Macquarie Infrastructure Company Discloses Performance Fee Payable for Third Quarter of 2014

  • $116.6 million payable to management company
  • $65.0 million to be settled in cash, balance to be reinvested in additional shares
  • 2014/2015 underlying Free Cash Flow per share not expected to change as a result of share issuance

NEW YORK--()--Macquarie Infrastructure Company (NYSE:MIC) announced that a performance fee of $116.6 million is payable to its management company, Macquarie Infrastructure Management (USA) Inc. (MIMUSA), for the third quarter of 2014. Performance fees are payable when the total return for shareholders of MIC is positive and exceed a benchmark index both for the quarter and cumulatively.

“I do not view the request of the independent directors to MIMUSA as representing any change in ongoing policy in relation to the reinvestment of fees in additional shares but rather the result of a unique set of circumstances that existed at the end of the third quarter.”

MIC will settle $65.0 million of the fee in cash and deliver shares worth $51.6 million in settlement of the balance. While MIMUSA has elected to reinvest the full amount of any performance fee payable in prior quarters, the independent directors of the Board of MIC requested that MIMUSA reinvest only a portion of the third quarter 2014 fee.

“With MIC’s substantial out performance in the third quarter and the amount of cash and liquidity currently available MIC, our Board of Directors requested that MIMUSA accept a combination of cash and additional shares in satisfaction of the performance fee to minimize the dilutive effect on our shareholders,” said James Hooke, chief executive officer of MIC. “This is a shareholder friendly and prudent use of capital given the approximately $1 billion in liquidity MIC has available as a result of events including the recent sale of our District Energy business.” The sale of the District Energy business was completed in late August of 2014.

“The cash portion of the fee is approximately the same as the proceeds from the District Energy sale,” Hooke noted. “I do not view the request of the independent directors to MIMUSA as representing any change in ongoing policy in relation to the reinvestment of fees in additional shares but rather the result of a unique set of circumstances that existed at the end of the third quarter.”

In accordance with the Management Services Agreement in place between MIC and MIMUSA, the price at which additional shares are to be issued will be calculated using the volume weighted average price of MIC’s shares over the last month of the quarter for which the fee is calculated. MIMUSA will reinvest the $51.6 million portion of the third quarter performance fee in an additional 747,460 shares at a price of $69.01 per share.

Performance fees are calculated based on the total shareholder return generated by MIC over a calendar quarter compared with the performance of a benchmark index over the same period. The total shareholder return produced by MIC during the quarter ended September 30, 2014 was approximately 13.9%. Year to date through September 30, 2014, the total shareholder return produced by MIC was approximately 33.5%. The benchmark index returned 14.3% over the same period and, for reference, the S&P 500 returned 9.9%.

MIC does not expect to adjust its estimates for underlying Free Cash Flow per share for either 2014 or 2015 as a result of the approximately 1% dilution stemming from the issuance of the additional shares. “The larger initiatives in which we have been involved, notably the acquisitions of the second half of IMTT and the six Galaxy fixed base operations, are proceeding as well or better than anticipated,” said Hooke. “We expect to provide the markets with an update on these matters when we finalize our third quarter results, but we feel MIC is performing in line with or slightly ahead of our initial estimates.”

MIC expects to publish its financial results for the third quarter of 2014 after the close of the markets on October 29, 2014. A conference call during which management will discuss the results will be conducted the morning of October 30, 2014.

About Macquarie Infrastructure Company

Macquarie Infrastructure Company owns, operates and invests in a diversified group of infrastructure businesses providing basic services to customers in the United States. Its businesses consist of a bulk liquid terminals business, International-Matex Tank Terminals, an airport services business, Atlantic Aviation, a gas processing and distribution business, Hawaii Gas, and several entities comprising a Contracted Power and Energy segment. MIC is managed by a wholly-owned subsidiary of the Macquarie Group. For additional information, please visit the Macquarie Infrastructure Company website at www.macquarie.com/mic. MIC-G

MIC is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of MIC do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of MIC.

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