Consortium led by Israel Infrastructure Management to acquire Aecon's 25% interest in Derech Eretz Highways (1997) Ltd
TORONTO, July 15 /CNW/ - Aecon Group Inc. (TSX:ARE) announced today that it has signed an agreement with a consortium headed by Israel Infrastructure Management (the IIM consortium) to sell its 25% interest in the Cross Israel Highway concessionaire, Derech Eretz Highways (1997) Ltd (DEC) for $77,781,720, subject to certain adjustments on closing. The transaction is expected to close in the fourth quarter of 2010.
The transaction remains subject to various third party approvals, including consents to waive rights of first refusal and tag-along rights held by Aecon's existing partners - Africa Israel Investments Ltd (37.5%) and Shikun & Binui Holdings Ltd. (37.5%) as well as approval by the State of Israel and DEC's senior lenders.
Excluded from the transaction are Aecon's interests in Derech Eretz Highways Management Corporation Limited, the operator of the Cross Israel Highway, in which Aecon holds a 30.6% interest, as well as Aecon's interests in several affiliates of the operator that operate other transportation infrastructure assets in Israel.
"We believe this opportunity to monetize our equity interest in this concession is an affirmation of both the appreciated value of this investment and of the risk/reward participation model that was pioneered in the development of the Cross Israel Highway to align the interests of constructors, owners, funders and operators of this type of infrastructure asset," noted John M. Beck, Aecon's Chairman and CEO. "I am grateful to all of the people at Aecon, as well as our partners in DEC, the DEC management team and the project's sponsors in the State of Israel, who made our participation in this very successful and innovative project possible."
"It was just over 10 years ago that we made our investment in DEC and began construction on the Cross Israel Highway" said Scott Balfour, President of Aecon Group Inc. "The monetization of this equity investment is expected to generate net after tax cash proceeds of between $65 and $70 million for Aecon and an after tax gain of approximately $30 million. These gains, which are in addition to the profits Aecon earned from its role in the construction of the project, highlight the merits of our strategy to participate in select public/private partnership projects as both developer and contractor."
Aecon Group Inc. is Canada's largest, publicly traded construction and infrastructure development company. Aecon and its subsidiaries provide services to private and public sector clients throughout Canada and on a selected basis internationally. Aecon is pleased to be recognized as one of the 50 Best Employers in Canada as published by Report on Business Magazine.
The information in this presentation includes certain forward-looking statements. These "forward-looking" statements are based on currently available competitive, financial and economic data and operating plans but are subject to risks and uncertainties. In addition to general global events outside Aecon's control, there are factors which could cause actual results, performance or achievements to vary from those expressed or inferred herein. Risk factors are discussed in greater detail in the section on "Risk Factors" in the Annual Information Form filed on March 31, 2010 and available at www.sedar.com. Forward-looking statements include information concerning possible or assumed future results of operations or financial position of Aecon, as well as statements preceded by, followed by, or that include the words "believes," "expects," "anticipates," "estimates," "projects," "intends," "should" or similar expressions. Important factors, in addition to those discussed in this document, could affect the future results of Aecon and could cause those results to differ materially from those expressed in any forward-looking statements.
SOURCE Aecon Group Inc.
For further information: For further information: John Sadler, Genoa Management Limited, 416-315-0600 (cellular), email@example.com, www.aecon.com