Tuesday, November 18, 2014

CitySpringTrust And Keppel Infra Trust Merger

The proposed merger of CitySpring Infrastructure Trust (CIT) and Keppel Infrastructure Trust (KIT)has been announced.KIT also announced that it will acquire 51% of Keppel Merlimau Cogen (KMC) which own a 1300 megawatt combined gas turbine generation facility on Jurong Island for a cash consideration of $500m based on a enterprise value of $1,700m.The KMC acquisition will form an integral part of the merged entity.The combined entity will be Singapore largest infrastructure-focused business entity with a market cap of about $1.9b and assets of about $4b.

Each KIT shareholder will receive 2.106 units of CIT shares for every unit of KIT share held.Keppel Infrastructure Holdings and Temasek through its subsidiary will be the two largest shareholders at 22.9% and 19.97% respectively. CIT will be the surviving trust and be renamed as Keppel Infrastructure Trust and KIT will be dissolved following completion. Current trustee manager of CIT will resign and current trustee manager of KIT will be appointed the trustee manager of the combined trust. As saving of $3.6m of management fees is expected from this arrangement.

The purchase of KMC will be financed through  non-renounceable of preferential shares to existing shareholders and private placement to institutional investors to raise up to $525m in gross proceeds.The transaction is accretive to CIT unitholders and the proforma distribution will be 3.67 cents per CIT unit higher than the current 3.28 cents.



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