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Eiffage Says Macquarie Partners Should Help Fund APRR’s Owner

Eiffage SA wants Macquarie Group Ltd. to consider putting capital into their Eiffarie investment partnership by the end of 2010 as debt at the venture’s APRR toll-road division remains at risk of losing investment grade.

Eiffarie, which faces about 80 million euros ($106 million) in interest payments every six months on 3.8 billion euros of bank loans, should seek its own capital financing and not depend on a dividend from Paris-based APRR, which has about 7 billion euros in debt, Eiffage Chief Financial Officer Max Roche said in a telephone interview yesterday.

APRR is 81.48 percent-owned by Eiffarie, with the remainder of the stock freely traded. The toll-highway operator decided on April 28 to pay the parent venture a dividend of 84 cents a share for a total payout of 79 million euros by the end of the first half, Roche said. That doesn’t provide stable enough funding for Eiffarie, he said.

“At each repayment date, we’ll have to agree on the way for Eiffarie to pay interest,” Roche said. “It would have been better to finance the interest with a capital increase.”

Eiffarie was set up about five years ago by Paris-based construction company Eiffage, which has a stake of 50 percent plus one share, and Macquarie Atlas Roads and Macquarie European Infrastructure Fund L.P., which hold the remaining 49.9 percent. Eiffarie’s financing, including the role of each partner in the funding, “will be raised again in six months,” Roche said.

Karen Smith, a spokeswoman for Macquarie Group in London, declined to comment today on Roche’s remarks.

Debt Rating

APRR’s debt is rated BBB- at Standard & Poor’s, the lowest investment grade at the credit-reporting company. The rating’s outlook since June 2009 has been negative, meaning more than a 30 percent chance of a downgrade within two years. APRR’s cash “headroom” has declined to less than 10 percent above a level that would break Eiffarie’s bank-loan terms, S&P said Feb. 10.

“The best way to secure this headroom wasn’t for a dividend distribution but to re-inject funds via shareholders, which is why we were pushing in this direction to secure the rating of APRR,” Roche said. “We’re waiting to see what Standard & Poor’s will decide.”

The dividend payment hasn’t had an influence on APRR’s credit rating as “we’re treating APRR and its parent company Eiffarie as a group, so it doesn’t change make a big difference if the money is at the upper or lower level,” Vincent Allilaire an analyst at S&P, said in a telephone interview today. He declined to comment further on the credit rating.

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