The listing of Multiplex looms as one of the largest deals in WA this year. Mark Beyer takes a closer look at the mechanics of the listing.
MULTIPLEX chairman John Roberts and his family can look forward to a very tidy income from their soon-to-be listed property group.
With a shareholding of 42 per cent in the listed company, the Roberts family will receive dividend income of $29 million in 2004 and $65 million in 2005.
This exceeds the audited $46 million profit (before interest and tax) from the existing privately owned business.
That, in short, explains why a 42 per cent shareholding in the listed company will be better for the Roberts family than 100 per cent of the existing business.
The prospectus for Multiplex’s initial public offering, released at the end of last week, reveals a complex series of transactions to transform the existing business and dilute the Roberts family’s shareholding.
The IPO will raise $1.1 billion with most of the proceeds used to purchase a portfolio of 12 commercial and retail properties across Australia.
These properties, with their steady income, will be combined with Multiplex’s existing construction and development activities, which have more volatile income.
As a result of the changes, the group’s total revenue will grow from $2.3 billion this year to $2.9 billion in 2004 and 2005.
More importantly, profit before interest and tax will increase sharply to $155 million in 2004 and $230 million in 2005.
The comparative profit figure for 2003 (based on a like-for-like accounting treatment) is $67 million.
However, the prospectus reveals that Multiplex’s audited profit before interest and tax was significantly lower at $46 million.
The difference between the two was a $9.4 million loss on discontinued operations and a $10.9 million loss on non-core assets.
The non-core assets are being sold to the Roberts family at market value of $16.6 million prior to the listing.
The Roberts family will also pay $103,500 per annum to lease Multiplex’s Egerton farming property in the Swan Valley.
The mechanics of the IPO and the Roberts family sell-down are complicated by the structure of the deal, which ‘staples’ (combines) the existing company to a newly created property trust.
The Roberts family will initially raise $541 million by selling a 58 per cent stake in the existing business to the public.
Of this amount, the family will retain $84.5 million.
Most of the proceeds will be reinvested in units in the property trust, which plans to raise capital in two instalments.
The first instalment, payable immediately, will raise $615 million and the second instalment, payable in December 2004, will raise a further $485 million.
In the interim 12-month period, the Roberts family will make an interest-free loan to the property trust of $201 million, being the amount of the final instalment payable on its units.
The end result is that the family will have a 42 per cent shareholding in the listed company.
“The Roberts family has advised that it intends to retain a significant investment in the group for the foreseeable future,” the prospectus states.
This is backed up by the presence of three members of the Roberts family on the company’s board of directors. John Roberts is chairman while elder son Andrew is managing director and younger son Tim is a director of the company and managing director of the development division.
