Summary Funding
Infratil’s use of debt
Infratil uses debt funding for three distinct purposes:
- To fund working capital. For instance Lumo acquires electricity and gas in the wholesale market which is on-sold to retail customers. The difference in timing can give rise to the need for short term funding requirements.
- Bridging. For instance Infratil and its subsidiaries occasionally buy asset or shares with long term funding to come from selling other assets or raising equity. While the long-term funding is being arranged bridging debt may be used.
- Long term funding of businesses with resilient cash flows which can comfortably service debt obligations over the long-term.
Whether debt is used for short or long term funding, it creates interest obligations and it must be repaid or rolled-over on maturity. Meeting such obligations intrinsically gives rise to risk. Infratil minimises the former by ensuring that its interest costs are comfortably covered by reliable sources of income with a margin for unexpected events. Loan repayment risk is minimised by ensuring that the debt which falls due in any year can be repaid from several sources; cash on hand, new debt, income, asset sales, or equity issues.
To minimise debt maturities in any one year, Infratil and its subsidiaries favour using corporate bonds. Bank debt tends to be for three to five year terms, bond for five to ten years. This preference for long term funding has made the Infratil group one of New Zealand’s main issuers of corporate bonds with each of Infratil, TrustPower, Wellington Airport and Z Energy having undertaken issues.
Infratil’s 100% subsidiaries tend to have low or no borrowings from external parties except for working capital facilities, or in the case of Infratil Energy Australia vendor finance attached to the Port Stanvac power station.
Wellington Airport (66% owned by Infratil) , TrustPower (51%), Perth Energy (82%) and Z Energy (50%) are not wholly owned by Infratil and their debt is not included in this profile as they undertake their own funding activities and Infratil has no obligations in respect of this debt and is not liable for any of their liabilities.
Infratil's Debt Profile
Infratil and its wholly owned subsidiaries have four distinct sources of debt. These are:- Bank or vendor borrowing by Infratil and 100% subsidiaries which is guaranteed by Infratil.
- Borrowing by a 100% subsidiary which is not guaranteed by Infratil.
- Fixed coupon bonds issued by Infratil.
- Perpetual bonds issued by Infratil. The coupon on these bonds is reset each 15 November at 1.5% over the then one year bank base rate for quarterly coupon loans.
| 31 March ($Millions) | 2011 | 2010 | 2009 |
| Net Bank Debt /Cash | $130 | ($58) | $323 |
| Not guaranteed by Infratil | $140 | $140 | $140 |
| Fixed Maturity Bonds | $623 | $509 | $509 |
| Perpetual Bonds | $238 | $239 | $240 |
| Market Value Infratil Equity | $1,151 | $1,002 | $764 |
| Total | $2,282 | $1,832 | $1,976 |
Infratil's facilities are provided by ANZ National Bank Limited, Bank of New Zealand, Commonwealth Bank of Australia, The Hongkong and Shanghai Banking Corporation Limited and Westpac Banking Corporation. The maturity/roll profile of Infratil’s debt as at 30 September 2011 is as shown in the following table. Subsequent to 31 March 2011 a net $61million of bonds were repaid and bank debt was increased.
| 31 March | 2012 | 2013 | 2014 | 2015 | 2016 | Longer |
| Bank/Other | $170m | $100m | $100m | |||
| Bond | $20m | $57m | $85m | $153m | $485m |
Infratil's Equity
Infratil has 597 million shares on issue at 10 Otober 2011 with an aggregrate market vaule of $1,092 million. Infratil is and NZX10 stock on the NZX (New Zealand Stock Exchange).
Infratil's Investments
| 31 March ($millions) | 2011 | 2010 | 2009 |
| TrustPower (51%) | $1,146 | $1,153 | $1,122 |
| Infratil Energy Australia (82-100%) | $375 | $256 | $221 |
| Z Energy (50%) | $375 | ||
| Wellington Airport (66%) | $297 | $289 | $286 |
| Infratil Airports Europe (100%) | $101 | $138 | $222 |
| NZ Bus (100%) | $208 | $214 | $211 |
| Other | $56 | $55 | $309 |
| Total | $2,508 | $2,055 | $2,371 |
The 51% shareholding in TrustPower is shown at market value. The other assets are shown at the book value of their shareholders' funds, including the market value of hedges and excluding deffered tax.
Subsequent to 31 March 2010 the following material changes occurred to the investments and their values:
Z Energy was acquired by Infratil and the NZ Superannuation Fund on 1 April 2010 with Infratil's investment amount being $212 million. The subsequent increase in value reflects retained earnings and a fair value uplift to Z's fixeds assets.
The value of Wellington Airport rose slightly mainly due to an icrease in the book value of the Airport's civil works and buildings. IEA's value was reduced by a reduction in the Airport's asset values.
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