Asciano : AIO Announces Transaction with Brookfield and Qube Consortia

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Date: 15 March 2016

ASCIANO ANNOUNCES TRANSACTION WITH BROOKFIELD CONSORTIUM AND QUBE CONSORTIUM

Asciano Limited (Asciano) (ASX:AIO, OTCUS:AIOYY) previously announced on 23 February 2016 that it had received letters regarding preliminary discussions between Asciano and each of:

• Brookfield Infrastructure Partners L.P. (and certain of its affiliates) (Brookfield), GIC Private Limited (and certain of its affiliates) (GIC) and British Columbia Investment Management Corporation (bcIMC) (together, the Brookfield Consortium); and

• Qube Holdings Limited (Qube), Canada Pension Plan Investment Board (CPPIB), Global Infrastructure Management, LLC (on behalf of itself and its managed funds and clients) (GIP) and CIC Capital Corporation (CIC Capital) (together, the Qube Consortium).

Since the time of these letters, Qatar Investment Authority has also joined the Brookfield Consortium.

The discussions related to a potential transaction under which the Brookfield Consortium and the Qube Consortium would together facilitate the acquisition by way of scheme of arrangement of 100% of the issued share capital of Asciano for $9.28 cash per share, reduced by the cash value of any interim and/or special dividend paid by Asciano after that announcement date (Joint Consortium Scheme).

Transaction Overview

Asciano today announces that it has entered into binding documentation with the Brookfield Consortium and Qube Consortium in relation to the Joint Consortium Scheme including an implementation deed (Scheme Implementation Deed) and sale agreements in relation to Patrick's container terminal business (Ports) and the Bulk & Automotive Port Services business (BAPS).

Under the Scheme Implementation Deed, it is proposed that a vehicle (BidCo) owned directly or indirectly by CPPIB, GIP, CIC Capital, GIC and bcIMC (Rail Consortium), will acquire 100% of the issued capital of Asciano at $9.15 cash per Asciano share (reduced by the cash value of any permitted special dividend) (Scheme Consideration). The $9.15 Scheme Consideration represents the $9.28 per share announced on 23 February 2016, reduced by the amount of the interim dividend of $0.13 per share declared by Asciano on 24 February 2016 which is payable on 24 March 2016. The

Investor and Analyst Enquiries:

Kelly Hibbins

Phone: + 61 2 8484 8046

Email: Kelly_hibbins@asciano.com.au

Media Enquiries:

Richard Baker

Phone: + 61 408 985 008

Email: media@asciano.com.au

combined value of the $9.15 Scheme Consideration and the $0.13 interim dividend per Asciano share implies an enterprise value of approximately $12.0 billion.

The Asciano Board has considered the Joint Consortium Scheme in the context of the previously announced Qube Consortium proposal and unanimously recommends that Asciano shareholders vote in favour of the Joint Consortium Scheme in respect of all of their Asciano shares, subject to:

• Asciano not receiving a superior proposal; and

• an independent expert opining that the Joint Consortium Scheme is in the best interests of Asciano shareholders.

  
  

  Termination of Qube Consortium proposal

  
  

  As a result of its recommendation of the Joint Consortium Scheme, the transaction documentation entered into under the previously announced Qube Consortium proposal, including the Qube Consortium Bid Implementation Deed and associated sale agreements, has been terminated by mutual agreement.

  
  

  No break fee is payable by Asciano with respect to the termination of Qube Consortium proposal transaction documentation or the Asciano Board's support for the Joint Consortium Scheme.

  
  

  Overview of the Joint Consortium Scheme

  
  

  The Joint Consortium Scheme involves the Rail Consortium (through BidCo) acquiring 100% of the issued share capital of Asciano. If the Scheme is implemented, Asciano Shareholders will receive the Scheme Consideration of $9.15 cash per share (reduced by the cash value of any permitted special dividend). In addition, Asciano shareholders eligible on the interim dividend record date will be entitled to retain the $0.13 interim dividend declared on 24 February 2016 and that will be paid to shareholders on 24 March 2016.

  
  

  As permitted under the Scheme Implementation Deed, if the transaction proceeds and ATO approval is obtained, Asciano expects to pay a fully franked special dividend of up to $0.90 per share before the Scheme Implementation Date (Special Dividend). To the extent that a Special Dividend is paid, the cash component of the Joint Consortium Scheme consideration will be reduced by the amount of the Special Dividend.

  
  

  The combined value of the $9.15 Scheme Consideration and the $0.13 interim dividend per share (excluding the potential benefit of franking credits associated with the interim dividend or Special Dividend) represents a 41.0% premium to the undisturbed volume weighted average price (VWAP) of Asciano Shares during the five trading days leading up to and including 30 June 20151 of $6.58 and an EV/EBITDA multiple of 10.5x for the twelve months ended 31 December 2015. The Scheme

  Consideration of $9.15, represents a 39.0% premium to the undisturbed VWAP of Asciano Shares during the five trading days leading up to and including 30 June 20152 of $6.58 and an EV/EBITDA multiple of 10.4x for the twelve months ended 31 December 2015.

  
  

  The value of the franking credits associated with the interim dividend and Special Dividend are up to approximately $0.05 per share and up to approximately $0.39 per share respectively. Those shareholders who can capture the full benefit of the franking credits associated with both the interim

  
  

  1 The day prior to Asciano confirming to the ASX that it had received a non-binding indicative proposal from Brookfield regarding the initial Brookfield scheme proposal.

  2 The day prior to Asciano confirming to the ASX that it had received a non-binding indicative proposal from Brookfield regarding the initial Brookfield scheme proposal.

  dividend and the Special Dividend may receive an additional benefit valued at up to approximately

  $0.44 per share.3

  
  

  Under the Joint Consortium Scheme:

  
  

• the Rail Consortium (through BidCo) will acquire all of the shares in Asciano, and with it the Pacific National rail business of Asciano;

• Asciano's Patrick business will be acquired from Asciano for $3.84 billion (on a cash and debt free basis) as follows:

  • a terminals joint venture comprising of Qube and the Brookfield Consortium (or entities controlled by them) (Terminals JV) would acquire 100% of Asciano's Ports business for $2.915 billion;

  • the Brookfield Consortium (or entities controlled by them) would acquire 100% of the BAPS business (including the 50% interest in Australian Amalgamated Terminals (AAT), the related shareholder loans provided by Asciano to AAT and the 50% interest in the ACFS Port Logistics joint venture) for $925 million (less debt assumed by the acquirer); and

    
    

  • the sales referred to above would be conditional upon the Joint Consortium Scheme becoming effective; and

    
    

• the relevant Qube and Brookfield entities would sell their existing Asciano shareholdings to BidCo at the scheme consideration price, through transfer agreements conditional upon the Joint Consortium Scheme becoming effective.

  
  

  The Joint Consortium Scheme is subject to a number of conditions precedent including (among others):

  
  

• Asciano shareholder approval;

• Receipt of regulatory approvals, including ACCC, OIO, FIRB, ASX4 and under the EU Merger Regulations, if required;

• An independent expert opining that the Joint Consortium Scheme is in the best interests of Asciano shareholders;

• Certain third party consents to the change of control of Asciano;

• No Asciano "material adverse change" or "prescribed occurrence" occurring; and

• Court approval.

Under the Scheme Implementation Deed, Asciano will be bound by customary exclusivity provisions including "no shop", "no talk", "notification" and "matching" obligations. A break fee of $88 million will be payable to the Qube Consortium by Asciano in certain circumstances.

A full copy of the Scheme Implementation Deed, including all applicable conditions, is attached to this announcement.

3 Whether a shareholder is able to capture the full benefit of the franking credits will depend on their personal tax circumstances, including whether they satisfy relevant holding period rules.

4 Australian Competition and Consumer Commission; Overseas Investment Office (New Zealand); Foreign Investment Review Board (Australia); Australian Securities Exchange, respectively.

ASIC Relief

ASIC has granted 'joint scheme relief' to the Joint Acquirers5 which enables them to enter into the Framework Deed in relation to the Joint Consortium Scheme, even though entering into that agreement will give each Joint Acquirer a relevant interest in approximately 40% of Asciano shares.

That relief is subject to a number of conditions, including a standard ASIC condition that if, after the announcement of the Joint Consortium Scheme and prior to its implementation or termination, a rival takeover bid is announced at a price which is 105% or more than the consideration under the Joint Consortium Scheme, then the Joint Acquirers will have 7 days after that rival takeover bid goes unconditional to either match or accept that higher rival offer for all of the shares they hold in Asciano. If such higher rival bid is structured as a scheme of arrangement rather than a takeover bid, and Asciano changes its recommendation in favour of that higher rival scheme, then the Joint Acquirers will be precluded from voting the shares they hold against that higher rival scheme. That relief is also subject to a standard ASIC condition that the Framework Deed must immediately terminate if the Joint Consortium Scheme is terminated for any reason.

ASIC has also granted relief to the Qube Consortium members from any obligation which they may have under section 631 of the Corporations Act to make a takeover bid for Asciano on the terms described in the previous Qube Consortium takeover proposal within 2 months of the announcement of that proposal, on the basis that the previous Qube Consortium takeover proposal is being replaced by the new Joint Consortium Scheme proposal. Under the terms of the ASIC relief, the Qube Consortium could be required to proceed with that takeover proposal if the Joint Consortium Scheme is terminated for any reason, but would not be required to do so unless Asciano had at that time entered into a new bid implementation agreement and share purchase agreements in the same or substantially the same form as those entered into with the Qube Consortium at the time of announcement of the previous proposal.

Indicative Timetable and Next Steps

It is anticipated that a Scheme Booklet in relation to the proposed Joint Consortium Scheme will be sent to Asciano shareholders in early May 2016. Asciano shareholders are expected to meet to vote on the Scheme in early June 2016.

An indicative timetable for the Joint Consortium Scheme is set out below:

Event Expected Date

Lodge Scheme Booklet and Independent Expert's Reports with ASIC for review

Early April 2016

First Court Hearing Date Late April 2016

Dispatch of Scheme Booklet Early May 2016

Scheme Meeting Early June 2016

Second Court Hearing Early June 2016

Effective Date Early June 2016

5 The 'Joint Acquirers' are: Qube Holdings Limited; Brookfield Infrastructure Partners Limited as general partner of Brookfield Infrastructure Partners L.P. ("Brookfield"); BIF II GP Bermuda Limited as general partner of BIF II Nitro AIV (Bermuda) LP; Global Infrastructure Management Australia Pty Limited in its capacity as trustee of the GIP Bell Australia Unit Trust; Perpetual Corporate Trust Limited in its capacity as trustee of the CPPIB Australia Trust; Beijing Shunrong Investment Corporation; bcIMC Nitro Trustee Inc., in its capacity as trustee of the bcIMC Nitro Investment Trust; Asciano Investment Company; and Buckland Investment Pte Ltd.