Keppel Infrastructure merges with CitySpring to form $2b trust

Keppel and Temasek will be the largest unitholders.

Keppel Infrastructure Trust yesterday revealed that it is merging with mainboard-listed CitySpring Infrastructure Trust in order to create a combined trust with a market capitalization of $1.9 billion and total assets worth $4 billion.

The combined trust will be Singapore’s largest infrastructure-focused business trust. Keppel and Temasek to remain the two largest unitholders in the Combined Trust.

Upon completion of the combination, Keppel Corp will become the largest unitholder with 22.9% ownership in the trust. Meanwhile, Temasek will become the second-largest unitholder with 19.97% ownership in the trust.

Keppel Infrastructure has also agreed to acquire a 51% stake in Keppel Merlimau Cogen Plant for $510m.

KMC, a 1,300 MW combined cycle gas turbine power generation facility, is located on Jurong Island. The KMC acquisition will form an integral part of the combined trust.

Here’s more from CitySpring and Keppel Infrastructure:
The Combination will be effected by CIT acquiring all the business undertakings and assets of KIT in exchange for 1,326 million new units of CIT.

The swap ratio has been arrived at based on the market capitalizations of S$658 million of KIT and S$753 million of CIT, based on their units' respective volume weighted average prices ("VWAP") for the 180-day period ended on 13 November 20141.

Each KIT unitholder will receive 2.106 new CIT units for every KIT unit held. The swap ratio is fixed and is not subject to any adjustment.

Each of KIFM and CSIM believe the transactions to be DPU accretive4 for existing unitholders of KIT and CIT, respectively. In addition, prior to the completion of the Combination, existing CIT unitholders will receive a one-time distribution of S$30 million.

After the completion of the Combination but before the equity fund raising, the Combined Trust will make a one-time S$30 million distribution to its expanded base of unitholders.