John Laing Infrastructure Fund Agreement of Acquisition (4116S)
December 21 2016 - 2:00AM
UK Regulatory
TIDMJLIF
RNS Number : 4116S
John Laing Infrastructure Fund
21 December 2016
21 December 2016
John Laing Infrastructure Fund Limited
Agreement of Acquisition
JLIF, the FTSE 250 listed infrastructure investment company, is
pleased to announce that it has signed a Sale and Purchase
Agreement with respect to an indirect 6% minority shareholding in
the Intercity Express Programme Phase 1 ("IEP") project, from John
Laing Investments Limited (a wholly-owned subsidiary of John Laing
Group plc ("John Laing")). The total consideration for the
acquisition will be approximately GBP42.4 million, which will be
financed by drawing on JLIF's revolving credit facility. Completion
of the transaction is subject to completion of certain formalities
and expected to be in early 2017.
The IEP project, which is still in the construction phase,
involves the provision of 57 new high speed intercity trains to be
deployed on the Great Western Mainline ("GWML"). The contract with
the Department for Transport ("DfT") benefits from a 27.5-year
concession from acceptance of the first train (scheduled 2017).
Payments are on an availability-basis, whereby revenues are
received in return for the trains being made available for use and
for certain performance and reliability criteria being met. Hitachi
are contracted as both manufacturer and maintainer of the trains
for the duration of the concession period, with typical pass-down
of delivery and operational risk. They are also a 70% shareholder
in Agility Trains West Ltd, the project company.
The first trainset is scheduled for delivery in 2017 with the
remainder delivered over the subsequent 15-month period. The design
life of the trains is 35 years and Agility Trains West Ltd retains
ownership of the trains at the end of the concession period,
providing a residual design life of 7.5 years. Current and
projected demand for these types of modern trains is strong and
around 10% of the consideration is due to that expected residual
value of the trains.
The discount rate applied to the forecast cash flows to
establish the valuation is well above the equivalent discount rate
for a fully-operational UK availability-based project, and a higher
discount rate has been applied to the residual value elements to
allow for the additional uncertainty of those cash flows.
JLIF retains the right of first offer with respect to John
Laing's remaining interest in the project.
Andrew Charlesworth from John Laing Capital Management ("JLCM"),
Investment Adviser to JLIF, said:
"IEP was a cornerstone project of JLIF's Rail First Offer
Agreement with John Laing, approved at the EGM in February 2014.
JLIF is therefore very pleased to have reached agreement for a
stake in this important project, which will be JLIF's first
investment in rail rolling stock. Although JLIF had anticipated
acquiring the project in full operation, John Laing offered 20% of
their 30% share of the project, at a stage of around two thirds of
the way through its construction phase. This will allow JLIF to not
only secure this project early but also to benefit from the
potential capital uplift generated by the project moving from
construction into operations. Rail rolling stock is a sector of
significant interest and targeted by many infrastructure investors,
and JLIF looks forward to working in collaboration with all
stakeholders to make the project a success."
For further information, please contact:
JLCM 020 7901 3326
Andrew Charlesworth
Finsbury 020 7251 3801
Philip Walters
Nidaa Lone
JLIF is one of Europe's largest listed infrastructure funds,
trading on the London Stock Exchange. As an equity stakeholder,
JLIF partners with public sector counterparties across the world to
deliver key local and national infrastructure projects. In return
these provide government-backed, inflation-linked revenue streams
to our business. JLIF's continued success is built on a
collaborative approach, centred on long term relationships with its
clients such that their changing infrastructure needs can be met in
a timely and cost effective way.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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