Transurban to raise $1.9bn for West Gate Tunnel project

An artist’s impression of the entrance to the West Gate Tunnel

Transurban will carry out one of the largest capital raisings in Australia this year when it taps shareholders for $1.9 billion to help fund its share of Melbourne’s West Gate Tunnel project.

Financial markets have been on standby for at least a week expecting the transaction, which will be steered by Macquarie, UBS and Morgan Stanley.

Transurban (TCL) shares will be in a trading halt for at least the next two days while it raises $1.9 billion through a renounceable rights offer which will also have a retail component.

In an announcement today, Transurban said the renounceable rights offer would be three for 37 shares to eligible shareholders at $11.40.

The offer price is a 4.6 per cent discount to the theoretical ex-rights trading price.

The company will also drawn down a new $550 million loan that will operate alongside its current $1.1. billion bank facility.

Transurban’s contribution to the West Gate Tunnel project is $4 billion and the company has come to an agreement with the Victorian government to build and operate the tunnel until 2045.

Construction on the project will start today and is expected to last for five years.

Transurban said the project would help ease congestion in inner Melbourne and provide a direct freight link to the Port of Melbourne.

In its statement today, Transurban reaffirmed its 56 cent per share distribution guidance for the 2018 financial year, which included the interim 28c payout ordered for the first half.

The new shares issued now will not receive that first half distribution.

Transurban said the institutional component of the entitlement offer is set to be completed on Friday, and the retail leg of the share offer will open next Tuesday and close on January 24.