Atlas Arteria announces $1.35 billion equity raising

Atlas Arteria Group (ASX:ALX) shares are in a trading halt whilst it raises $1.35 billion to funds acquisitions…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Atlas Arteria Group (ASX: ALX) share price won't be going anywhere on Thursday.

This morning the toll road operator requested a trading halt whilst it undertakes a capital raising.

What did Atlas Arteria announce?

Atlas Arteria announced that it has executed agreements to acquire a further 6.14% indirect interest in APRR and ADELAC. This will lift its indirect interest in APRR to 31.14% and in ADELAC to 31.17%.

APRR is a high quality toll road group in France which management notes is performing well and has access to growth opportunities. It is the largest existing business in Atlas Arteria's portfolio, meaning the acquisition has limited due diligence risk.

ADELAC is a smaller business which connects to APRR in southeast France. Combined, the two businesses comprise a 2,318 kilometre motorway network located in the East and South East of France.

Management expects the transaction to be immediately cash flow and value accretive.

It believes it creates value for shareholders by increasing its interest in the businesses at an attractive valuation, delivers better governance and genuine operational influence for Atlas Arteria, and will support higher distributions.

In respect to the latter, management provided upgraded distribution guidance of 17 cents per share for the next two distributions. This is a 6% increase on its previous guidance.

Equity raising.

The release explains that the transaction will be funded via a fully underwritten $1,350 million equity raising. This comprises a $452 million institutional placement and a 4 for 21 accelerated pro-rata non-renounceable entitlement offer to raise $898 million.

These funds will be raised at $6.90 per share, which represents a discount of 9.7% to its last close price.

Some of these funds ($100 million) will also be paid to Macquarie Group Ltd (ASX: MQG) in order to terminate all remaining management agreements. If it did not terminate this agreement, it would have to pay Macquarie $15.1 million a year in management fees if the transaction goes through.

The transaction remains subject to anti-trust clearance and foreign investment committee clearance from the French Ministry of the Economy. However, management is optimistic that completion will occur by the end of Q1 2020.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Capital Raising

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Capital Raising

Up 102% in 2024, here's why this ASX All Ords stock is now frozen

Seize the day. This company is ready to cash in on its renewed image.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Materials Shares

Why is this ASX 300 battery materials stock crashing 20% today?

Its shares are now down by 67% since this time last year.

Read more »

A man with a heavy facial hair growth and a comical look on his face holds his hands in a 'time out' gesture.
Energy Shares

Up 90% in a year, why is this ASX 300 uranium stock suddenly halted?

Here's why this high-flying stock is out of action today.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Mergers & Acquisitions

Why are Metcash shares tumbling today?

This wholesaler has just received a $300 million cash injection.

Read more »

A man sitting at a computer is blown away by what he's seeing on the screen, hair and tie whooshing back as he screams argh in panic.
Materials Shares

Why is the Arafura share price sinking 17% today?

It has been a tough session for this rare earths stock. But why?

Read more »

Two happy pharmacists standing together in a pharmacy.
Capital Raising

Own Sigma shares? Everything you need to know about the 'transformational' $8.8b merger with Chemist Warehouse

Here's what you need to know about this mega merger.

Read more »

Close up of a sad young woman reading about declining share price on her phone.
Energy Shares

Why is the Boss Energy share price sinking 5% today?

This uranium share is raising funds. But why?

Read more »

a man in a suit holds up a hand and a stop sign at a roadblock positioned over a bitumen road .
Capital Raising

Why are Boss Energy shares in a trading halt?

This uranium share is raising funds. But why?

Read more »