Keppel Infrastructure Trust to combine with CitySpring Infrastructure Trust

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Keppel Infrastructure Trust to combine with CitySpring Infrastructure Trust

Singapore Keppel Infrastructure Fund Management (KIFM) and CitySpring Infrastructure Management (CSIM) in their capacity as trustee-manager of Keppel Infrastructure Trust (KIT) and CitySpring Infrastructure Trust (CIT) have agreed to combine KIT and CIT.

In addition, KIT has agreed to acquire a 51% stake in Keppel Merlimau Cogen (KMC) for a cash consideration of S$510 million (US$391.7 million). KMC will form an integral part of the combination. As part of the KMC Acquisition, KMC will enter into a 15-year capacity tolling agreement with Keppel Electric Pte. Ltd.

The combination will be effected by CIT acquiring all the business undertakings and assets of KIT in exchange for 1,326 million new units of CIT. The swap ratio has been arrived at based on the market capitalizations of S$658 million (US$505.5 million) of KIT and S$753 million (US$578.4 million) of CIT, based on their units' respective volume weighted average prices for the 180-day period ended on 13 November 2014. Each KIT unit holder will receive 2.106 new CIT units for every KIT unit held.

Upon completion, Keppel Corporation Limited, via its wholly-owned subsidiary, Keppel Infrastructure Holdings (KI) will become the largest unitholder and Temasek Holdings, through its wholly-owned subsidiaries, will become the second largest unitholder with approximately 22.9% and 19.97% ownership in the combined trust respectively. CIT will be renamed Keppel Infrastructure Trust and KIFM will be appointed trustee-manager of the combined trust.

The combined trust will be the largest Singapore infrastructure-focused business trust listed on the SGX-ST with a market capitalization that is expected to exceed S$1.9 billion (US$1.46 billion) and proforma total assets in excess of S$4 billion (US$3.07 billion).

Mr Khor Un-Hun, CEO of KIFM stated:

"With the support of the unitholders, the transactions will combine KIT and CIT into an attractive flagship infrastructure investment vehicle in Singapore sponsored by KI, offering investors exposure to its large and diversified core infrastructure portfolio."

Mr Tong Yew Heng, CEO of CSIM added:

"The Combination and the KMC Acquisition are transformational. With greater scale and critical mass, the Combined Trust will be able to better access the capital markets to pursue meaningful growth opportunities in the future. Such future growth opportunities could include assets incubated by KI in addition to other infrastructure assets that meet our investment criteria."

KIT's portfolio:

  • Senoko Waste-to-Energy Plant, the only incineration plant servicing the eastern, northern and central areas of Singapore,
  • Keppel Seghers Tuas Waste-to-Energy Plant, the newest of the four waste incineration plants currently operating in Singapore,
  • Ulu Pandan NEWater Plant, the second largest NEWater plant in Singapore, and
  • The proposed acquisition of the 51% stake in KMC, a top-tier gas-fired power plant in Singapore.

CIT's portfolio:

  • City Gas, the sole producer and retailer of town gas in Singapore,
  • SingSpring, Singapore's first large-scale seawater desalination plant,
  • Basslink, the only electricity interconnector between Tasmania and mainland Australia (including the Basslink Telecoms fibre optics telecommunications cable),
  • CityNet, trustee-manager of Netlink Trust6, which owns, installs, operates and maintains the fibre network for Singapore's Next Generation Nationwide Broadband Network, and
  • DataCentre One, an Uptime Institute Tier 3 datacentre (estimated completion in 1Q CY2016).

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