Brookfield Infrastructure Partners L.P. (BIP) Q1 2012 Earnings Report, Transcript and Summary

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. [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, 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 Sam Pollock. Sam?

Thank you, Mike and good morning everyone. Let me begin with just a short overview and then I will turn it over to John to give a summary of our results for the quarter. We are pleased that we are able to start the year with strong first quarter results. Our stable cash flow profile and global footprint insulate us from the variable speed the economy has developed. We continue to see considerable strength in the South American economies where we were active and U.S. economy is demonstrating signs of recovery. Our 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 our transitional period in which we are commissioning a number of projects that will meaningfully contribute to our business over the next 12 months. Following a 7% distribution increase in February 2012, our payout ratio will be will be 65% of our funds from operation for the quarter, the mid-point of our targeted range of 60% to 70%. Looking to the balance of 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 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 stages of organic growth projects. With that, now let me turn it over to John to review our results for the quarter.

Thanks, Sam. In my remarks, I will focus on FFO. We highlight this metric because we believe it’s a good proxy for cash flow from our operations. I will 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 $0.0.4 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 4 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 utility 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 utility segment generated an FFO 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 6 expansion projects at our railroad have commenced commercial operations, and we transported an incremental 1.4 million tonnes of iron ore over our network during the quarter. By the end of the second quarter, we expect that -- these 3 customers to be fully ramped-up and shipping at a rate of approximately 2.4 million tonnes per quarter. In mid-April, steel production resumed at the Teesside Cast Products plant, which is a large customer of our UK port. Although the port’s throughput 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 steel facility reaches capacity. Finally, this was the first quarter of our ownership of our Chilean toll road. Although it is 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 continue 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 whitewood 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 kilometres of natural gas transmission lines, serving 60% of the Chicago market. Over the past 2 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 rating of BBB+, which we believe will provide us access to low cost debt capital. We expect to complete this financing in the next 2 quarters. Finally, we continue to proactively advance a number of refinancings to take advantage of the historically low interest rate environment. We executed a NZD$155 million refinancing at our New Zealand regulated distribution company in the bank market with an average life of 4 years and an average spread of 180 basis points over the New Zealand base rate, and 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 will turn the call back over to Sam to walk through our growth initiatives and outlook.

Thank you, John and as John mentioned, I will 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 2/3 is associated with our railroad's expansion program and network upgrades. The remainder is a diversified portfolio of projects in our utility operations. At our Australian railroad, we made significant headway on the upgrade of its mid-west segment, the largest component of our expansion program. To date, we have 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 mid-west 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 2 more projects, bringing the total to 5 of the 6 that comprise the overall expansion program. By the end of the first quarter of 2013, these 5 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 3 lines and six substations 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 the 2/3 for the third line. We have broken ground on the first 2 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 kilometres north of Bogotá, serving a 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 cost. 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 demands from smaller mining companies and will 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 prospects 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 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 the debt and 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 mid-stream 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 cost. Operator, that now concludes my remarks, I would like to turn the call back over to you to open the call for any questions.

[Operator Instructions] The first question comes from Bert Powell of BMO Capital Markets.

So what’s -- you put $200 million more into NGPL. What’s your thinking in terms of mid-stream assets? Would you be more interested in increasing your position in NGPL by taking out one of the [indiscernible] partners? Or are you thinking about you’re happy with that and you would look in a different ground to tell?

Let me start and then I will 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 is lots of growth that will come back into that asset because it is very well placed and that it will do well in a subsequent recovery. So I don’t foresee that there will 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 mid-stream assets are not as well capitalized as the shareholders of NGPL are and that there is probably a number of more likely candidates for us to pursue. Let me just turn to John to talk a bit about some of our recent initiatives.

Bert, as you are 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 has been a pretty robust environment for mid-stream valuations to this point, the MOPs have low cost to 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 distress driven by the decline in the spreads that I talked about there could be some opportunities that arise and we think that we would be very interested in deploying capital and making acquisitions if we can find the right asset.

Just out of curiosity, I am assuming you guys were in some way, shape or form involved in the work purchase by one of the BAM funds and I am just curious around thinking as to why that’s -- you are not involved in that given it’s a storage asset. Not that it’s material, but I am just curious.

So far we did buy that. A portion of that is in Brookfield Infrastructure. As you probably recall, we are the largest investor in a Brookfield Private Fund [indiscernible] of America’s Infrastructure. We have a 25% interest in that. Any capital that gets deployed in that fund, 25% of it, a minimum of 25% of it comes into Brookfield Infrastructure and 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% and obviously from an operational perspective, our team, our infrastructure group manages all those assets. So we control and operate them. So that asset was the one that we acquired and it is held by the company.

Okay, my apologies. I thought you didn’t mention it in the letter, so I thought it was not part of Brookfield Infrastructure.

Bert, that transaction just closed pretty recently but we do think there is an opportunity to build a portfolio of natural gas storage assets and we think it does -- that asset class lends itself to 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 and we are looking to use the skill set that we have developed to try to enhance the value of portfolio that we are helping to build.

Okay, and just last question. Just on Columbia, 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 at the end of January. We generally would expect that asset to have a FFO yield around 10%. It should increase with inflation and we also think that there is 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 are very excited about and as Sam mentioned we think there is opportunities to further consolidate within the distribution sector in Columbia and deploy additional capital.

The next question comes from Brendan Maiorana of Wells Fargo.

Had a question for you guys with respect to what your customer outlooks are in the outlook for China, and Sam, I think you mentioned that you thought that maybe China growth could reaccelerate as we get further on into 2012 and I guess it’s not with respect to the current operations or the future development projects growth to capital that you could deploy as you guys talked about at Dungeon Point but beyond that you have 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 is some additional concern that China may be falling down?

I guess, that’s the million dollar question because the transparency into China isn’t great. Having said that, I guess I would make 2 comments. The first one, in relation to current activity during the quarter and then particularly just following the quarter, there is no doubt that we have seen a tempering of demand in growth from China. And we have also seen similarly a tempering of demand from Korea and Taiwan as well and we can see that both, obviously, in our sales from the timber business but we have also seen just in shipments coming out of our terminal, particularly in at DBCT. So that’s our deals with the existing situation. As it relates to sort of 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 are talking to our various customers are fairly optimistic about the activities in their business in the coming parts of the year. In addition to that, in discussions with our customers, particularly from relation to Dungeon Point, we have recently held our open season we are 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 has come back reasonably robust. We have 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 am 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 is not a big change for their outlook for longer term growth projects anyways?

Not that we can see yet.

Great, and then this maybe for you, Sam, or for John, it looks like NGPL was -- the classification changed a little bit in the supplemental but it looks like it was higher than what you guys reported in the fourth quarter and that you guys have the cushion gaffe on the fourth quarter? So was there something that happened there that drove results up at NGPL when we would have expected them to sequentially go down?

Hi, Brendan, the first quarter is the seasonally stronger, that quarter for NGPL. Basically in the winter, there is the most demand for transportation and we saw the most transportation capacity. So I think that’s some seasonality that you are seeing in the results.

Okay, but nothing more than that?

That’s correct. It’s basically seasonality.

Okay, and then, just last question, John, when you think about applying corporate debt, one, do you think that the savings that you get from an interest rate perspective relative to secure 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? Those 125 basis points, will you get enough rate savings to offset what you otherwise would get if you put it at the segment level?

Well, first of all, we got a very strong rating from S&P as you probably saw the BBB+. We think that will enable us to access very low cost capital and the second point I would make is that we are maintaining the strategy we have had where we are going to predominantly fund the business with non-recourse debt. I don’t think you are going to see any more than 5% to 10% of the debt that we raise, the recourse to Brookfield Infrastructure. So the lion’s share is going to be non-recourse debt as has been our strategy but we do think that by being able to leverage the rating that we have 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.

And do you think that the overall leverage level of the company on a look through or pro rata basis, if you have got 10%, let’s say if there is 10% corporate level debt, do you feel comfortable that the leverage targets that you guys had set out previously which was largely based on secured debt non-recourse debt, can be comparable if you have got a 10% allocation at the corporate level?

Well, I think that the strategy is largely the same which is we are financing with non-recourse debt and the amount that we finance is going to be driven by the underlying credit characteristics of the asset that we are acquiring or investing in. So you will 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, any diversity that we have 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?

I think, Brendan, if you look at it we are rebalancing the capital structure. When we merged with Prime there was some corporate debt there. So we were refinancing that and then we were refinancing some [indiscernible] debt effectively at the NGPL level.

The next question comes from Andrew Kruske of Credit Suisse.

I guess, the first question is for Sam, and just in the context of some of your comments in the past on talking about the Iberian companies and I guess, what’s changed in the last little while, and then the most recent Spanish budget, there are some changes to the deductibility of interest for Spanish companies which arguably should motivate some of those companies to deliver. 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 have seen recently?

Let me say that we continue to spend a lot of time focusing on opportunities in Spain and in other parts of Europe. There is, I would 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 that is necessarily tied to changes in the tax code, to be honest. I think that was just sort of 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 then the deleveraging that’s going on. 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 those banks are all in trouble and we have seen just very recently in the last couple of days talk about the Spanish government having to bail the third largest bank in that country. And today, with the fall off of traffic for roads and other types of infrastructure assets in that country where anecdotally we are hearing that traffic levels are back to 2000 levels. So basically has 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 certain type of asset and in the Americas or are you still looking very broadly across all the asset classes?

We have a very broad and diversified portfolio and I think any opportunity where we can acquire business at good value that compliments our existing businesses then we have an interest in doing that. I think today, we have 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 have to sell. In addition to that, while still at the early days of this phenomena. We think there is going to be significant opportunities in the mid-stream sector in North America given what’s happened in the natural gas pricing market and so I think over the next 6 to 12 months, that’s where we will focus a lot of our attention.

And then, if I may, just on that point on natural gas and I guess, maybe this transitions to John. What’s your view on the lay of the lands in the natural gas infrastructure space because we have seen the El Paso takeover, the Sonoco deal just recently announced among other things that have happened in the 12 to 18 months? How do you look at that whole sector on a go forward basis when really where does Brookfield Infrastructure Partners along with new base or any other future vehicle fit into that?

Andrew, it’s John. In terms of what’s been going on in the sector, clearly there has been a ton of M&A activity. There has been a fair number of $1 billion plus transactions and the valuations have been pretty robust. It is really driven by the Shale Gas phenomenon and a lot of company trying to position itself 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 underwrite deals or that underwrote or underpinned their business could well change. If you have rig counts coming down and with that deliverability of natural gas coming down, we think that there is going to impact that could ripple through and that there may be some opportunities to buy assets that become stressed. So that’s what we are looking to do. We are not looking to participate and compete against people for assets that are very sought after. We are looking to see if there is going to be some stress and some constrained opportunities that might develop and we think that, in natural gas storage, you are starting to see it you could also see those kinds of opportunities with gathering and processing for, particularly, dry natural gas and maybe also like [ph] transportation.

Next question come from Robert Kwan of RBC Capital Markets.

If I can just come back to Europe here? Are you seeing the best opportunities when you are 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?

Hi, Robert, I guess, it’s a mix. So we, in relation to each of the companies that we are speaking to, they generally have a portfolio of assets, some of which are in the Americas. They have some assets actually North America’s well and then they also have a number of assets in Europe and that they are 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 is 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 the things are in such a state of flux there. So there are opportunities in both markets, I guess that in summary, but I think my expectation is that it is more likely that we will execute on opportunities in the Americas with, I think if we are lucky, hopefully finding a few things in Europe as well.

Okay, that’s great and 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 you have any particular preference as to where you would like to deploy capital and then specifically with the U.S. some of the changes that may or may not be going forward? Is there a greater hesitation to deploy capital into the U.S.?

Robert, it’s John, and I am not sure specifically what tax issues you might be referring to in the U.S. but we are actively looking at opportunities in the U.S. market if you are referring to potential tax legislation that could impact the MOPs 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 U.S. or other jurisdictions at this point.

Okay, now just there is one on the MOP but there also I think some general partnership risk factors that I was alluding to. And then just the last question, more granular on IEG connections. We have seen the connection revenue trending now over the past few quarters. Just wondering what you are 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 at unusually strong level and I think we 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 is going to be a little bit more variability in that, but we think that last quarter and this quarter is a pretty good guide for us.

Okay. So, you are not seeing 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 as a market shares we had, but we're still seeing a pretty good opportunity, a pretty good market opportunity to put new connections on the books.

The next question comes from Cherilyn Radbourne of TD Securities.

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 terminal. So, I'm just curious if that's a place that you are seeing opportunities.

Hey, 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, and 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 interesting container terminals, but we're seeing that change a bit. And that's something that we're actively looking at.

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

Hi, Cherilyn, In relation, first, to the partners that we invested with, with a number of years ago when we decided to look at Columbia as a market to expand in, leveraging off of the long history we had in South America, in Chile and in Brazil, we decided that the best way to get into the market was to establish partnerships with the leading pension funds. There's about 6 main pension funds that manage capital for workers in that country and I believe we have 5 of them that are part of this partnership that we have set up, and so all 5 of those have invested alongside us in this transaction, and this is a long-term partnership. It has been set up for about 10 years, so we'll have them with us for a long period of time and 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, Columbia is a relatively small country from an economic perspective. It does have large population of about 40 million people, but it is an emerging market and so, the number of opportunities available in 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 that country. I think over the next number of years, I can't recall exact number, but probably 5 to 10 years, they've identified about $10 billion of projects they'd like to see done, whether it'd be in utilities or toll roads, or ports. In fact they just hosted a conference and they are not too long ago, just probably a couple of weeks ago, which a number of our people went down to participate in. And, they are 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. And last one from me. What's your current thinking on when the Dungeon 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 starting up the master plan for the site with the state and with the other preferred proponent, and 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, and that is obviously a key for space of the project, that will determine exactly where we're going to build. The second big component for us is determining what level of interest we have from our customers and that will tell us how much or how big we're going to build. Once we have those 2 key questions answered, which I hope will be in the next 3 to 6 months, and then we'll start our feasibility studies. We're in the process of implementing a 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. And, if all of that goes well, I would say that's a year to 18 months process, where we could reach financial close. So I'd say at the earliest we are 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 sort of general neighborhood as far as when we would get into a financial close and then obviously construction would take a good 3 years from that point.

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

Ladies and gentlemen, this concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a nice day.