MIG to Invest in Dulles Greenway Toll Road, Virginia and Take Operational Responsibility

30 August 2005

Macquarie Infrastructure Group (MIG) today announced it has entered into agreements to invest US$533 million (A$711m) in Dulles Greenway, a 14 mile (22 km) operating toll road, subject to financing and other customary conditions precedent.  The road runs west of Washington D.C. from Dulles International Airport to Leesburg, through Loudoun County, Northern Virginia.

The Dulles Greenway is owned by TRIP II, a limited partnership.

MIG will provide loans against and hold options over 86.7% of TRIP II, and acquire 100% of the General Partner.  The General Partner has day-to-day responsibility for the management and operation of the concession.

Mr Steve Allen, Chief Executive Officer of MIG said, “Dulles Greenway has a number of highly attractive attributes that caught the attention of MIG and we have been actively pursuing the opportunity to invest in the road for some time.

“Dulles Greenway is a relatively young, well maintained intra urban toll road with a 10-year operating history and 51 years remaining in the concession agreement.  Tolls are established, on application, by the Virginia State Corporation Commission (SCC).

“One of the most exciting aspects about the road is that it serves an affluent region experiencing strong population and employment growth.  Loudoun County has one of the fastest growing populations in the United States with significant housing and economic development expected to continue. 

“Although the road experienced difficulties in the early years the region’s strong growth is now reflected in the Dulles Greenway’s compound average growth of 17% for traffic and 26% for revenue between 1996 and 2004.

“This is a high quality, growth asset that will be value accretive to the MIG portfolio.  We are forecasting an average yield of 8% per annum over the next 10 years.  Following completion of our investment in Dulles Greenway it will comprise 8% of MIG’s portfolio and will be our third investment in the growing United States toll road market, “ Mr Allen said.

Project Details

• Certificate of Authority granted by the SCC has 51 years remaining, with exclusive right to manage, operate, maintain and toll Dulles Greenway held by TRIP II
• Current peak toll of US$2.40 for cars (US$2.30 for ETC motorists) with a schedule of staged increases to reach US$3.00 in 2007. Tolls are regulated by the SCC and tolls beyond 2007 will be set through application to the SCC
• 10 year old, well maintained asset with a solid operating history
• Key operational tasks sub-contracted to Autostrade
• Spare capacity, with scope for expansion and with increasingly congested competing routes

Investment Structure

• The Dulles Greenway is owned by TRIP II, a limited partnership
• MIG is investing US$533 million (A$711m) for:
  • two subordinated loans against the 86.7% of limited partner interests in TRIP II, currently held by AIE LLC and the Shenandoah Group
  • two long-dated call options to acquire 86.7% of the limited partner interests in TRIP II, currently held by AIE LLC and the Shenandoah Group 
  • 100% of the General Partner, Shenandoah Greenway Corporation, which holds sole right to manage and operate the concession
• MIG is in advanced exclusive negotiations with Kellogg Brown & Root to acquire the remaining 13.3% limited partnership interest in TRIP II.
• The structure provides MIG: 
  • access to the cashflows generated by the asset 
  • substantial control through ownership of the General Partner, and debt and option covenants
  • the ability to move to direct ownership via exercise of the call options
  • a structurally efficient investment

Investment Fundamentals

• Investment IRR* of 12.6% p.a. – an 8.4% risk premium
• Dulles Greenway is a growth asset which is expected to deliver forecast yield of 5% per annum over the first 5 years and 8% over the first ten years
• Debt facilities were refinanced in March 2005 with a bond issue wrapped by MBIA

* The equity returns stated above is based on certain assumptions which, if not achieved, may affect the return.

Macquarie Securities (USA) Inc. acted as financial adviser to MIG on the transaction.

Financing the Investment

MIG is proposing to undertake an equity capital raising of approximately $675 million via an institutional placement of stapled securities. There will also be a security purchase plan.

MIG anticipates financial close by mid-September, 2005.

MIG has reaffirmed its previous distribution guidance of 21 cents per stapled security for FY2006.

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These materials do not constitute an offer of securities for sale in the United States, and the securities referred to in these materials have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration.

For further information, please contact:

Investor Enquiries
Peter Johnston
Head of Investor Relations
Mobile: (61) 413 994055
Email: peter.johnston@macquarie.com

Media Enquiries
Jane Rotsey
Public Affairs Manager
Mobile: (61) 401 997 160
Email: jane.rotsey@macquarie.com

Investor Enquiries
Bianca Francis
Investor Relations Manager
Tel: 61 2 8232 5007
Email: bianca.francis@macquarie.com