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Non-Tech : Macquarie Infrastructure Company (MIC)
MIC 3.7200.0%4:00 PM EDT

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From: JakeStraw4/19/2007 8:13:53 AM
   of 10
Macquarie Infrastructure Company to Acquire Mercury Air Centers
Thursday April 19, 12:01 am ET

Transaction Creates Largest FBO Network in US

NEW YORK, April 19 /PRNewswire-FirstCall/ -- Macquarie Infrastructure Company (NYSE: MIC), a market leader in the ownership and operation of infrastructure businesses in the US, has entered into a definitive agreement to acquire the fixed base operations business of Mercury Air Centers ("Mercury") for $456.2 million. Mercury operates a network of 24 fixed base operations, or FBOs, at 22 airports across the US. Mercury is majority owned by Allied Capital Corporation (NYSE: ALD).

The business will be operated as a part of MIC's airport services business, Atlantic Aviation ("Atlantic"). Atlantic will operate a total of 68 FBOs following the acquisition of Mercury. The transaction is expected to close during the third quarter of 2007, subject to consent (or letters of estoppel) being received from relevant airport authorities.

"We are pleased to be able to further expand our presence in this exciting market with the acquisition of a substantial portfolio of quality FBOs", said Peter Stokes, Chief Executive Officer of MIC. "With the addition of Mercury, Atlantic will become the largest network of FBOs in the country, serving the general aviation sector of the air transportation industry throughout the US."

There is no overlap between the Mercury and Atlantic networks. The addition of Mercury will extend the Atlantic brand into strong general aviation markets including Los Angeles, Burbank, Cleveland and Nashville.

Key Terms

The $456.2 million purchase price includes transaction costs, pre-funded capital expenditures and debt service reserves of $29.2 million. The final purchase price is subject to working capital and capital expenditure adjustments.

MIC will fund a portion of the acquisition with a $192.0 million, two-year term loan secured by Mercury. The balance will be funded with proceeds from MIC's existing acquisition-related revolving credit facility and $20.0 million of available cash. The Company plans to refinance both the Mercury term loan and Atlantic's credit facility into a single facility following the closing of the acquisition. The proceeds of the refinancing will be used to repay the Mercury debt, Atlantic's current debt, and a portion of the borrowings under MIC's acquisition facility, reducing the Company's equity investment in Mercury.

The Company intends to raise an estimated $150.0 million of new equity in a follow-on offering of trust stock to repay the remaining borrowings under its acquisition facility. New shares will be offered at management's discretion, subject to favorable market conditions.

Impact on MIC

The transaction is expected to be immediately yield accretive, including distributions on shares issued in connection with raising new equity. The Company anticipates that Mercury will generate pro-forma gross profit in a range of $79.5 million to $82.5 million. Consistent with Atlantic's performance historically, MIC further expects that Mercury will generate EBITDA in a range of 44% to 46% of gross profit, or in excess of $35.0 million, during the first full year of its ownership.

As it has with prior acquisitions in the airport services sector, MIC believes that it will realize both economies of scale as well as opportunities for incremental revenue generation in combining the Mercury and Atlantic organizations. The Mercury sites will be integrated into the existing Atlantic regional management structure. In addition, Atlantic's highly regarded loyalty program, Atlantic Awards, will be introduced at the Mercury sites. The process of integrating and re-branding the facilities is expected to take 12 - 18 months.
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