Challenger Infrastructure Fund : CIF announces sale of LBC

MARKET RELEASE

5 June 2012, Sydney - Challenger Infrastructure Fund (ASX: CIF) today announced that it has entered into a binding sale and purchase agreement for the sale of its 66.2% interest in LBC for US$277.8 million1 (A$286.7million2) to a consortium comprising Dutch pension fund asset managers APG Algemene Pensioen Groep N.V and PGGM (through its PGGM Infrastructure Fund 2012) and Australian superannuation investors, all advised by Access Capital Advisers. Completion of the sale is expected to occur in late July or early August 2012. The sale is subject to the receipt of European antitrust clearance and, if required by the ASX, the approval of the unit holders of CIF.
Chief Executive Emil Pahljina said: "The sale of LBC follows a rigorous and exhaustive process. The price achieved reflects both the resilience of LBC's existing operations as well as its future growth prospects. Following the sale, CIF will have cash reserves of circa A$415 million (A$1.31 per unit) plus its interests in Inexus".
The Board believes that the sale of LBC is in the best interests of unit holders and notes the consideration CIF will receive for LBC relative to the current unit price. The sale price of US$277.8 million1 implies an Enterprise Value / EBITDA multiple of circa 10x LBC's forecast EBITDA for the year ended 30 June 2012. The effect of the sale of LBC on CIF's consolidated revenue, total assets, profit before tax, extraordinary items and total equity attributable to unit holders is set out in Annexure A below.
Costs associated with the transaction (including Rothschild and Challenger Management Services Limited (CMSL) advisory costs, vendor due diligence costs, European, US and Australian legal and tax advice) are estimated at A$5.8m, resulting in net proceeds of circa A$281 million2. Consistent with prior divestments, CIF has entered into an AUD/USD foreign exchange hedge at a rate of 0.9689 in order to fix the Australian dollar value of the sales proceeds on the expected completion date.
The Board expects to provide an update on its intentions with respect to the fund level cash at the time of completion of the LBC sale.
The Board, CMSL and Rothschild have been actively engaged with a strategic review of CIF and its assets since August 2011. The refinance of the Inexus debt facilities, due in August 2012, is a key focus for management and the Board. The Board has not made any decision concerning Inexus or the entry into any transaction involving Inexus. Given the current economic climate in Europe there is no certainty that any further transactions will be entered into or recommended by the Board. The existing Inexus debt facilities have recourse to Inexus' assets only.
Following the sale of LBC, CIF will continue to be an investor in global infrastructure assets through its investment in Inexus. The Board does not consider that unit holder approval is required for the sale of LBC. In accordance with ASX Listing Rules 11.1, 11.2 and ASX Guidance Note 12, CIF is required to seek a determination from the ASX as to whether it will exercise its discretion to require unit holder approval. Challenger Listed Investments Limited (as RE for CIF) will apply to the ASX for a determination and will notify unit holders upon receipt of that determination.
The entry into this binding sale agreement for LBC results in the variations to the CMSL Management Agreement taking effect. For additional information on the variation, unit holders should refer to the market release of 24 February 2012.

ENDS

1. Based on an expected completion date of 31 July 2012

2. Based on AUD / USD exchange rate of 0.9689

Nicole Webb, Corporate Communications Associate, Challenger Limited, 02 9994 7806

Challenger Infrastructure Fund (CIF Investment Trust 1 ARSN 114 139 703 and CIF Investment Trust 2 ARSN 114 139 632) Responsible Entity Challenger Listed Investments Limited ABN 94 055 293 644 AFSL 236887

Annexure A - Information on the effect of the Sale on CIF

ASX Guidance Note 12 requires that CIF outline the likely effect of the sale of LBC on CIF's consolidated annual revenue, annual profit before tax, total assets and total equity attributable to unitholders. The relevant information is set out in the following table.
The impact of the sale of LBC on CIFs consolidated annual revenues and profit has been determined by reference to the last annual statutory accounts provided to the ASX, being in respect of the 12 months ending 30 June 2011. The impact of the sale on the consolidated total assets and equity attributable to unitholders has been determined by reference to the last statutory balance sheet provided to the ASX being as at 31 December 2011.

1. Impact on revenue for the 12 months ended 30 June 2011.

2. Impact on profit (loss) before tax for the 12 months ended 30 June 2011, excluding the statutory gain on sale.

3. Impact on total assets as at 31 December 2011

4. Non-controlling interest movement relates to the elimination of the minority interests in LBC and Inexus.

5. The movement in the equity attributable to CIF unitholders is the difference between the net consideration received for the sale of LBC and the proportionate carrying value of LBC as at 31 December 2011. This includes an estimate of the statutory gain on sale and the movement in reserves.

6. Impact of LBC sale comprises divestment of LBC plus consideration received (assuming an expected completion date of 31 July 2012 and an FX

rate of 0.9689) plus 12 months interest on consideration received.

Any forward looking statements included in this document are by nature subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to, Challenger, so that actual results or events may vary from those forward looking statements, and the assumptions on which they are based.

Nicole Webb, Corporate Communications Associate, Challenger Limited, 02 9994 7806

Challenger Infrastructure Fund (CIF Investment Trust 1 ARSN 114 139 703 and CIF Investment Trust 2 ARSN 114 139 632) Responsible Entity Challenger Listed Investments Limited ABN 94 055 293 644 AFSL 236887

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