Atlas Arteria rejects IFM Investors takeover proposal
- The board of Atlas Arteria has rejected a restructure and funding proposal from major shareholder IFM Investors regarding the Chicago Skyway toll road.
- The target company stated that the suitor's equity raising plans would heavily dilute existing retail shareholders who cannot afford to participate.
- The infrastructure group chose instead to cancel a costly asset joint-venture clause directly with its North American pension fund partner.
The board of Atlas Arteria (ASX:ALX) has urged its retail shareholders to reject an alternative financing proposal put forward by suitor IFM Investors for the Chicago Skyway toll road.
The rejection comes after IFM Investors built its voting stake in Atlas Arteria above 50% and requested a renegotiation of joint-venture terms.
The suitor suggested that Atlas Arteria execute a call option to buy out the remaining 33% stake in the United States asset from the Ontario Teachers' Pension Plan for US$1.02 billion.
IFM Investors proposed funding the transaction via a discounted, non-renounceable rights issue, which Atlas Arteria stated would create unnecessary corporate costs and dilute investors.
Instead, Atlas Arteria announced it reached an independent agreement to extinguish the original joint-venture put option by paying the Ontario Teachers' pension plan a US$100 million settlement.
Following the announcement, the Atlas Arteria share price was unchanged at $5.10.
The global toll road operator noted that the settlement will be funded through a mix of existing corporate cash reserves and local debt facilities.
The company stated that the transaction is expected to provide funding certainty for its securityholders while a separate corporate sale process for the Chicago Skyway asset is paused.
