On January 25, 2010, Macquarie Infrastructure Group (MIG) began trading ex-MQA and the special dividend of A$0.10 per MIG share, and closed at A$1.25 per share (down from A$1.48 per share as of January 22, 2010). This effectively values Intoll at a c.27% discount to pro forma NAV of A$1.71 per share. This valuation is within our expected initial trading range of A$1.20-A$1.40 per share, representing a peer-like 20% to 30% discount to NAV.

The implication is that Macquarie Atlas Roads (MQA) is being valued at more than A$0.13 per MIG share (A$0.65 per MQA share) based on MIG’s last closing cum-price of A$1.48 per share. This represents a discount to the pro forma NAV of A$0.67 per MIG share in excess of 80%. Should the MQA shares trade at these levels when trading of the stock on the Australian Stock Exchange commences on February 9, 2010, we believe this would represent a relatively cheap option on improving global credit market conditions and a bet on the successful refinancing of MQA’s assets, offering high risk tolerant investors potentially significant upside.

The expected time line for the restructuring process is as follows:

January 25, 2010 – MIG trades ex-MQA and special dividend of A$0.10 per MIG share.
February 1, 2010 – Record date for distribution of MQA shares and special dividend.
February 2, 2010 – MIG renamed Intoll.
February 9, 2010 – Trading in MQA shares on the ASX commences.

For a more detailed analysis of the prospective restructuring of MIG, please refer to our Global Spin-Off Report, published on January 22, 2010.

On January 14, 2010, CSR announced that it continues to progress discussions with the Australian Securities and Investment Commission (ASIC) with regard to the disclosure of asbestos liabilities in the scheme booklet for the proposed de-merger of Sucrogen. As a consequence, CSR and ASIC have agreed to a second adjournment of a court hearing in the Federal Court for approval to dispatch the de-merger documentation to CSR shareholders ahead of an EGM. Originally scheduled for mid-December 2009, and then delayed to January 15, 2010, the court hearing is now expected to take place in the week beginning January 18, 2010.

While this may cause some concern about a possible slippage in the de-merger timetable, CSR remains insistent that the de-merger can be implemented on schedule by the end of March 2010.

For a more detailed analysis of the prospective de-merger, please refer to our Global Spin-Off report published on January 11, 2010.

On January, 8, 2010, Hutchison Telecommunications International (HTIL) announced that its principal shareholder, Hutchison Whampoa (13 HK), which owns 60.36% of the company, has proposed to buy out HTIL minorities at a price of HK$2.20 per share. This represents a c.33% premium over the pre-suspension share price of HK$1.65 (suspended on January 4, 2010, pending an announcement on the potential offer), and a c.38% premium over the average HTIL share price of HK$1.59 since October 28, 2009, when HTIL completed the sale of its stake in Israeli mobile phone operator, Partner Communications (PTNR TV / PTNR US). Under the company’s articles of association, the privatization will require 75% of voting minority approval and not more than 10% of minority dissention.

We believe the offer is generous and will likely be accepted. Our sum-of–the-parts analysis suggests that the offer values HTIL’s emerging businesses at a 1.7x estimated end 2009 NAV (see exhibit below). Given the lack of visibility and perceived risks – none of these businesses is generating profit and all are draining cash – we think the offer is very reasonable. Furthermore, there are two additional reasons why we believe the offer should be accepted: 1) Hutchison Whampoa has categorically stated that it will not raise its offer; and 2) the announcement indicates that, should the offer lapse, HTIL would not pay out a special dividend from the proceeds of the Partner stake sale as all cash would be retained to fund continued investments in its growth businesses in Vietnam, Indonesia and Sri Lanka.