He said: “I am immensely proud of the hard work and dedication of the entire Atlas Arteria team. We have assumed this occurs (an arguably aggressive assumption), which contributes approx. Prior to this amendment the TML Concession had a concession expiry of 2068.APRR Group is expected to benefit from a progressive reduction in the French corporate income tax rate from 33.3% in 2019 to 25.0% by 2022 (per the Finance Law). APRR consists of three concessions: the APRR … The plan consists of 12 projects including new or improved motorway exchanges, environmental protection development as well as customer service improvements.There are five tolling categories on the APRR, AREA and ADELAC Concessions, as outlined in the below table.In June 2010, Eiffarie reached agreement to acquire a further 13.7% of APRR from minority holders.
We currently own a 25% interest in the APRR toll road group in France. Today the Atlas Arteria Group consists of four businesses. Adjacent to the APRR business is the smaller ADELAC business which connects Macquarie Atlas Roads International Limited) and Atlas Arteria Limited (ACN 141 075 201) (“ATLAX”) (formerly Macquarie Atlas Roads Limited).
Including the additional social surcharge of +3.3%, the APRR Group's applicable tax rate will reduce from 34.4% to 25.8% over this period.Atlas Arteria holds a 31.14% indirect interest in APRR. This bodes well for EBITDA growth in 1H18 (we target approx. Atlas Arteria, which was known as Macquarie Atlas Roads until 2018, was spun out of the Macquarie Infrastructure Group in 2010 to hold APRR and a number of other toll roads, most of which were struggling financially. This excess cash has historically been used to fund capital expenditure and debt reduction.Dividends paid out of APRR are subject to conventional French accounting restrictions and can only be paid from current period profit, distributable reserves, retained earnings and share premium. MIG had a 25.0% stake in Eiffarie and therefore an effective stake in APRR of 20.4%. This gave Eiffarie a 95.2% holding in APRR, allowing it to consolidate for tax purposes and to launch a compulsory acquisition of the remaining shares. As anyone who has been involved in any negotiation knows, arriving at an outcome that satisfies everyone is not easy and the difficulty increases exponentially the more parties are involved!Atlas has investments in three different toll roads located in France, Germany and USA and started life as Macquarie Atlas. The effective valuation that Atlas is buying the shares in APRR is around 10.3x EV/EBITDA which we think is very fair for the asset given the growth profile and remaining concession life.The situation is further complicated by:The deal structure in short is:The Macquarie Managed Funds get closer to being able to wind up which will potentially trigger performance fees to Macquarie.I understand if you find this chart difficult to make sense of (it took me a LONG time to fully understand the intricacies) but for today’s purposes, let’s focus on the MAF/MAF2 box and its surrounding boxes and identify the key stakeholders involved.The new management team has been busy negotiating a complete separation from Macquarie.
As a direct investor in APRR, Atlas Arteria will also be more easily able to pursue growth opportunities for the toll road in Europe, including potentially buying more roads in France. Forecast upgrades from incorporating the 1H18 data lifts our ALX valuation by 12 cents per share.The strength of French economic conditions is driving underlying growth well above trend. Atlas Arteria (ALX) Atlas Arteria is a global owner, operator and developer of toll roads, with a portfolio of four toll roads in France, Germany and the United States. The downgrade has reduced our ALX valuation by 3 cents per share.In 1H18, Atlas Arteria (ALX) reported that light vehicle traffic increased 4.3% on the previous corresponding period, while heavy vehicles increased 6.3%. Atlas Arteria Group is a global operator and developer of toll roads. This has not been an easy task given the number of stakeholders involved. The company was started and managed by Macquarie Group but from 1 April 2019, it has been managed by an external management team but as the corporate structure is rather complicated (not unusual for Macquarie vehicles), Macquarie was still getting fees of around $15 million per year for managing Atlas’s stake in the most valuable asset, the APRR motorway in France where Atlas own 25 per cent.As far as we can see, this is a good deal for everyone and it is also something we think will be value accretive to Atlas Arteria’s shareholders. This debt doesn't show up on Atlas's balance sheet, but it still brings all the pros and cons of ordinary debt, amplifying earnings growth and adding risk. The Group owns 25% of APRR … Source: Atlas Arteria. Atlas Arteria’s CEO, Graeme Bevans, appeared to be very pleased to complete the transaction. We are focused on ensuring our customers, and the communities in which we operate, are well served by the transport links we provide. We are optimistic that initiatives are underway to eliminate the amortisation of the Eiffarie debt following the interest rate hedge expiry in June, albeit the decision rests not with ALX but Eiffage (holds the controlling interest in APRR).