Transfield Services Infrastructure Fund (ASX:TSI) Scheme of Arrangement



Clive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me today is CEO of Transfield Services Infrastructure Fund (ASX:TSI), Steve Loxton to discuss the Scheme of Arrangement proposed by Thai electricity company, Ratchaburi.
Steve welcome to FNN, what does the Proposal involve and who is the company behind it?

Steve Loxton: Thank you Clive.  The Proposal involves a Scheme of Arrangement for the 56% of Transfield Services Infrastructure Fund that is not owned by Transfield Services. The Proposal is being made by Ratchaburi or Ratch for short, which is the largest independent power producer in Thailand. They represent about 14% of the installed generation in Thailand and they have about 4,500 megawatts. The Proposal is for 85 cents per security and this will be paid in early July.

Clive Tompkins: Thanks Steve. Under the Scheme there are a number of resolutions and they all need to pass for the Proposal to succeed?

Steve Loxton: That is correct, there are four resolutions being put to security holders. TSI is a Triple Stapled Security with two companies in the Trust. There is a resolution being put to each of those entities and in addition, there is a resolution to change the Constitution of the Trust. And each of those four resolutions which are inter-conditional, need to be approved for the Proposal to get up.

Clive Tompkins: So how does the 85 cents compare to the price prior to the offer being made?

Steve Loxton: The 85 cent price represents a 38% premium to the price before the announcement and a similar premium to the six month volume weighted average price. It also represents a 21% premium to the price at which we raised equity last year.

Clive Tompkins: So are you paying a second half distribution?

Steve Loxton: The directors have yet to determine whether to pay a distribution for the second half.

Clive Tompkins: And if one is paid, is this included in the 85 cent offer?

Steve Loxton: Yes it is, but the distribution has yet to be determined.

Clive Tompkins: Now Steve I see the TSI independent directors and the independent expert, Deloitte both recommend the Proposal in the absence of a superior one. How have the TSI independent directors arrived at their recommendation?

Steve Loxton: The independent directors have sought financial advice from Merrill Lynch and commissioned an Independent Expert’s Report from Deloitte to assess the Proposal. The offer’s now been open since the 31st of March and TSI has received no alternative Proposals.

Clive Tompkins: So what value does the independent expert put on TSI?

Steve Loxton: Deloitte’s have valued TSI between 70 and 86 cents per security and on the basis of the Ratch offer of 85 cents, have concluded that the offer is both fair and reasonable and in the best interests of all security holders.

Clive Tompkins: Thanks Steve, now the Scheme Meeting is on the 21st of June. There are four resolutions, what are independent directors recommending and why?

Steve Loxton: They’ve unanimously recommended that TSI security holders vote in favour because of the certainty, because the independent expert has concluded that it’s fair and reasonable, because the 85 cent represents a considerable premium to the TSI price before the offer and because no alternative offer has emerged.

Clive Tompkins: So what are some of the disadvantages of accepting the Proposal?

Steve Loxton: The key disadvantage is that security holders will no longer have exposure to the TSI Fund’s essential infrastructure assets or their future potential upside. Another disadvantage is that it simply may not suit your personal circumstances.

Clive Tompkins: Thanks Steve, so what percentage of votes are needed for the Proposal to succeed?

Steve Loxton: The resolutions will be passed if approved by at least 50% of TSI Security Holders voting impersonal by proxy, representing at least 75% of the votes cast. I strongly recommend that Security Holders read the Scheme Booklet and then submit their votes either online or by proxy, or by attending the meeting in person on the 21st of June.

Clive Tompkins: Last question. Assuming security holders accept the Proposal, what’s next?

Steve Loxton: The next steps are the Scheme needs to be approved by the New South Wales Supreme Court. TSI will then be delisted and security holders will receive their 85 cents per security on the 5th of July.

Clive Tompkins: Steve Loxton thanks for explaining the Scheme and good luck with the vote on the 21st of June.

Steve Loxton: Thank you.