HICL Infrastructure Regulatory News (HICL)

11 Feb 2008 07:01

HSBC Infrastructure Company Limited11 February 2008 11 February 2008 HSBC Infrastructure Company Ltd (the "Company" or "HICL") INTERIM MANAGEMENT STATEMENT The Company currently owns a portfolio of 27 infrastructure investments, themajority of which are low risk, yielding projects backed by long termconcessions with public sector authorities. The Company reports its Interim Management Statement for the period commencing 1October 2007 to 8 February 2008, in accordance with the FSA disclosure andTransparency Rule 4.3. References to the Group below refer to the Company andits 100% owned subsidiaries. Graham Picken, Chairman of HSBC Infrastructure Company Ltd said "The Board ispleased with the performance of the Company which is well positioned to deliverits long term targets, and policy of progressive distribution growth. There is aregular flow of good quality new investment opportunities under evaluation andwe remain optimistic of our growth prospects." Tony Roper, director of HSBC Specialist Fund Management Ltd ("HSFML"), theInvestment Adviser, said "The defensive characteristics of the Company'sportfolio make this an attractive asset class, brought into sharp focus bycurrent market conditions. None of the projects have short term debt whichrequires refinancing, and none are exposed to floating rates due to long termhedges in place. Whilst the credit markets have shrunk, debt funding is stillavailable for infrastructure assets with sound fundamentals." Trading update The Company has seen its portfolio of infrastructure and PFI investmentscontinue to perform well. HSFML, in its capacity as Investment Adviser to theCompany and Operator of the Company's partnership, continues to optimise thereturns from each investment. This work includes selected refinancings ofproject debt where new facilities can be secured on improved terms. All projects that are debt funded have long term facilities in place with anyinterest rate exposure appropriately hedged. Any downgrade in the rating of amonoline insurer will have a negligible impact on only one of the 27 projects inthe portfolio. Discussions continue between a subsidiary of the Company and HMRC to recover withholding tax. After taking further advice from the Group's tax advisers and in the light of Counsel's opinion, the Directors remain confident that there are reasonable prospects for recovery. The Investment Adviser is actively seeking to resolve this matter. As reported on 21 December 2007, the Company completed its acquisition of anadditional 14.14% of the Home Office project for £14.4m, to take its equitystake to 80% and its loan note stake to 100%. The Group's valuation of the portfolio at 30 September 2007 was £384.1m. Sincethen, the Group has acquired six assets from Kajima Partnerships Ltd in Octoberfor £30.2m and the additional Home Office stake for £14.4m. In January 2008 the Company held a successful visit for investors to theMetropolitan Police Specialist Training Centre. Guests saw the facility in useand heard how the project is being run and operated. The Group's Debt facilities As announced on 21 December 2007, the Company successfully refinanced theGroup's debt facilities by agreeing a new 5 year facility with Bank of Scotlandplc. This refinancing provides a £200 million multi-currency facility and replacesthe Group's previous lines of credit of £135 million. The debt is available onimproved terms. The net debt of the Group at 31 December 2007 was £112m(excluding the outstanding loanstock commitment of £22.3m for the ColchesterGarrison project). Valuation of the Portfolio The Directors and the Investment Adviser regularly review the portfolio and itsvaluation. The nature of the long term concessions (without break clauses) andthe continued market appetite for this asset class have underpinned assetvalues. Recent transactions in the UK PFI sector suggest that discount rates arebroadly similar to those used in September 2007. Investment opportunities The Investment Adviser continues to identify suitable new infrastructure assetsfor purchase. The Company's Investment Policy can be found on the Company'swebsite: www.hicl.hsbc.com As announced in last November's interim results, the Company and its advisershave been developing and planning the next phase of the Company's growth. Thisis likely to entail seeking further equity capital to enable the Company torepay the Group's existing debt. In turn, this in turn will allow the enlargedbank facility to be available to finance new investments. The timing and quantumof the capital raising have yet to be finalised and further details will follow. Outlook Whilst the recent turbulence in the credit markets is affecting a number ofsectors, it has not affected the Company's current portfolio or the number ofnew investment opportunities presented to the Investment Adviser. Debt continuesto be available to finance assets with core infrastructure characteristics. TheInvestment Adviser is using its growing network of relationships, and its HSBCconnections, to source suitable new investments in the UK and abroad. Financial Calendar The Company intends to announce its preliminary results for the 12 months to 31March 2008, including an updated valuation of the portfolio, on 28 May 2008. For further information please contact: HSBC Specialist Fund Management Limited 020 7991 8888Tony RoperKeith PickardSandra Lowe M: Communications 020 7153 1530Ed OrlebarTilly von Twickel Notes to Editors HSBC Infrastructure Company Limited The Company is a long term investor in infrastructure projects which arepredominantly in their operating phase and yielding steady returns. It was thefirst infrastructure investment company to be listed on the London StockExchange. It manages a portfolio of mostly operational infrastructure projectsand seeks to acquire further investment opportunities. The Investment Adviser to the Company is HSBC Specialist Fund ManagementLimited, whose infrastructure investment team has successfully invested ininfrastructure projects since 1997. This information is provided by RNS The company news service from the London Stock Exchange