KEPPEL Infrastructure Trust (KIT) saw its distributable income year on year (yoy) tumble 60.1 per cent to S$106.1 million for the first nine months of 2024 from S$266.1 million.
The fall in distributable income in the latest nine-month period was notably in the absence of a special distribution of S$131.2 million that was recorded in the year before.
In Wednesday’s (Oct 23) announcement, KIT’s manager also attributed the lower distributable income to reduced contributions from its Senoko waste-to-energy plant as well as lower fuel cost over-recovery at City Energy, which outweighed the positive contribution from new acquisitions.
The manager noted that after including adjustments for one-offs and timing differences, the trust’s distributable income for the first nine months of the fiscal year would have been S$124 million, or 11.2 per cent lower yoy.
This figure takes into account a performance fee of S$13 million, an upfront financing fee of S$6.5 million, and adjustments related to the Philippine Coastal Storage and Pipeline Corporation (PCSPC) loan drawdown for capital expenditures of S$1.1 million and base fees of S$0.5 million.
KIT’s portfolio asset distributable income fell 10.6 per cent yoy to S$188 million, from its ongoing business operations over the first nine months of 2024.
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Among its various business segments, energy transition had the best performance as it reported a 2.7 per cent rise in distributable income to S$110 million for the first nine months of 2024, compared with the same period last year.
However, distributable income for its environmental services as well as distribution and storage segments fell by 16.4 per cent and 34.6 per cent, respectively. Higher maintenance and growth capital expenditures, along with increased interest expenses, contributed to the decline.
KIT’s manager also reported that the trust’s net debt is 5.5 times its earnings before interest, tax, depreciation, and amortisation over the last 12 months, which include contributions from the completed phases of its German solar portfolio and Australian bus company Ventura starting from Jun 3, 2024.
However, the manager said that KIT has a “well-spread debt maturity profile with healthy capital management metrics”. It highlighted that the trust successfully raised S$200 million through a placement to new and existing investors.
KIT also optimised its capital structure with the issuance of S$200 million in 4.9 per cent perpetual securities. The proceeds from this issuance and the placement were used to fully repay the term loan that was drawn to acquire Ventura.
Divestment
Separately, KIT’s trustee-manager said that the trust and Metro Pacific Investments Corporation (MPIC) were selling their entire 100 per cent stake in PCSPC for a total value of US$460 million, which includes US$181 million in debt.
The sale is expected to be completed by early 2025, with KIT projected to realise a gain of US$21.1 million. The completion of the sale is contingent upon certain customary conditions, including anti-trust clearance in the Philippines.
Both KIT’s 50 per cent stake and that of MPIC, which holds the remaining 50 per cent, will be sold to companies affiliated with independent global infrastructure investment manager I Squared Capital.
The debt portion pertains to a loan used to finance part of KIT and MPIC’s acquisition of the PCSPC Group, as well as its capital expenditure and working capital needs. The purchaser will refinance this loan as part of the transaction.
After accounting for the loan refinancing, the expected purchase price for all the shares in the company is US$296 million, excluding the earn-out which will be paid fully in cash upon completion of the transaction.
KIT and MPIC had each acquired their respective 50 per cent equity stakes in PCSPC in early 2021. PCSPC is the largest independent petroleum products storage facility in the Philippines, located in Subic Bay.
KIT expects to use the net proceeds of the sale for its general corporate purposes, including funding of working capital, capital expenditure, repayment of debt and other growth initiatives.
Its manager said the divestment is in line with KIT’s long-term investment strategy to focus on lower carbon energy transition segments. It is also expected to strengthen KIT’s balance sheet and increase its financial flexibility to pursue other growth initiatives.
The opportunity to divest the asset was taken as significant capital will be required to grow and scale up PCSPC, which would further entrench KIT in the business.
Units of the trust closed unchanged at $0.47 on Tuesday.
