Brookfield Infrastructure Partners LP (BIP) 2012 Q1 法說會逐字稿

Hello this is the chorus call conference operator. Welcome to the Brookfield Infrastructure Partners Conference Call and Webcast to present the Company's 2012 first quarter results to unit holders. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. (Operator Instructions) At this time, I would like to turn the conference over to Michael Botha, Senior Vice President of Finance. Please go ahead Mr. Botha.

Thank you operator, and good morning. Thank you all for joining us for Brookfield Infrastructure Partners' first quarter 2012 earnings conference call. On the call today is Chief Executive Officer, Sam Pollock, who will discuss highlights for the quarter, provide comments on our strategy and the outlook for our business. Also joining us is John Stinebaugh, our Chief Financial Officer, who will review our financial results. Following the remarks, we look forward to taking your questions and comments.

At this time, I would like to remind you that in responding to questions and in talking about our growth initiatives and our financial and operating performance, we may make forward looking statements. These statements are subject to known and unknown risks and future results may differ materially. For further information on known risk factors, I would encourage you to review our Annual Report on Form 20-F which is available on our website. With that, I would like to turn the call over to Sam Pollock. Sam?

Thank you Mike, and good morning everyone. I'm going to begin with just a short overview and then I'll turn it over to John to give a summary of our results for the quarter.

We are pleased that we're able to start the year with strong first quarter results. Our stable cash flow profile and global footprint insulated us from the variable speed economy that has developed. We continue to see considerable strength in the South American economies where we are active and the US economy is demonstrating signs of recovery. However, economic activity in Europe is suffering from several years of austerity programs, and growth in China while still strong has slowed.

Our performance was consistent with our expectations, during that transitional period in which we are commissioning a number of projects that will meaningfully contribute to our business over the next 12 months. Following our 7% distribution increase in February 2012, our payout ratio will be 65% of our funds from operation for the quarter, the midpoint of our target range of 60% to 70%.

Looking to the balance for the year, our primary objective is to execute our growth plans, particularly our Australian Railroads Expansion Program, while continuing to operate our businesses efficiently. We believe that continued political uncertainty such as the recent election of the Socialist party in France combined with challenges in the European banking sector may provide us with unique acquisition opportunities. Additionally, we are working hard to replenish our capital backlog by firming up a number of early-stage organic growth projects. With that, now let me turn it over John to review our results for the quarter.

Thanks Sam. In my remarks, I'll focus on FFO. We highlight this metric because we believe it's a good proxy for cash flow from our operations. I'll also focus on AFFO yield, which is equal to FFO, less maintenance CapEx, divided by invested capital. This is a measure of how effectively we deploy our capital.

During the quarter, our FFO was $108 million, an increase of $10 million over the prior year. However, our per unit FFO of $0.58 was $0.04 lower than the prior year due to the impact of our October equity issuance which primarily funded the investment in our railroad. Cash flow from this investment will ramp up over the next four quarters.

Our results reflected strong performance from our transport and energy and utilities platforms, partially offset by lower contribution from our timber business. Overall, we generated an AFFO yield of 10% on an invested capital base of $3.6 billion. Our utilities segment generated FFO of $65 million during the quarter compared with $61 million in the prior year.

The increase was primarily driven by greater contributions from our regulated terminal and electricity transmission operations as a result of additions to our rate base and favorable foreign exchange movements. This was partially offset by a reduction in the contribution from our UK regulated distribution business where we had lower connection revenues compared with an exceptionally strong prior year period. For the quarter, our utilities segment generated an AFFO yield of 14% compared with 13% in the prior year.

During the first quarter, our transport and energy segment posted a sharp increase in cash flow with $62 million of FFO compared to $45 million in the prior year. The improvement reflects a doubling of FFO from our Australian Railroad, supported by consistent results from our energy transmission and distribution and ports businesses.

Three of these six expansion projects at our railroad have commenced commercial operations and we transported an incremental 1.4 million tons of iron ore over our network during the quarter. By the end of the second quarter, we expect that these three customers to be fully ramped up and shipping at a rate of approximately 2.4 million tons per quarter.

In mid-April, field production resumed at the Teesside Cast Products plant which is a large customer of our UK port. Although the port's through-put has been impacted by economic weakness in Europe, we expect EBITDA to increase by between $6 million to $8 million annually once production at this field facility reaches capacity.

Finally, this was the first quarter of our ownership of our Chilean toll road. Although it's early days, this investment is off to a strong start with traffic 14% above prior year levels. Overall, our transport and energy segment generated a 12% AFFO yield in the quarter compared to an 8% AFFO yield in the prior year.

Our timber segment posted FFO of $6 million for the quarter, compared to $10 million in the prior year. While we continued to benefit from relatively strong export markets, our performance was impacted by reduced demand from China due to slowing growth and high inventories. For the quarter, average prices for our highest margin product, Douglas Fir, declined by 6% and prices for White Wood declined by 11% compared with the prior year. This was partially offset by a 6% increase in sales volume.

Our timber segment generated a 5% AFFO yield in the quarter compared to an 8% AFFO yield last year. During the second half of the year, we expect that the excess inventory will be absorbed in the Chinese market. Once improved pricing materializes, we will be in a position to increase production above our long run sustainable yield.

On the corporate finance front, we are working on several initiatives, the most important of which is the refinancing of our North American gas transmission business. This system is a strong franchise consisting of over 15,000 kilometers of natural gas transmission lines serving 60% of the Chicago market.

Over the past two years, this business has been challenged by a combination of a negative rate settlement as well as declining market fundamentals. Consequently, a decision was made to reduce leverage in this business. Together with our partners, we have agreed to inject equity to retire holding company debt, our share of which is $200 million.

We are also undertaking a refinancing at the operating company. We recently launched a tender offer to buy back the December 2012 maturity of its bonds and we intend to refinance this debt with a combination of secured loans and bonds. In addition, a portion of the annual cash flow generated by the business will be used to retire additional debt. In time, we expect cash flow from this business will recover significantly along with its credit profile.

We have also begun to work on a corporate debt issue of approximately $300 million to fund the equity injection into our North American gas transmission business, as well as an upcoming $120 million corporate bond maturity. In that regard, we recently engaged S&P in a rating advisory service role. We are pleased to report that S&P has initiated coverage of Brookfield Infrastructure with an investment grade of BBB-plus which we believe will provide us to access to low cost debt capital. We expect to complete this financing in the next two quarters.

Finally, we continue to proactively advance a number of refinancings to take advantage of the historically low interest rate environment. We executed a NZD155 million refinancing at our New Zealand regulated distribution company in the bank market with an average life of four years and an average spread of 180 basis points over the New Zealand base rate.

We are beginning to focus on a number of 2013 refinancings. We finished the quarter with $1.3 billion of liquidity across the group including almost $700 million at the corporate level.

Now, I'll turn the call back over to Sam to walk through our growth initiatives and outlook.

Thank you, John. As John mentioned, I'll touch on some of the current growth initiatives first and then give a short summary.

In the first quarter, we invested $216 million in a number of organic growth initiatives and an acquisition. We finished the quarter with a capital backlog of over $600 million and construction work in progress of $370 million. Of the total capital to be commissioned, approximately two-thirds is associated with our Railroads Expansion Program and network upgrades. The remainder is that diversified portfolio of projects in our utility operations.

At our Australian Railroad, we made significant headway on the upgrade of its Midwest segment, the largest component of our expansion program. To date, we've invested 62% of the capital, procured 92% of the material, and laid 72% of the track for this project. At its peak, construction on the Midwest segment employed about 750 people.

As we have finished the labor intensive earth work, we are now in the process of demobilizing various work crews this month. Over the remainder of the year, we expect to commence service of two more projects, bringing the total to five of the six that comprise the overall expansion program. By the end of the first quarter of 2013, these five projects will be fully operational accounting for over 90% of the expansion program's anticipated $150 million of annual incremental EBITDA.

We also continued to advance the construction of our Texas electricity transmission system. The system is comprised of three lines and six sub stations in West Texas. At quarter end, we had secured 100% of the right-of-way easements for the first line, 98% for the second line, and about two-thirds for the third line. We have broken ground on the first two lines and we will start construction of the third line in the latter part of the year. The project remains on schedule with an online date in the first half of 2013.

In January, we invested $55 million in a Brookfield-led consortium that acquired a regulated distribution business in Colombia. Although our initial equity investment was modest, we are excited about this opportunity and the ability to invest alongside several notable Colombian pension funds. This utility is located approximately 150 kilometers north of Bogota, serving their region with a population of 1.3 million people that is home to emerging coal, steel and cement industries.

Colombia's regulatory framework is similar to Chile's whereby utilities earn a real return on replacement costs. Furthermore, the electricity distribution industry in Colombia is quite fragmented, and we hope to use this company as a platform to build a broad-based electric utility business within the country.

Finally, we continue to advance feasibility and planning work for the Dudgeon Point coal terminal project. Over the past several months, we have held substantive discussions with several large mining companies that are interested in sizable capacity commitments. Additionally, we recently launched an open season process to assess demand from smaller mining companies and we'll have results from this initiative shortly. Although there is considerable work to progress to construction ready status, we remain optimistic that we will be able to convert this opportunity to a project in our capital backlog.

In summary, we remain positive regarding the process for our business for the balance of the year. Although we expect Europe to continue to struggle, this may be offset by a renewed momentum in China as the government there has the capacity to continue investing in infrastructure to manage the transition to a more consumer-driven economy. Despite the uncertainty in the global economy, we are on track to deliver cash flow growth over the next 12 months as we commission a large proportion of our capital backlog.

With our strong balance sheet and access to debt equity markets, we are also actively looking for acquisitions. We continue to believe that interesting opportunities will arise from uncertainty in Europe. During the quarter, we witnessed renewed activity amongst European companies to recapitalize their balance sheets through asset sales.

Another focus is the North American Midstream sector as the collapse in natural gas prices has dramatically clouded the outlook for a number of midstream businesses. In such an environment, our strategy is to take advantage of any dislocation that results and opportunistically acquire high-quality assets at a discount to replacement costs.

Operator, that now concludes my remarks. I'd like to turn the call back over to you to open the call for any questions.

(Operator Instructions) Bert Powell of BMO Capital Markets.

Hello Sam, what's -- you put $200 million more into NGPL. What's you're thinking in terms of midstream assets? Would you be more interested in increasing your position in NGPL? By taking out, maybe, one of the Myria partners? Or are you thinking about you're happy with that and you would look in a different ground to till?

Hello Bert. Thanks for that question. Let me start and then I'll probably ask John to make a few comments as well. He sits on the Board of NGPL for us.

Just in general, obviously we know the NGPL asset very well and should an opportunity come up where we could increase our interest there at the appropriate value, I think we would very much consider that. My sense is that all our partners share the same view of the asset, that there's lots of growth that will come back into that asset because it's very well placed and that it will do well in the subsequent recovery.

So I don't foresee that they'll be an opportunity for us but if one did arise then I think we would definitely look at that, and given the fact that we know it well, that would be a logical place for us to start. But we think that there are probably a lot of other situations where owners of midstream assets are not as well capitalized as the shareholders of NGPL are and that there's probably a number of more likely candidates for us to pursue. Maybe with that, I'll just turn to John to talk a bit about some of our outreach initiatives.

Bert as you're well familiar, in this natural gas price environment, not only have you seen natural gas prices decline. But spreads for storage have declined. Basis spreads which drive transportation value has compressed, and the rig count for natural gas wells has declined pretty sharply. So we think there will be opportunities to potentially acquire natural gas storage assets, transportation assets, as well as gathering and processing assets.

It's been a pretty robust environment for midstream valuations to this point. The MLPs have low cost of capital and have been very aggressive buyers of a lot of the assets that have traded hands recently. But we think with some of the stress driven by the decline in the spreads that I've talked about that there could be some opportunities that arise. We think that we'd be very interested in deploying capital and making acquisitions if we can find the right assets.

Just out of curiosity, I'm assuming you guys were in some way shape or form involved in the Warrick purchase by one of the BAM funds. I'm just curious around the thinking is to why that's -- you're not involved in that given it's a storage asset? Not that it's material, but I'm just curious

So Bert, we did buy that. That is -- a portion of that is in Brookfield Infrastructure.

Okay, okay.

As you probably recall, we are the largest investor in a Brookfield private fund called Brookfield America's Infrastructure Fund. We have a 25% interest in that. So any capital that gets deployed in that fund, 25% of it, a minimum of 25% of it comes into Brookfield Infrastructure. Obviously for larger transactions we tend to take up the balance of the investment. So, we tend to buy a lot more than that 25%.

Obviously from an operational perspective, our team, our infrastructure group manages all those assets. So, we control and operate them. So, in fact that asset was the one that we acquired and it is held by the Company.

Okay. My apologies. I thought it -- you didn't mention it in the letter so I thought it was not part of Brookfield Infrastructure proper.

Yes, and Bert that transaction just closed pretty recently, but we do think there's an opportunity to build a portfolio of natural gas storage assets. We think it does -- that asset class lends itself to a lot of the capabilities that Brookfield has.

There is a lot of optimization opportunities with natural gas storage assets, pretty similar to hydroelectric power assets. We're looking to use the skill set that we've developed to try to enhance the value of a portfolio that we're helping to build.

Okay. Just last question. Just on Colombia, if I look at the numbers it looks like that generated about $5 million in FFO for the quarter on an equity base of $55 million. Am I thinking about that correctly?

That's correct. We closed on that transaction the end of January. We generally would expect that asset to have a AFFO yield of around 10%. It should increase with inflation.

We also think that there's further upside by reducing costs as well as increasing the regulatory recovery of some of the expenses in the business. So, that's an asset that we're very excited about. As Sam mentioned we think there's opportunities to further consolidate within the distribution sector in Colombia, and deploy additional capital.

Okay. Thank you.

Brendan Maiorana of Wells Fargo.

Thanks, good morning. I had a question for you guys with respect to what your customer outlooks are, in the outlook for China. Sam, I think you mentioned that you thought maybe China growth could re-accelerate as we get further on into 2012. I guess it's not with respect to the current operations, but more the future development projects growth capital that you could deploy as you guys talked about at Dudgeon Point.

But beyond that you've got additional rail expansion opportunities which are largely tied to China and then some port expansion opportunities there as well. So, do you still feel confident that those opportunities are likely to be realized given that there's some additional concern that China may be falling down?

Hi Brendan. I guess that's a bit of the million dollar question, because the transparency into China isn't great. Having said that, I guess I'd make two comments.

The first one, in relation to current activity during the quarter, and in particular just following the quarter, there's no doubt that we have seen a tempering of demand and growth from China. We've also seen similarly a tempering of demand from Korea and Taiwan as well. We can see that both, obviously in our sales from the timber business, but we've also seen it just in shipments coming out of our terminal particularly in -- at DBCT. So, that deals with the existing situation.

As it relates to future demand and our outlook for China, our sense from the visits that our teams have made to China in the various parts of our operation are that inventories are being worked through and that all the people that we're talking to, our various customers, are fairly optimistic about the activities in their businesses in the coming parts of the year. In addition to that, in discussions with our customers particularly in relation to Dudgeon Point, we've recently held our open season and we're just starting to get some feedback from our customers in that respect.

But it's -- while I guess we were mildly optimistic that we would have good feedback, in fact, it's come back reasonably robust. We've had some initially large indications of interest for capacity, and so, that tells us that our customers are still expecting there to be a strong growth in China for the years ahead. So, I'm not sure how much you can rely on that as a forecast for Chinese growth, but indications so far from our customers are that the outlook isn't too bad.

Okay. So there's no -- okay, no that's helpful. So there's not a big change for their outlook for longer term growth projects anyway.

Nothing that we can see yet.

Yes, great. Then, this is maybe for Sam or for John. It looked like NGPL was -- that classification changed a little bit in the Supplemental. But it looked like it was higher than what you guys reported in the fourth quarter and that you guys had the cushion gas sale in the fourth quarter. So, was there something that happened there that drove results up at NGPL when we would've expected them to sequentially go down?

Hello Brendan. The first quarter is the seasonally strongest quarter for NGPL. Basically, in the winter, there is the most demand for transportation and we sell the most transportation capacity. So, I think that's some seasonality that you're seeing in the results.

Okay. So okay. But nothing more than that?

That's correct. It's basically seasonality.

Okay. Then another -- just last question. John, when you think about applying corporate debt, one, do you think that the savings that you'll get from an interest rate perspective relative to secured debt at the segment level will be enough to offset the additional management fee that unit holders will have to absorb -- given the way that the Management fee structure works? That the 125 basis points, will you get enough rate savings to offset what you otherwise would get if you'd put it at the segment level?

Well, first of all we've got a very strong rating from S&P as you probably saw, the BBB-plus. We think that it will enable us to access very low-cost capital.

The second point I'd make, is that we are maintaining the strategy we've had where we're going to predominantly fund the business with nonrecourse debt. I don't think you're going to see any more than 5% to 10% of the debt that we raise be recoursed to Brookfield Infrastructure. So, the lion's share is going to be nonrecourse debt as has been our strategy.

But we do think that by being able to leverage the rating that we've got and the low cost of funds that should be able to afford us that, it -- in certain situations will be an economic thing to do for our unit holders.

Do you think that the overall leverage level of the Company on a look-through or pro rata basis, if you've got 10%, let's say if there's 10% corporate level debt. Do you feel comfortable that the leverage targets that you had set out previously, which was largely based on secured debt, nonrecourse debt, you know can be comparable if you've got a 10% allocation at the corporate level?

Well I think the strategy is largely the same, which is we're financing with nonrecourse debt and the amount that we finance is going to be driven by the underlying credit characteristics of the assets that we're acquiring or investing in. So, you'll see that utility assets have got higher levels of debt in the 60% range. On the other hand, transportation assets or timber assets would be closer to probably the 40% range.

But with the quality of all the dividend flows that come up to the corporate level and the diversity that we've got, we think that we can support a modest level of corporate debt at a very strong credit quality.

So, is that to suggest that the 10% corporate debt would be above the prior segment level debt targets that you guys had previously provided?

Well, I think Brendan if you look at it, we're rebalancing the capital structure. The -- when we merged with Prime there was some corporate debt there. So we're refinancing that, and then we're refinancing some holdco debt effectively at the NGPL level.

Okay. All right, thank you.

Andrew Kuske of Credit Suisse.

Thank you, good morning. I guess the first question is for Sam, and it's just in the context of some of your comments in the past on talking with the Iberian companies. I guess what's changed in the last little while?

In the most recent Spanish budget there were some changes to the deductibility of interest for Spanish companies which arguably should motivate some of those companies to delever. So I guess the question is at the end of the day, have you had more accelerated or advanced discussions with companies out of Spain because of some of the changes we've seen recently?

Hello Andrew. I guess let me say that we continue spend a lot of time focusing on opportunities in Spain and in other parts of Europe. There's -- I'd say in the last number of months we have seen a renewed selling coming out of that part of the world.

I don't know if it's necessarily tied to changes in the tax code, to be honest. I think that was just the cherry on top. I think most of the impetus for the selling pressure really is coming from the lack of liquidity in that market and the deleveraging that's going on.

Their -- those -- the companies in those countries were over-leveraged to begin with, but today they just don't have any access to credit within their own country, as all those banks are in trouble. We've seen just very recently in the last couple days, talk about the Spanish government having to bail one, I think the third-largest bank in that country.

Today with the falloff of traffic for roads and other types of infrastructure assets in that country where anecdotally we're hearing that traffic levels are back to 2000 levels, so basically gone back 12 years, companies are incredibly distressed. So I think with all those factors that's the main reason that's driving the selling of assets.

Now, just as a follow-up to that initial question. Do you have any preference at this point in time for a certain type of asset in the Americas or are you still looking very broadly across all the asset classes?

We have a very broad and diversified portfolio. I think any opportunity where we can acquire a business at good value that complements our existing businesses then we have an interest in doing that. I think today, we've highlighted to our investors that where we see particular opportunities is in relation to transportation type assets in Europe and in South America -- because of the European situation and the European companies having to sell.

In addition to that, while it's still at the early days of this phenomenon, we think there's going to be significant opportunities in the midstream sector in North America given what's happened in the natural gas pricing market. So, I think over the next 6 to 12 months that's where we'll focus a lot of our attention.

Then if I may, just on that point on natural gas, and I guess maybe this transitions to John. I guess, just what's your view on the lay of the lands in the natural gas infrastructure space? Because we've seen the El Paso takeover, Sunoco deal just recently announced, among other things that have happened in the last 12 to 18 months. I guess, how do you look at that whole sector on a go-forward basis and really where does Brookfield Infrastructure Partners, along with the base or any other future vehicle, fit into that?

Andrew it is John. In terms of what's been going on in the sector, clearly there's been a ton of M&A activity. There's been a fair number of $1 billion-plus transactions and the valuations have been pretty robust. I think it's really driven by the shale gas phenomenon and a lot of companies trying to position themselves to build that infrastructure and take advantage of the shale gas phenomenon.

But one of the things that we do think is that with natural gas prices and spreads coming down so much, that a lot of the assumptions that people may have used to underwrite deals -- or that underwrote or underpinned their businesses could well change. If you have rig counts coming down, and with that deliverability of natural gas coming down. We think there's going to be impacts that could ripple through and that there may be some opportunities to buy assets that become stressed. So, that's what we're looking to do.

We're not looking to participate and compete against people for assets that are very sought after. We're looking to see if there's going to be some stress in some [contrarian] opportunities that might develop. We think that the natural gas storage, you're starting to see it but you could also see those kinds of opportunities with gathering and processing for particularly dry natural gas, and maybe also transportation.

Okay, that's great, thank you.

Robert Kwan of RBC Capital Markets.

Great, thanks. If I can just come back to Europe here. Are you seeing the best opportunities when you're talking about the European companies for assets in Europe? Or is -- do you see better opportunities for some of these European companies liquidating their international assets kind of how you picked up the Chilean toll roads?

Hello Robert. I guess it's a mix. So we -- in relation to each of the companies that we're speaking to, they generally have a portfolio of assets, some of which are in the Americas. They have some assets actually in North America as well. Then, they obviously have a number of assets in Europe and they're all available.

I think from a transaction execution standpoint, it's probably easier to transact with them on assets in the Americas, primarily because there's less distress and uncertainty around those assets in particular in relation to traffic volumes. Whereas in Europe, while we would have an interest in a number of those assets, we tend to find it challenging to agree on a view of growth and traffic just because things are in such a state of flux there.

So, there are opportunities in both markets, I guess, in summary. but I think -- my expectation is that it's more likely that we'll execute on opportunities in the Americas with -- I think if we're lucky hopefully finding a few things in Europe as well.

Okay. That's great. Then just in terms of geographic preference and specifically just some of the stuff that you disclosed in your 20-F around tax risk. Do have any particular preferences as to where you'd like to deploy capital? Then specifically with the US, with some of the changes that may or may not be going forward is there a greater hesitation to deploy capital into the US?

Robert, it's John. I'm not sure specifically what tax issues you might be referring to in the US, but we are actively looking at opportunities in the US market. If you're referring to potential tax legislation that could impact the MLP's or things of that nature, we think that our structure is different, and that we wouldn't fall under the potential proposals that we have seen. We obviously actively monitor the developments on the tax front and don't foresee anything on the horizon that would negatively impact investments in the US or other jurisdictions at this point.

Okay. Yes, and I was just -- there was something on the MLP, but there was also I think some general just partnership risk factors that I was alluding to. Then just the last question, more granular on IEG connections. We've seen the connection revenue trending down now over the past few quarters. Just wondering what you're seeing in the market and what your outlook is for connection revenues going forward?

Well, the connection revenue Robert, we think that the first quarter of last year was an unusually strong level and I think we've tried to signal that. But we think the level that we had between last quarter and this quarter is a level that is what we think of as a run rate. So, there's going to be a little bit more variability in that, but we think that last quarter and this quarter is a pretty good guidepost.

Okay. So you're not seeing, say, a slowdown in the housing market here?

In terms of the book of business, we're continuing to put new connections in our capital backlog. We have had very high market share over the last year or so. We're seeing a little bit more competition from some of the other independents out there. So, that might impact our ability to book as high of a market share as we had. But we're still seeing a pretty good opportunity, a pretty good market opportunity to put new connections on the books.

Okay that's great. Thank you.

Cherilyn Radbourne of TD Securities.

Thanks very much, good morning. A lot has been asked already, but I did want to ask you about the port sector. There's been a lot of distress among the shipping companies, and many of those companies do own port terminals. So, I'm just curious if that's a place that you're seeing opportunities?

Hello Cherilyn, this is John. We do see opportunities in that sector, as you pointed out. Shipping companies own and control a number of the container terminals, particularly the West Coast of the United States. They are under more financial stress than they have been with the combination of low rates for their ships, and also they've got significant capital commitments as they are committed to taking delivery of new ships. So with that, historically they have not been interested in selling either container terminals or interest in container terminals, but we're seeing that change a bit and that's something that we're actively looking at.

Okay, and on your Colombian investment, I just wonder if you could give us a bit more color on the partners that you invested with. I guess the timing of the potential roll up opportunity that you allude to using this as a platform to consolidate other assets in the region, is that short-term? Medium term?

Hello Cherilyn. In relation first to the partners that we invested with, a number of years ago when we decided to look at Colombia as a market to expand in, leveraging off of the long history we had in South America -- in Chile and then Brazil. We decided the best way to get into the market was to establish partnerships with the leading pension funds. There's about six main pension funds that manage capital for workers in the country and I believe we have five of them that are part of this partnership that we have set up.

So, all five of those have invested alongside us in this transaction. And the -- this is a long-term partnership for -- that's been set up for about 10 years. So we'll have them with us for a long period of time. I think it gives us a lot of comfort and obviously connections into the right people in that country to help build the platform.

In relation to the opportunities, Colombia is relatively small country from an economic perspective. It does have a large population of about 40 million people, but it is an emerging market. So, the number of opportunities available at any one given time is relatively small. So it will take time to build out this business.

Having said that, the government has a very ambitious program to stimulate infrastructure development in the country I think over the next number of years, I can't recall the exact number -- but probably 5 to 10 years, they've identified about $10 billion of projects they'd like to see done whether it be in utilities or toll roads or ports. In fact they just hosted a conference down there not too long ago just -- probably a couple weeks ago which a number of our people went down to participate in. They're clearly open for business and we think this is going to be one of the great new markets for us to build a platform in.

Okay. Last one for me. What's your current thinking on when the Dudgeon Point opportunity might make its way into the capital project backlog?

I think today our timing probably hasn't changed from what we telegraphed last quarter. We're in the midst of sorting out the master plan for the site with the state and with the other preferred proponent. I think we're 90% of the way there on having that completed.

But I'd say we're probably still a couple of months away from having that totally agreed and signed off. That's obviously a key first phase of the project because that will determine exactly where we're going to build. A second big component for us is determining what level of interest we have from our customers. That will tell us how much or how big we're going to build.

Once we have those two key questions answered, which I hope will be in the next three to six months, then we'll start our feasibility studies. We're in the process of implementing feasibility funding arrangements with the various customers to finance that exercise. That's probably going to take about a year to do.

During that period of time while we're doing feasibility studies, we will hammer out all the various commercial arrangements with customers. If all of that goes well, I would say that's a year to 18 month process, where we could reach financial close. So, I'd say at the earliest we're looking at the back half of 2013 to reach financial close.

Just given the scale of the project and with a little bit of the uncertainty in relation to China these days, I would probably -- pushing that maybe into early 2014. But it's in that general neighborhood as far as when we would get into a financial close, and then obviously construction would take a good three years from that point.

Okay great. That's all for me, thank you.

This concludes the time allocated for questions on today's call. I will now turn the call back over to Mr. Pollock for closing comments.

Thank you Operator. I'd just like to thank everyone who joined us on the call today for listening in. We look forward to speaking with you again next quarter. Thank you.