The Macquarie Group is threatening to pull the plug on a deal to relinquish management control of Macquarie Airports (MAp), saying that the agreement may no longer be financially viable.
MAp, which operates Sydney Airport, came to an agreement with the Australian investment bank earlier this year to internalise its management. It has proposed paying A$345 million ($299 million) for the management rights, and shareholders must approve the move at an extraordinary general meeting scheduled for Wednesday.
However, an independent group called Global Airports (Gap), which includes the former heads of Melbourne and Copenhagen airports and a fund manager, has offered an alternative to the deal and said that it can take over the MAp management at a lower cost. MAp has rejected this offer but the rival bidders have taken their case to the courts, which will later today hear their petition to delay Wednesday's meeting.
The Macquarie Group's executive director John Roberts, however, has said in a letter to MAp independent board committee chairman Trevor Gerber that any delay to Wednesday's vote would allow Macquarie to pull out of the deal.
"We will act in good faith in respect of the proposal as currently tabled, but have an obligation to our own shareholders to consider whether we should proceed, should a delay present an opportunity for Macquarie to reassess its position," he says in the letter.
The MAp stock price climbed to a one-week average of A$2.78 last week, up from A$2.30 when the announcement was made in July. This continued strong performance could increase the base management and performance fees owed to Macquarie by A$40m a year, says Roberts.
"The increased share price is perhaps reflective of the internalisation proposal, but also the improved economic conditions that are delivering tangible increases in traffic numbers, and substantially increasing future expectations about the financial performance of MAp's airports," adds Roberts.
A MAp spokeswoman says that Macquarie does not have a case, and adds that the bank will be held to its "contractual obligations".
Source: Air Transport Intelligence news