past two weeks but point to a change of sentiment, with investors seeing risk in stocks that many had come to assume were rock solid.
Academic John Goldberg, from the architecture school at Sydney University, has produced a detailed work in which he claims the financial model used by the toll roads and rolled out by Macquarie Bank does not work, as it assumes no interest will be paid on debt.
When debt is factored in the toll roads will never make a profit or pay off their debt and are only being kept alive by the support of tax concessions in the form of infrastructure bonds.
Transurban and MIG deny this. Transurban says it has factored in interest costs to its business model, that it's debt is not rising out of control and that Mr Goldberg has miscalculated the benefit it gets from infrastructure bonds. Last year the net benefit from the bonds was $51.7 million, not the $152 million claimed by Mr Goldberg.
Mr Wood said ratings agency Standard & Poor's had recently said toll roads had "the lowest of probabilities of default." To question the financial model is "to say S&P and the banks are idiots," he said.
Tyndall fund manager Brad Potter said toll road assets were very good but their corporate structures were "very poor." Under the MIG model, promoters were paid big performance fees; and even Transurban's structure was too complex and expensive.
"You can't look at operating cash flows; its a meaningless figure. If toll roads were financed totally by bonds, tolls would be lower. They don't need equity capital at all," Mr Potter said.
HC
"... if you've got a chart, I have an opinion!"
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holycow
Member
Username: holycow
Post Number: 1855
Registered: 08-2004Rating: N/A
Votes: 0
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| | Friday, October 14, 2005 - 11:46 am: |
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... SP bounced off 3.47, let's see if 3.45 will be tested by EOD, this one is getting a lot of heat from some big players - recent selling were with fairly large volume. If the pressure continues, it will soon be some kind of "Sleepless in Chicago" instead of missing in chicago...
HC
"... if you've got a chart, I have an opinion!"
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holycow
Member
Username: holycow
Post Number: 1860
Registered: 08-2004Rating: N/A
Votes: 0
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| | Friday, October 14, 2005 - 05:36 pm: |
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... thought I would highlight some "bone" of contention...
Academic John Goldberg, from the architecture school at Sydney University, has produced a detailed work in which he claims the financial model used by the toll roads and rolled out by Macquarie Bank does not work, as it assumes no interest will be paid on debt.
When debt is factored in the toll roads will never make a profit or pay off their debt and are only being kept alive by the support of tax concessions in the form of infrastructure bonds.
*** let's assume they did factor in the interest cost, it would be interesting to find out what kind of interest rate they are using, and over what period. In MIG's case, I am not so sure if there's any tax concessions handing out by the city, but I doubt if it will ever amount to a billion. All in all, if you are to consider the scenario where interest rate will be hiked to contain inflation, where does that place them? Will they ever pay off the debt with interest cost edging higher? At a minimum, I hope some "analyst" should/would at least ask some sensible question and get them to open up their books for closer scrutiny.
As for me - I will only trade this sucker..., oops, I mean this "solid as a piece of ROCK that sinks to the bottom of the ravine" stock. I will let the long term investors, the mutual funds, the investment funds, blah blah blah people to worry over the long term yield thingy (6.5% to 10%, it seems quite good but let's not mention inflation  )
... so far, it's only the first year and there're another 39 years and counting, so I reckon there will be a fair bit of anxiety for as long as they don't make their biz model clear with cashflow, earning projections, etc well laid out for the life of the project. People with fertile imagination (like moi) will always come out with some horror scenario to scare everyone witless...
Just for fun.
HC
"... if you've got a chart, I have an opinion!"
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holycow
Member
Username: holycow
Post Number: 1862
Registered: 08-2004Rating: N/A
Votes: 0
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| | Sunday, October 16, 2005 - 10:36 am: |
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Heavy toll of private roads
By Chris Moriarty
16-10-2005
From: The Sunday Telegraph
...
Toll operators pay upfront for the cost of building a road - not just tar and white paint, but the land, government fees and so on.
... Instead, it raises a lot of money from the stock market using a complicated tool called a stapled security..
Once the road is built, vehicles begin paying tolls and revenue starts trickling in. There's only one major operational expense: collecting the tolls.
Imagine collecting $100 in tolls, but spending only $10 to collect them. You're left with $90 cash.
You also have to service the loan (or, in this case, keep investors happy). That means paying out a good, solid dividend. (...there is no mention of loan servicing, interest repayment, etc...?)
But there's a complication: depreciation. Depreciation is good and bad. With a billion-dollar asset, depreciated over 30 years, you get $33 million a year in write-downs.
Depreciation is a non-cash expense. The money comes in, but in your tax return you balance it against depreciation and may end up making a loss.
But companies can't pay dividends unless they're profitable...
If investors can't get the cash, they stop investing - and the business falls over...
(this new report has been heavily edited, you're advised to read the whole thing)
http://finance.news.com.au/story/print/0,10119,16931977,00.html
HC
"... if you've got a chart, I have an opinion!"
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holycow
Member
Username: holycow
Post Number: 1904
Registered: 08-2004Rating: N/A
Votes: 0
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| | Wednesday, October 19, 2005 - 02:47 pm: |
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... as more people realise the risk in this humbug stock, the more they want to disown it - right now it is trading at 3.43, 3.25 is not far down. Let's wait and see.
HC
"... if you've got a chart, I have an opinion!"
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holycow
Member
Username: holycow
Post Number: 1952
Registered: 08-2004Rating: N/A
Votes: 0
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| | Friday, October 21, 2005 - 10:45 pm: |
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MIG Daily
HC
"... if you've got a chart, I have an opinion!"
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holycow
Member
Username: holycow
Post Number: 1957
Registered: 08-2004Rating: N/A
Votes: 0
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| | Saturday, October 22, 2005 - 11:41 am: |
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MIG chief unmoved as toll roads draw more flak
...Even the Chicago Skyway — in which MIG is said to have paid $US1 billion ($A1.3 billion) more than the next bidder — is working out financially after only a year. "We just raised $US1.55 billion in debt and that debt will mature in 20 years," Mr Allen says.
The Skyway concession lasts 99 years, so Macquarie will have a further 79 years to structure repayments, more than ample time to see the debt paid off, he says.
Even rising interest rates will not damage MIG, despite it being heavily leveraged, he says. Real interest rates fluctuate only by about 1 percentage point, making it easy for MIG to cope with their effects, he says.
*** 1) 1.55 bil matured in 20 years, project life 40 years; concession 99 years, they have 79 years to structure repayment, with more than ample time to pay off the debt! I don't know what that means...
But I find it damn impressive. I mean those numbers... after 30 years I was told we will run out of oil and the world economy will be in chaos, no one will know how much a barrel of oil will cost, neither will we likely to know the inflation and interest rate at that time, not many people in this forum cum MIG holders will survive to that time and demand their share of distribution...
...but, that's not all, after 30 years they have another 49 years more to payback. A total of SEVENTY NINE years! Not seven point nine! That's a whole life time away! Phew! Love the "beauty of the scheme", coining one analyst.
... anyway, I don't think we should all worry that much because REAL interest rate fluctuates only by about 1% accordingly. So we should all be "relaxed" and take this easy. Life is sweet!... and let's assume from now to another 20 years (or 79 years?), it will remain fluctuating at 1%. In fact, we should all assume everything to stay constant, if not getting better because the economy is booming and China is there, like a rock!
I have a simple litmus test - we will watch if they will do a "revaluation" or borrow, to source some additional fund for some good distribution and fat bonuses next year. I am sure everyone will be happy. Some will be more happy than the others.
Meantime I will go out the garden and smell the roses. Sweet!
HC
"... if you've got a chart, I have an opinion!"
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