Macquarie Bank-led consortium to acquire US water utility, Aquarion Company

24 February 2006

A Macquarie Bank-led consortium today announced that it has entered into an agreement to acquire 100% of US water utility, the Aquarion Company (Aquarion) from Kelda Group plc of the UK, for an enterprise value^[1] of US$860 million.

The consortium also includes Macquarie Essential Assets Partnership (MEAP), an unlisted Macquarie-managed fund that invests in essential infrastructure assets located in North America.

Aquarion is a well-established water utility business operating in the New England region of the United States and is one of the 10 largest privately owned water utilities in the country. Aquarion provides water distribution and other related services to approximately 677,000 people in 52 communities in the states of Connecticut, New York, Massachusetts and New Hampshire.

Aquarion’s primary business line is a regulated water distribution business operating as Aquarion Water Company which is regulated at a local level by state Public Utility Commissions.

Aquarion’s utility assets, consisting primarily of water mains, pump stations, treatment facilities, reservoirs and other associated water-utility infrastructure, are included in the acquisition.

Commenting on the transaction, Macquarie Bank’s Chief Financial Officer, Greg Ward, said: “Aquarion is yet another example of Macquarie’s ability to source attractive infrastructure investments with strong and sustainable cash-generating characteristics in a stable and mature regulatory environment”.

“The Aquarion business has appealing investment fundamentals. The company has a sound reputation and capable management, and we are attracted to its  market leading position, consistent standards of water supply quality and high customer satisfaction levels,” Mr Ward said.

It is intended that the Company’s management and employees will remain with the company following the acquisition.

Macquarie Bank will commit US$205 million towards the acquisition, comprising US$100 million for a 50 per cent equity stake in Aquarion, and US$105 million in hybrid equity funding. MEAP will also commit US$100 million for its 50 per cent equity stake, taking the consortium’s total equity commitment for the acquisition to US$305 million. The remainder of the acquisition price will be debt financed.

Macquarie Bank notes that MEAP has now invested, or committed to invest, its total final commitments from investors of C$460 million.

Macquarie Bank will explore a range of options for its equity holding in Aquarion prior to financial close, including potential inclusion in a Macquarie-managed fund.

The impact on Macquarie’s Tier 1 capital ratio during the period of Macquarie’s commitment is anticipated to be marginal.

The acquisition is subject to a number of regulatory approvals, including from the state Public Utility Commissions of Connecticut, New York and New Hampshire. Completion of the transaction is anticipated by the end of 2006.

For further information, please contact:

Matthew Russell
Public Relations
Macquarie Bank Limited
Tel: (612) 8232 4102
Mobile: (614) 1069 9532

Erica Sibree
Investor Relations
Macquarie Bank Limited
Tel: (612) 8232 5008
Mobile: (614) 1302 6309

Suzanne Mercer
Public Relations
Macquarie Group (North America)
Tel: (1 416) 607 5042
Email: suzanne.mercer@macquarie.com

Alison Jefferis
Corporate Communications
Macquarie Group (London)
Tel: (44) 20 7065 2335
Mobile: (0)79 1938 2958