July 20, 2011 / 5:45 AM / 8 years ago

UPDATE 2-Australia's MAp agrees asset swap with Canadian fund

* Deal worth $1.7 billion

* Flags possible cash return to shareholders

* To hand over Brussels and Copenhagen airport stakes

* Will also get A$791 million in cash

(Adds details, updates share prices)

MELBOURNE, July 20 (Reuters) - Australia’s MAp Group has agreed to swap airport stakes with Ontario Teachers’ Pension Plan to beef up its holding in Sydney Airport in a deal worth A$1.6 billion ($1.7 billion), and flagged a possible cash return to shareholders.

The operator of Sydney airport will exchange its stakes in Brussels Airport and Copenhagen Airports for OTPP’s 11 percent stake in Sydney Airport and A$791 million in cash, as it looks to simplify ownership of Australia’s top airport.

The cash component was slightly lower than flagged when the proposal was announced in June, mainly due to the strengthening of the Aussie dollar against the euro.

After the deal, it will own 85 percent of Sydney airport and said it expected to make about A$1.5 billion available to MAp investors when the deal is completed, slated for the fourth quarter of 2011.

While MAp is trading its stakes in Brussels and Copenhagen airports for below their last valuation at A$1.94 billion, giving way to some concern, investors were still satisfied that the group was making progress on its plan to get out of other airports to focus on Sydney.

“It’s disappointing they’ve decided to do it at this particular point in time when we’re mid-way through the recovery in asset valuations,” said Will Seddon, analyst at White Funds Management, which owns MAp shares.

“But that said, it cleans the structure up a lot and gives them absolute control of Sydney, which is a very good asset.”

MAp shares rose 1.5 percent to A$3.44, underperforming the broader market , which rose 1.8 percent.

No decision has been made yet on exactly how MAp may return cash to shareholders, a MAp spokeswoman said.

“I guess they’ll probably keep some powder dry for what opportunities may come up with respect to Sydney, but apart from that, the best thing they could do is return it to shareholders,” Seddon said.

The biggest block to MAp taking full control of Sydney airport is German construction group Hochtief , which is trying to sell its airport concessions as a whole, including a 12 percent stake in Sydney airport.

OTPP will end up with a 39 percent stake in Brussels Airport and a 30 percent stake in Copenhagen Airport, adding to its airport holdings in Birmingham and Bristol in Britain.

“We believe that Brussels and Copenhagen Airports are excellent opportunities that strongly reflect our investment criteria and our long-term investment horizon,” Stephen Dowd, senior vice-president of OTPP’s Teachers’ Infrastructure Group, said in a statement.

The Danish government remains the single biggest shareholder in Copenhagen Airports with a 39.2 percent stake.

Shares in Copenhagen Airports traded up 2.3 percent at 1,647 Danish crowns ($313.6) by 0724 GMT. ($1 = 0.934 Australian Dollars) ($1=5.252 Danish Crown) (Reporting by Sonali Paul and Narayanan Somasundaram; Editing by Balazs Koranyi and Hans-Juergen Peters)

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