Town of Port Hedland Council tonight resolved to enter a historic deal with AMP Capital and the Infrastructure Capital Group to lease the Port Hedland International Airport.
Mayor Kelly Howlett said the new operator would bring expertise, experience and economic opportunities.
“Tonight was the start of a new era for our community as Council resolved to appoint new custodians of Port Hedland International Airport,” Mayor Howlett said.
“Council resolved to enter a 50-year lease of the Port Hedland International Airport for a total transaction value of $205 million ($165 million upfront price and $40 million capital requirement).
“As Australian investors, the AMP Capital and the Infrastructure Capital Group (ICG) consortium will be fitting custodians of our community asset.
“They are committed to working with our community to improve the airport, rebuild the airport, deliver a high-quality asset, and provide the best level of customer service possible.
“Ensuring local employment, commencing dialogue on airfare reduction, driving future economic growth and improving international flight connectivity are also priorities for the new consortium.”
AMP Capital Head of Australian and New Zealand Funds Michael Cummings and ICG Managing Director Tom Laidlaw said they were pleased to be appointed as lessee for Port Hedland International Airport and looked forward to working with the Town and local community in the coming months.
Mr Cummings said AMP Capital was an experienced long-term investor in airports.
“We are pleased to include this airport in our global portfolio, which already includes Melbourne and Launceston airports in Australia and Newcastle Airport in the UK," Mr Cummings said.
“We and our investors like the fact Port Hedland International Airport is a strategically-located asset servicing one of the world’s largest commodity export ports, it has stable cash flows from both the airport’s aeronautical and non-aeronautical businesses, and there is significant scope for the consortium to add value through investment in the terminal and improving the airport’s retail offering.
“We look forward to working with Town of Port Hedland and the local community going forward.”
Mr Laidlaw said Port Hedland International Airport was a unique asset.
“It is a critical piece of infrastructure for Port Hedland and the local resources industry and, as such, has characteristics that make it a great fit for our investors such as stable cash flows and the fact the nearest airport is some 250 kilometres away," Mr Laidlaw said.
“We are pleased to partner with AMP Capital and the community to deliver the best outcome for the airport’s customers and the Town of Port Hedland.
“We are very excited at the prospect of developing and implementing a new master plan for Port Hedland International Airport, which once completed, will enhance the passenger experience at the airport.”
Mayor Howlett said the upfront price would enable Council to consider the creation of a future fund to provide significant investment into the community and for future generations.
“We’ve got a once-in-a-generation opportunity to fund a whole range of benefits for our community – anything from new cultural centres, facilities, roads and footpaths, parks and gardens, community services.
“Based on the illustrative model of investing $160 million into the fund and earning a conservative/balanced 5% interest rate, there would be $388.5 million available for our community.
"It’s an enormous value and certainly affirms the benefit of pursuing a leasing arrangement for the airport.
“The final choices of where to invest will be driven by our community and it really is in your hands as to what is possible – we will now commence a significant engagement program to determine the best model and investment structure for our community.”
Key features of the bid:
- The consortium has demonstrated a robust structure; and is supported by key organisations. They are experienced airport and infrastructure investors with over $160 billion in funds under management globally including airport and other infrastructure investments.
- The total transaction value ($205 million) demonstrates value for money for the Town. The Western Australia Treasury Corporation; the Fair Value assessment undertaken by the Town’s advisors; and the Fair Value assessment of the aggregation of the land, infrastructure, plant and equipment and building assets undertaken by registered valuers Asset Val have comprehensively confirmed we are receiving an excellent price for this asset. This is money we will put to good use in the community.
- The consortium has provided evidence its bid is fully funded including the funding for the mandatory capital works expenditure to be undertaken in the first five years of the lease.
- The consortium has deep experience in owning and managing airports and other infrastructure assets in Australia and around the world and has experience in gaining all necessary approvals associated with these assets. The consortium has confirmed they have the requisite internal approvals to undertake the transaction.
- The consortium has demonstrated a robust structure, suitable to operate the airport and undertake the future development of the airport. The consortium’s airport governance structure includes an independent board, sub committees, and asset management support provided to the Port Hedland International Airport management team from its own in-house highly experienced airport, construction, property, and infrastructure management teams.
A Special Council Meeting was held on Tuesday 25 August – council resolved to lease the airport in an absolute majority vote.
For more information:
Alison Kenny, Senior Communications Officer
(08) 9158 9355