Aurizon shareholder raises A$347m in block

An undisclosed shareholder offloaded its entire stake less than two weeks after the Australian rail freight operator posted strong earnings.
Aurizon is one of Australia's largest rail freight operators
Aurizon is one of Australia's largest rail freight operators

A$347 million ($273.4 million) was raised from an accelerated block trade in Aurizon Holdings late on Wednesday after an undisclosed shareholder sold its entire stake in the Australian rail freight operator.

The shareholder offloaded 71 million secondary shares -- or 3.3% of Aurizon's enlarged share capital -- at A$4.90 per unit, representing a 1.8% discount to Tuesday's closing price, according to a term sheet seen by FinanceAsia.

The shares were initially marketed at a range of A$4.89 to A$4.92 per unit, a source close to the deal said. 

The clean-up trade met with strong support at launch, with books closing before 7pm Hong Kong time, and was multiple times oversubscribed, the source told FinanceAsia.

The top-10 investors accounted for 70% of the book. Roughly half of the book was allocated to Australian long-only institutional investors, while the remainder of the book went to European and Asian firms, the source said. The majority of takers were long only institutions and there were a handful of hedge funds.

Robust earnings

Aurizon, which raised A$3.99 billion in its November 2010 flotation, posted robust earnings on Feb. 16. For the second half of the year ended December 31, 2014, the rail freight operator reported a net profit after tax of A$308 million, an 188% percent rise over the A$107 million reported in the same prior-year period. Revenues for the period remained broadly flat year-on-year, totaling A$1.97 billion.

The company's executives attributed the improved earnings to its ongoing efforts to reduce costs and improve productivity. This included a net gain of $40 million from the sale of surplus maintenance facilities in Redbank, Queensland.

Aurizon's solid earnings coupled with its decent stock market performance of late -- shares in the company are up 8% so far this year -- made it an ideal time for the shareholder to sell its stake, the source said.

According to data provided by S&P Capital, Aurizon's shareholders include the following: HSBC Global Asset Management, MLC Investment Management, Perpetual Limited, Queensland Treasury Holdings, UBS Global Asset Management, and UniSuper. 

Brisbane-based Aurizon operates a heavy haul freight railway in Australia and transports a number of commodities across the country. This includes shifting coal from mines in Queensland and New South Wales to end customers and ports; iron ore from mines in Western Australia to ports; and other mineral commodities and agricultural products.

Morgan Stanley was the sole bookrunner on the block trade.

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