I think this is a right decision as Miaoli is not income producing investment. 

Just curious if Miaoli able to secure financing on its own.

Is SIAS signaling that MIIF will use internal fund to finance  Miaoli Wind S$19m (NT$445m) of debt maturing in December this year? 

(Source:  Macquarie International Infrastructure Fund: An Attractive Yield Play (SIAS))

 

Miaoli EDBITA is 252.2million NT for 2011, 2010 is 188.9 million NT, 2009 is 203.6million NT,  these three years  no contribution to distribution, it already make up 644.7 million NT, which still have not consider 2012, isn't it more then enough to repay the dept? where is the risk?  

Miaoli refinancing at risk is quoted in MIIF (page 45 - http://www.macquarie.com/dafiles/Internet/mgl/miif/news/2012/docs/22-02-2012-sgx-report.pdf), furthermore EDBITA ≠ cash.  

For the 2020 due is 1.2billion NT which is 1,200million NT  not 12,000millionNT (which you quoted), for 8years till 2020 assume the EDBITA is the same as 2011, which will be 2017.6million NT, thus for 1200million NT, there will be still an access of 817.6million, why do they need refinancing?

Yes there is a typo error, 2020 loan due should be 1.2 billion = S$51million , the point to highlight the 2020 loan due caused if Miaoli not able to refinance 2012 and MIIF wanted to retain Miaoli mean MIIF will need to inject S$19m + S$51m and total investment could become S$100m.   of course MIIF cause inject S$19m for 2012 loan due and subsequently look for buyer. But based on current operation performance MIIF fetch a good price? Recent high oil price of course added some value to Miaoli. Again EDBITA ≠ cash unless MIIF publish Miaoli financial report we would have a better picture.

Based MIIF conservative capital management, Miaoli should negotiate with their banker on refinancing on 2012 loan and yet management highlighted risk of refinancing mean Miaoli banker might not satisfy with Miaoli operation performance.

For the EDBITA margin, it is the best for all the investment that MIIF have, do you think they are so stupid to give up this golden egg? The reason for those statement that you mention is quited clear if you think through.

Of course MIIF management not stupid but there should be a reason why they decided to  written off Miaoli investment  from S$30m to ZERO.

If they are really in the risk, will they put up cash to buy back their own shares?

MIIF share buyback decision as explained by management they cannot find assets with reasonable and of course management think MIIF share undervalue (NBV of S$0.79) as valued by management. Take note that NBV S$0.79 per share not included Miaoli.

I do not question MIIF business model and in fact I like infrastructure assets, but the existing bullet loan repayment term make asset owner at certain risk. I like amortization method which I think is more sustainable and stable.

Miaoli Wind generates revenue by selling its entire energy production to Taipower under a 15 year fixed tariff PPA (one agreement per wind farm site) with an option to extend each PPA for an additional 5 years. The fixed tariff is NT$ 2.00/kWh."

“Outlook

_ Since acquisition, wind speeds have been significantly lower than expected. The original valuation at acquisition was based on 36 years of wind history from a nearby location and provided management with high confidence over a long-term achievable average. However, the operational performance has been disappointing and management has now revised its forecast to the average actual historic generation. This puts at risk Miaoli Wind’s ability to refinance to current debt levels in 2012.

_ Miaoli Wind has lodged an application for Voluntary Gold Standard carbon credits. The Gold Standard Foundation has accepted the project’s pre-feasibility assessment and the project is now in the final stages of validation. If the application is successful, Miaoli Wind will be able to generate incremental revenue through the sale of these credits”