MACQUARIE INFRASTRUCTURE GROUP EXPLANATORY MEMORANDUM AND NOTICES OF MEETING. 18 December 2009

Transcription

1 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 1 MACQUARIE INFRASTRUCTURE GROUP RESTRUCTURE PROPOSAL EXPLANATORY MEMORANDUM AND NOTICES OF MEETING 18 December 2009 For a recommended proposal to restructure MIG into two ASX listed toll road groups with assets allocated according to their risk pro le, one of which employs its own management team and the other which is managed by Macquarie (Restructure Proposal). This is an important document and requires your immediate attention. You should read this document in its entirety before deciding whether or not to vote in favour of the resolutions to approve the Restructure Proposal and, if necessary, consult your legal, investment, taxation or other professional adviser(s). You may call the MIG Securityholder information line on (within Australia) or (outside Australia) if you have any questions. MACQUARIE INFRASTRUCTURE TRUST (I) (ARSN ) MACQUARIE INFRASTRUCTURE TRUST (II) (ARSN ) MACQUARIE INFRASTRUCTURE GROUP INTERNATIONAL LIMITED (ARBN ) None of the entities noted in this document is an authorised deposit-taking institution for the purposes of the Banking Act 1958 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited (ABN ) (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities.

2 2 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP

3 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Contents Letter from Chairman and Lead Independent Directors 1 The Restructure Proposal at a glance 4 Securityholder information 8 Disclaimer and Important Notices 10 1 Details of the Restructure Proposal Background to the Restructure Proposal Overview of the Restructure Proposal Management arrangements Macquarie Group s interests Special Distribution to MIG Securityholders Independent Expert s Report and MIG Independent Directors recommendation Ongoing Director fees Summary of the bene ts of the Restructure Proposal Disadvantages and risks of Restructure Proposal Alternatives considered by the IBCs 30 2 Questions and answers Details of the Restructure Proposal Intoll Macquarie Atlas Roads Special Distribution Meetings 44 3 Evaluation of the Restructure Proposal Background Development of the Restructure Proposal Bene ts, disadvantages and risks of the Restructure Proposal Macquarie s involvement in the Restructure Proposal Implications if the Restructure Proposal does not proceed Independent expert s report MIG Independent Directors recommendation 69 4 Pro le of Intoll Overview and corporate structure Strategy and Investment mandate Distributions Assets, valuations and key metrics Management and corporate governance arrangements Key Risks 79 5 Pro le of Macquarie Atlas Roads Overview and corporate structure Investment mandate Dividends Assets, valuations and key metrics Management and corporate governance arrangements Key risks 87 6 Financial Information for Securityholders Introduction Basis of preparation Pro Forma Historical Financial Information Pro Forma Management Information Valuations and Net Asset Backing Per Security MIG s valuation approach 102

4 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 7 Investigating Accountant s Report Macquarie Group interests Overview of current arrangements with Macquarie Payments to Macquarie in connection with the Restructure Proposal Impact of the Restructure Proposal on Macquarie s relationship with Intoll Impact of the Restructure Proposal on Macquarie s relationship with Macquarie Atlas Roads Impact of the Restructure Proposal on the payment of management fees Other arrangements with Macquarie Group Summary of ongoing arrangements with Macquarie Group Summary of fees payable to Macquarie under existing management and advisory arrangements Summary of termination rights under existing management and advisory arrangements Tax information for Securityholders Securityholder approvals General Resolution 1 for each of MIT(I), MIT(II) and MIGIL Required Resolutions MIT(I) resolution 2 Amendment of MIT(I) Constitution MIT(II) resolution 2 Amendment of MIT(II) Constitution MIGIL resolution 2 Amendment of MIGIL Bye-laws and change of name for MIGIL MIGIL resolution 3 Change of name of MIGIL Additional information Summary of Implementation Deed Summary of MIIML Share Sale Agreement Summary of Transitional Services Agreement Summary of MQA Management Agreement IP Licence Summary of ASIC relief relating to the Restructure Proposal Summary of ASX Waivers/Con rmation relating to the Restructure Proposal Disclosure of interests of directors and advisers Disclosure of TFNs to MQA Availability of other information Supplementary Information Material changes since full year 2009 audited nancial statements Other material information Glossary 158 Appendix A Independent Expert s Report Appendix B Intoll Appendix C Independence criteria Appendix D Notices of Meeting Corporate Directory

5 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING Letter from Chairman and Lead Independent Directors MACQUARIE INFRASTRUCTURE GROUP 1 18 December 2009 Dear MIG Securityholder, On 30 October 2009, MIG announced a proposal to restructure MIG into two separate ASX listed toll road groups with assets allocated according to their risk pro le, one of which employs its own management team and the other which is managed by Macquarie (Restructure Proposal). The MIG Boards have proposed the Restructure Proposal with the objective of enhancing MIG Securityholder value by creating two more de ned portfolios of assets that are more transparent and aligned as an investment opportunity. The Restructure Proposal requires the approval of MIG Securityholders by passing the Required Resolutions and is subject to other conditions. If the Restructure Proposal is implemented, MIG Securityholders will hold securities in: Intoll - a standalone group which employs its own management team holding MIG s interests in the 407 ETR and Westlink M7. These high quality assets have stable capital structures and cash ows; and Macquarie Atlas Roads ( MQA) - a Macquarie managed group holding MIG s interests in M6 Toll, APRR, Chicago Skyway, Indiana Toll Road, South Bay Expressway, Dulles Greenway, Warnow Tunnel and Transtoll. These assets require substantial operational and nancial management to maximise value to MIG Securityholders. After providing adequate working capital for both Intoll and MQA, the MIG Boards propose a Special Distribution of A$0.10 per MIG Security would be paid in addition to the normal interim distribution for FY2010. The MIG Boards are also taking the opportunity to put forward some additional resolutions to make certain recommended changes to the constitutions of MIT(I) and MIT(II) and the MIGIL Bye-Laws to be considered at the General Meetings. The implementation of the Restructure Proposal is not conditional on these Additional Resolutions being passed by MIG Securityholders. The General Meetings of MIG Securityholders to consider the Restructure Proposal will be held on 22 January 2010 at 11 am in the Heritage Ballroom of the Westin Hotel in Sydney. MIG history MIG listed in 1996 (as Infrastructure Trust of Australia Group) after raising approximately A$231 million to invest in a portfolio of interests in four Australian road assets. The portfolio of investments expanded over time and MIG has held interests in 32 toll roads globally. Following strategic divestments, MIG now holds investments in nine roads in six countries. Investors were attracted to the combination of stable long-term cash yields and capital growth through improved business and capital management. Since listing, MIG has distributed approximately A$3.7 billion in cash to its investors, which represents A$1.67 per MIG Security. MIG s recent trading record and portfolio initiatives The market price of MIG Securities has declined over the past 18 to 24 months and has underperformed the S&P/ASX 300 Industrials Accumulation Index. There are a number of factors that have contributed to this period of underperformance including, but not limited to, investor concerns regarding debt levels and attendant re nancing risk of some assets. The MIG Boards have been concerned for some time that the value of MIG s assets has not been re ected in the security price. In response a range of initiatives were undertaken which sought to restore value to MIG Securityholders. These included: the reduction of MIG s interest in Westlink M7 from 50% to 25%, realising more than A$400 million; the sale of Lusoponte for more than A$200 million;

6 2 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Letter from Chairman and Lead Independent Directors continued conducting on market security buybacks in excess of A$250 million; and changes to MIG s distribution policy to align distributions with operating cash. Background to strategic review process The MIG Boards believed that further action was necessary to restore value to MIG Securityholders. In August 2009, the MIG Boards determined to undertake a detailed review of the bene ts and risks of restructuring MIG into two separate groups and the appropriate management structure for these groups. The strategic review led to the development of the Restructure Proposal as outlined above. The MIG Boards reviewed a range of options and evaluated the bene ts and risks of the Restructure Proposal. In addition, two independent board committees (IBCs) comprised of the MIG Directors who are independent under the Macquarie Funds Management Policy separately considered the Restructure Proposal and a number of alternatives to deliver/restore value for MIG Securityholders. None of the MIG directors on the IBCs would be considered independent under the ASX Corporate Governance Principles and Recommendations because they are either appointed by Macquarie or, in the case of Jeffrey Conyers, he is married to a senior executive and shareholder of a small Bermudian fund administrator which earns more than 5% of its income from other Macquarie managed vehicles. However, the IBC directors do meet the director independence criteria used by MIG which have been framed to cater for the fact MIG is an externally managed vehicle with sponsor appointed directors. Details of the independence of the MIG Directors are set out in section Grant Samuel was appointed as nancial adviser to the IBCs. On 30 October 2009, MIG announced it had reached in principle agreement with Macquarie concerning the Restructure Proposal. Agreement with Macquarie As part of the Restructure Proposal, the IBCs negotiated the following agreement with Macquarie: if the Restructure Proposal is implemented, Macquarie will be paid an amount estimated to be approximately A$103.9 million as compensation in connection with the implementation of the Restructure Proposal. The actual amount may be higher or lower and comprises: A$50 million for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG (see sections and 8.2 for further details); an advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll for nancial advisory services in connection with the Restructure Proposal. Macquarie s nancial advisory role does not extend to advice on arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other) on which Grant Samuel advised the IBCs (see sections and 8.2). That fee is estimated to be approximately A$28.3 million (assuming a post implementation 30 day VWAP trading price for Intoll of A$1.25 per Intoll Security); a payment of approximately A$25.6 million for the shares in Macquarie Infrastructure Investment Management Limited (MIIML), the responsible entity of Macquarie Infrastructure Trust (I) (MIT(I)) and Macquarie Infrastructure Trust (II) (MIT(II)). This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal; and Under new management agreements, Macquarie will manage MQA. To re ect the smaller asset base of MQA, a new base management fee arrangement will be put in place that is higher than the current MIG base management fee. The out-performance fee hurdle will be based on the market price after listing of MQA compared with the S&P/ ASX 300 Industrials Accumulation Index (see section for further details). The new fee arrangements are intended to properly incentivise the MQA Manager to deliver performance for all MQA Securityholders and to align the interests of the MQA Manager and MQA Securityholders.

7 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 3 In determining the payment to Macquarie, the IBCs had regard to all of the potential bene ts that the Restructure Proposal would deliver MIG Securityholders, and in particular, the view that engagement with Macquarie as the existing manager and a signi cant MIG Securityholder had the likelihood of delivering a better outcome for MIG Securityholders through Macquarie s cooperation and provision of a range of services. MIG Independent Directors Recommendation and Independent Expert The MIG Independent Directors unanimously recommend that MIG Securityholders approve the Restructure Proposal by voting in favour of the Required Resolutions in the absence of a superior proposal and subject to the Independent Expert not changing or withdrawing its conclusion that the Restructure Proposal is in the best interests of MIG Securityholders. The IBCs appointed the Independent Expert to prepare an independent expert s report on the Restructure Proposal. The Independent Expert considers that the Restructure Proposal is in the best interests of MIG Securityholders. Explanatory Memorandum This Explanatory Memorandum contains important information in relation to the Restructure Proposal, including the reasons for the MIG Independent Directors recommendation, a summary of the advantages, disadvantages and risks associated with the Restructure Proposal and a report on the Restructure Proposal by the Independent Expert. Please read this Explanatory Memorandum carefully before making your decision and voting either by proxy or in person at the General Meetings. How to obtain further information If you have any questions in relation to the Restructure Proposal, please call the toll free MIG Securityholder information line on ( for overseas callers). Yours sincerely, Mark Johnson Chairman Macquarie Infrastructure Investment Management Limited Paul McClintock Chairman Independent Board Committee Macquarie Infrastructure Investment Management Limited Robert Mulderig Chairman Independent Board Committee Macquarie Infrastructure Group International Limited

8 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP The Restructure Proposal at a glance The Restructure Proposal comprises: the separation of MIG s assets into two separate ASX listed toll road groups to be renamed Intoll and Macquarie Atlas Roads; a transition of Intoll into a standalone group which employs its own management team; and management of MQA by Macquarie. If the Restructure Proposal is implemented, Macquarie will be paid an amount estimated to be approximately A$103.9 million as compensation in connection with the implementation of the Restructure Proposal. The actual amount may be higher or lower and comprises: A$50 million for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG (see section 8.2 for further details). an advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll for nancial advisory services in connection with the Restructure Proposal. Macquarie s nancial advisory role does not extend to advice on arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other hand) on which Grant Samuel advised the IBCs (see section 8.2). That fee is estimated to be approximately A$28.3 million (assuming a post implementation 30 day VWAP trading price for Intoll of A$1.25 per Intoll Security). a payment of approximately A$25.6 million for the shares in MIIML. This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal. If the Restructure Proposal proceeds, MIG will distribute surplus cash by way of a Special Distribution of A$0.10 per MIG Security paid to MIG Securityholders. Current structure of MIG The diagrams below show the current MIG structure. Diagram 1 shows the relationship between MIG Securityholders, MIG and Macquarie. Diagram 2 is a simpli ed version of the structure of the MIG Portfolio.

9 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 5 Diagram 1: MIG holding structure Macquarie 14.0% 86.0% Other Securityholders Resources (staff, premises, IT, etc) 100% 100% Macquarie Infrastructure Group Stapled Stapled MIT (I) MIT (II) MIGIL MCFEL MIIML Responsible entity Adviser (MIGIL Advisory Deed) Diagram 2: MIG Portfolio MIT (I) MIT (II) MIGIL 50.0% 25.0%* 22.5% 25.0% 50.0% 20.4% 30.0% 70.0% 100.0% Westlink M7 Chicago Skyway Indiana Toll Road South Bay Expressway Dulles Greenway APRR 470 ETR Warnow Tunnel M6 Toll Represents Macquarie s Principal Holding as at 11 December As at 11 December 2009, Macquarie had a total relevant interest in approximately 17.6% of MIG Securities * Estimated economic interest

10 6 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP The Restructure Proposal at a glance continued Post Restructure Porposal - Intoll Standalone On implementation of the Restructure Proposal, MIIML will be owned by a wholly-owned subsidiary of MIT(II) and the MIGIL Advisory Deed will cease. MIT(I), MIT(II), MIGIL and MIIML will be renamed Intoll Trust(I), Intoll Trust (II), Intoll International Limited and Intoll Management Limited respectively. A simpli ed version of this structure is shown below. Macquarie 14.0% 86.0% Other Securityholders Intoll MIT (I) Stapled MIT (II) Stapled MIGIL RE RE 100% Adviser MIIML 25.0% 30.0% Westlink M7 407 ETR Represents Macquarie s Principal Holding as at 11 December As at 11 December 2009, Macquarie had a total relevant interest in approximately 17.6% of MIG Securities. Net Asset Backing A$3,711 million as at 30 June 2009 Distribution Policy Intoll will have a distribution policy that aligns the distributions to the cash generated by the Intoll Portfolio Strategy Intoll s strategy will be to invest in and develop quality toll road assets. Current and future assets should demonstrate the following: Located in OECD and OECD like countries Offer potential for increasing value Offer sustainable competitive advantage in traf c corridor Offer growth in operating cash ows More information Section 4 and Appendix B of this Explanatory Memorandum

11 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 7 Post Restructure Proposal Macquarie Atlas Roads Macquarie managed On implementation of the Restructure Proposal, MIG Securityholders will hold securities in MQA which will be managed by Macquarie. A simpli ed version of this structure is shown below. Macquarie 14.0% 86.0% Other Securityholders 100.0% Resources (staff, premises, IT, etc) Macquarie MRd Atlas Roads MQA Australia Stapled MQA Bermuda MQA Manager MQA Management Agreements 22.5% 25.0% 100.0% 50.0% * 50.0% 70.0% 20.4% 100.0% Chicago Skyway Indiana Toll Road Transtoll Dulles Greenway South Bay Expressway Warnow Tunnel APRR M6 Toll Where assets are held by both MQA Australia and MQA Bermuda the principal economic interest is shown with the percentage ownership by MQA as a whole. * MQA will hold an estimated 50% economic interest in Dulles Greenway via both MQA Australia, and MQA Bermuda (majority of value). Represents Macquarie s Principal Holding as at 11 December As at 11 December 2009, Macquarie had a total relevant interest in approximately 17.6% of MIG Securities. Net Asset Backing A$1,686 million as at 30 June 2009 Dividend Policy Ordinary dividends are not anticipated in the near to medium term. Cash ows from the sale of assets, if any, will be assessed at the time for potential return to MQA Securityholders or, if considered bene cial, for reinvestment in the MQA Portfolio. Strategy MQA s strategy will be to deliver growth in the value of the existing MQA portfolio. Priorities will include: Active management of project operations Ef cient capital management Re nancing of project debt at suitable opportunities More information Section 5 and MQA Prospectus

12 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP RESTRUCTURE PROPOSAL EXPLANATORY MEMORANDUM AND NOTICES OF MEETING [22] December 2009 MACQUARIE INFRASTRUCTURE GROUP For a recommended proposal to restructure MIG into two ASX listed toll road groups with assets allocated according to their risk pro le, one of which employs its own management team and the other which is managed by Macquarie ( Restructure Proposal ). This is an important document and requires your immediate attention. You should read this document in its entirety before deciding whether or not to vote in favour of the resolutions to approve the Restructure Proposal and, if necessary, consult your legal, investment, taxation or other professional adviser(s). You may call the MIG Securityholder information line on (within Australia) or (outside Australia) if you have any questions MACQUARIE INFRASTRUCTURE TRUST (I) (ARSN ) MACQUARIE INFRASTRUCTURE TRUST (II) (ARSN ) MACQUARIE INFRASTRUCTURE GROUP INTERNATIONAL LIMITED (ARBN ) None of the entities noted in this document is an authorised deposit-taking institution for the purposes of the Banking Act 1958 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited (ABN ) (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities. 1 MACQUARIE ATLAS ROADS PROSPECTUS DECEMBER 2009 MACQUARIE ATLAS ROADS LIMITED (ACN ] MACQUARIE ATLAS ROADS INTERNATIONAL LIMITED ([MIG to insert Bermudian registration number]) None of the entities noted in this document are authorised deposit-taking institutions for the purposes of the Banking Act 1958 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited (ABN ) (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities. Macquarie Atlas Roads Prospectus - December RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Securityholder information Key Dates Date Last date to lodge proxies 20 January 2010 General Meetings 22 January 2010 Intoll trades ex-restructure Proposal 25 January 2010 Deferred settlement trading in MQA Securities and Intoll Securities commences 25 January 2010 Record Date for implementation of Restructure Proposal and Special Distribution 1 February 2010 Restructure Proposal implementation 2 February 2010 MIG renamed Intoll 2 February 2010 Despatch holding statements for MQA Securities and Intoll Securities 8 February 2010 Trading in MQA Securities and Intoll Securities on normal T+3 basis commences 9 February 2010 All dates following the date of the General Meetings are indicative only and are subject to ASX approval and the satisfaction of the conditions precedent to the implementation of the Restructure Proposal. Any change to this timetable will be noti ed to ASX and posted on MIG s website at: What you need to do STEP 1 - READ Explanatory Memorandum MQA Prospectus + This Explanatory Memorandum sets out information relating to the meetings of MIG Securityholders to be held from 11 am on 22 January 2010 at Heritage Ballroom, Westin Hotel, No. 1 Martin Place Sydney, to consider the Restructure Proposal. The Notices of Meeting are set out in Appendix D to this Explanatory Memorandum. This Explanatory Memorandum, including the appendices, set out details of the Restructure Proposal. Appendix B of this Explanatory Memorandum contains information on Intoll following implementation of the Restructure Proposal. The MQA Prospectus accompanying this Explanatory Memorandum contains information on MQA. This Explanatory Memorandum includes the information required to be sent to certain MIG Securityholders in relation to the Restructure Proposal under Parts 2E and 5C.7 of the Corporations Act. This information is important. You should read these documents carefully and if necessary seek your own independent advice on any aspects about which you are not certain. STEP 2 - VOTE The General Meetings are scheduled for 22 January 2010 at: Heritage Ballroom, Westin Hotel No. 1 Martin Place Sydney commencing at 11.00am (Sydney time). You can vote on the Resolutions either by attending the General Meetings or by completing and returning the proxy form accompanying this Explanatory Memorandum. Proxy forms must be received at least 48 hours before the commencement of the General Meetings. For details on how to complete and lodge the proxy form, please refer to the instructions on the enclosed proxy form.

13 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 9 Background This Explanatory Memorandum contains details of the Restructure Proposal including the MIG Securityholder approvals that are required to implement the Restructure Proposal. The MQA Prospectus (accompanying this Explanatory Memorandum) has also been prepared in connection with the Restructure Proposal. Implementation of the Restructure Proposal If the Required Resolutions are passed, you will not be required to do anything further in order for the Restructure Proposal to be implemented. The Restructure Proposal is subject to certain conditions in addition to MIG Securityholder approval (see section 1.2.4). Accordingly, no assurance can be given as to the timing of the implementation of the Restructure Proposal if the relevant Resolutions are passed. MIG will announce to the ASX when the conditions to the Restructure Proposal have been satis ed or waived. MQA Securities are expected to begin trading on ASX on a deferred settlement basis on and from 25 January 2010 and new holding statements will be despatched to you after the Implementation Date. You will receive one holding statement in relation to your Intoll Securities and one holding statement relating to your MQA Securities. You should retain your nal MIG Securities holding statement for record purposes. What if the Restructure Proposal does not proceed? If the Restructure Proposal does not proceed, MIG will continue in its current form. In particular: MIG will remain as a single stapled group; Macquarie will continue to manage MIG and MIG will continue to pay base fees and potentially performance fees to Macquarie in future periods; MIG will not acquire MIIML or pay an amount equal to the net assets of MIIML on completion of the sale of MIIML (estimated to be A$25.6 million of cash deposits); Intoll will not become a standalone group that employs its own management team and the assets will continue to be managed by Macquarie as part of MIG; MIG will not make a cash payment of A$50 million to Macquarie for facilitating the implementation of the Restructure Proposal; an advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll (A$28.3 million, assuming a 30 Day VWAP for Intoll of A$1.25 per Intoll Security) will not be paid to Macquarie; MIG will have incurred approximately A$7 million of costs in relation to the Restructure Proposal that are not recoverable; MIG will not change its name; the corporate governance features which are proposed to be introduced as part of the Restructure Proposal will not be implemented; and the Special Distribution will not be paid. MIG Independent Directors recommendation For the reasons set out in this Explanatory Memorandum, subject to there being no superior competing proposal and the Independent Expert not changing or withdrawing its conclusion that the Restructure Proposal is in the best interests of MIG Securityholders, each MIG Independent Director recommends that MIG Securityholders vote in favour of the Required Resolutions. Independent Expert s report The IBCs engaged the Independent Expert to provide an independent expert s report in relation to the Restructure Proposal. A copy of the Independent Expert s Report is attached to this Explanatory Memorandum as Appendix A. The Independent Expert s Report provides an assessment of the Restructure Proposal. The conclusion reached by the Independent Expert is that the Restructure Proposal is in the best interests of MIG Securityholders.

14 10 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Disclaimer and Important Notices Important notices This Explanatory Memorandum is issued by Macquarie Infrastructure Group (MIG). MIG comprises Macquarie Infrastructure Trust (I) (ARSN ) (MIT(I)), Macquarie Infrastructure Trust (II) (ARSN ) (MIT(II)) and Macquarie Infrastructure Group International Limited (ARBN ) (MIGIL). Macquarie Infrastructure Investment Management Limited (ABN ) (AFS Licence No ) (MIIML) is the responsible entity of MIT(I) and MIT(II). Macquarie Capital Funds (Europe) Limited (registered number ) (MCFEL) is the adviser of MIGIL. MIIML and MCFEL are members of the Macquarie Group. De ned terms Capitalised terms used in this document have the meaning given to them in the Glossary. Disclaimer None of the entities noted in this document is an authorised deposit-taking institution for the purposes of the Banking Act. The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited (ABN ) (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities. Except as outlined below, this Explanatory Memorandum has been prepared by MIIML (as responsible entity of MIT(I) and MIT(II)) and MIGIL, and is based on information available to them. The historical information is derived from sources believed to be accurate at the date of this Explanatory Memorandum. However, no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of any information, opinions and conclusions contained in this Explanatory Memorandum. To the maximum extent permitted by law, neither MIG nor any member of the Macquarie Group (including Macquarie, MIIML and MCFEL), their respective directors, of cers, employees, agents, advisers or intermediaries, nor any other person accepts any liability for any loss arising from the use of this Explanatory Memorandum or its contents or otherwise arising in connection with it, including, without limitation, any liability arising from fault or negligence on their part. The historical information in this Explanatory Memorandum is, or is based upon, information that has been released to the market. It should be read in conjunction with MIG s other periodic and continuous disclosure announcements including the MIG results for the year ended 30 June 2009 lodged with ASX Limited (ASX) on 20 August 2009 and announcements to the ASX available at The information in this Explanatory Memorandum remains subject to change without notice. MIG reserves the right to withdraw or vary the timetable for the Restructure Proposal without notice. The pro-forma nancial information provided in this Explanatory Memorandum is for illustrative purposes only and is not represented as being indicative of MIG s views on its future nancial condition and/or performance. No investment advice This Explanatory Memorandum does not constitute nancial product advice and does not and will not form any part of any contract for the acquisition of MIG Securities. This Explanatory Memorandum does not purport to contain all the information that a prospective investor may require in evaluating a possible investment in MIG, Intoll or MQA nor does it contain all the information which would be required in a prospectus or product disclosure statement prepared in accordance with the requirements of the Corporations Act. However, the MQA Prospectus which relates to the MQA Securities being transferred to MIG Securityholders under the Restructure Proposal accompanies this Explanatory Memorandum. This Explanatory Memorandum has been prepared without taking account of any person s investment objectives, nancial situation or particular needs. MIG Securityholders should seek independent nancial and taxation advice before making any investment decision in relation to the Restructure Proposal or how to vote in respect of the Restructure Proposal. ASIC and ASX involvement A copy of this Explanatory Memorandum (including the Independent Expert s Report) has been provided to ASIC for the purpose of Chapter 2E and Part 5C.7 of the Corporations Act. Neither ASIC nor its of cers takes any responsibility for the contents of this Explanatory Memorandum. MQA will apply for admission to the of cial list of ASX and for quotation of all MQA Securities on ASX. A copy of this Explanatory Memorandum will be lodged with the ASX. Neither the ASX nor any of its of cers takes any responsibility for the contents of this Explanatory Memorandum. The fact that ASX may admit MQA to the of cial list of ASX does make any statement regarding, and shall not be taken in any way as an indication of the merits of an investment in MQA. Responsibility for information Except as outlined below, the information contained in this Explanatory Memorandum has been provided by MIG and is its responsibility alone. Except as outlined below, no member of the Macquarie Group nor any of

15 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 11 their respective directors, of cers, employees, agents, advisers or intermediaries assumes any responsibility for the accuracy or completeness of such information. No member of the Macquarie Group nor any of their respective of cers, employees, agents, advisers and intermediaries, nor MIG s advisers nor any other person named in this Explanatory Memorandum other than MIG, have authorised or caused the issue, submission, despatch or provision of this Explanatory Memorandum and, except as outlined below, no member of the Macquarie Group or their respective directors, of cers, employees, agents, advisers or intermediaries makes or purports to make any statement in this Explanatory Memorandum and there is no statement in this Explanatory Memorandum which is based on any statement by any of them. Ernst & Young Transaction Advisory Services Limited (Independent Expert) has provided and is responsible for the information contained in the Independent Expert s Report. None of MIG, Macquarie Group or any of their respective directors, of cers, employees, agents, advisers or intermediaries assumes any responsibility for the accuracy or completeness of the information contained in the Independent Expert s Report which accompanies this Explanatory Memorandum. PricewaterhouseCoopers Securities Ltd (Investigating Accountant) has provided and is responsible for the information contained in the Investigating Accountant s Report. None of MIG, Macquarie Group or any of their respective directors, of cers, employees, agents, advisers or intermediaries assumes any responsibility for the accuracy or completeness of the information contained in the Investigating Accountant s Report included in this Explanatory Memorandum. Greenwoods & Freehills Pty Limited (ABN ) has provided and is responsible for the information contained in the Tax Opinions. None of MIG, Macquarie Group or any of their respective directors, of cers, employees, agents, advisers or intermediaries assumes any responsibility for the accuracy or completeness of the information contained in the Tax Opinions included in this Explanatory Memorandum. Macquarie Capital Group Limited has provided and is responsible for the Macquarie Information. No other member of Macquarie Group, MIG nor any of its subsidiaries and each of their respective of cers, employees, agents advisers or intermediaries assumes any responsibility for the accuracy or completeness of the Macquarie Information. References to Macquarie s holding in MIG Securities All references in this Explanatory Memorandum to Macquarie s voting power in MIG Securities are stated on the basis that as at 11 December 2009: (a) Macquarie had a Principal Holding of million MIG Securities (approximately 14.0% of MIG Securities on issue). This Principal Holding is held by Macquarie Capital Group Limited (ABN ); and (b) Macquarie had a total relevant interest in million MIG Securities (approximately 17.6% of MIG Securities on issue). This includes the Principal Holding. The above percentages have been determined on the basis that as at 11 December 2009 MIG had 2,261,732,048 MIG Securities on issue. Unless stated otherwise, all references in this Explanatory Memorandum to Macquarie s holding of MIG Securities are references to its Principal Holding. Foreign MIG Securityholders USA US security holders should note that the Restructure Proposal is made in accordance with the laws of Australia and the listing rules of the Australian Securities Exchange (ASX). The Restructure Proposal is subject to the disclosure requirements of Australia that are different from those of the United States. Financial statements included in the Explanatory Memorandum have been prepared in accordance with Australian Accounting Standards and also comply with International Financial Reporting Standards and interpretations issued by the International Accounting Standards Board. These nancial statements may not be comparable to nancial statements prepared in accordance with the generally accepted accounting principles of the United States. It may be dif cult for you to enforce your rights and any claim you may have arising under US federal securities law because MQA is located in Australia and Bermuda and all of its of cers and directors are residents of Australia and Bermuda. You may not be able to sue MQA or its of cers or directors in Australian courts for violations of the US securities laws. It may be dif cult to compel MQA and its af liates to subject themselves to a US court s judgement.

16 12 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Disclaimer and Important Notices (continued) The Explanatory Memorandum has not been led with or reviewed by the US Securities and Exchange Commission or any state securities authority and none of them has passed upon or endorsed the merits of the Restructure Proposal or the accuracy, adequacy or completeness of the Explanatory Memorandum. Any representation to the contrary is a criminal offence. The MQA Securities to be issued pursuant to the Restructure Proposal have not been, and will not be, registered under the US Securities Act 1933 or the securities laws of any US state. The MQA Securities would not be issued in any US state or other jurisdiction where it is not legally permitted to do so or where registration or quali cation would be required. MQA intends to list MQA Securities only on the ASX. US security holders may trade the MQA Securities in regular transactions on the ASX so long as they are not pre-arranged with persons in the United States. United Kingdom This document does not constitute an offer of transferable securities to the public in the United Kingdom (within the meaning of sections 85 and 102B of the Financial Services and Markets Act 2000). Neither this document nor any accompanying letter or any other documents have been delivered for approval to the Financial Services Authority in the United Kingdom and no prospectus has been published or is intended to be published in respect of the MQA Securities. Accordingly, the MQA Securities are not being and may not be offered or sold in the United Kingdom by means of this document, any accompanying letter or any other document. Singapore This Explanatory Memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. This Explanatory Memorandum and any other document or material in connection with the offer, sale or distribution, or invitation for subscription, purchase or receipt of the securities may not be offered, sold or distributed, or be made the subject of an invitation for subscription, purchase or receipt, whether directly or indirectly, to persons in Singapore except pursuant to exemptions in Subdivision (4) Division 1, Part XIII of the Securities and Futures Act, Chapter 289 (Act), or as otherwise pursuant to, and in accordance with the conditions of, any other applicable provisions of the Act. Hong Kong The contents of this Explanatory memorandum have not been reviewed by any regulatory authority in Hong Kong. MIG Securityholders are advised to exercise caution in relation to the Restructure Proposal. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. Canada This Explanatory Memorandum describes an issuance of MQA Securities only in the Provinces of British Columbia, Ontario, New Brunswick and Quebec (Provinces) which is being made pursuant to an exemption from the prospectus requirements in the Provinces. This document is not, and under no circumstances is to be construed as, an advertisement or a public offering of MQA Securities in the Provinces. No securities commission or similar authority in the Provinces has reviewed or in any way passed upon this document or the issuance of MQA Securities and any representation to the contrary is an offence. No prospectus has been, or will be, led in the Provinces with respect to the issuance of the MQA Securities or the resale of such securities. Any person in the Provinces lawfully participating in the Restructure Proposal will not receive the information, legal rights or protections that would be afforded had a prospectus been led and receipted by the securities regulator in the Provinces. Furthermore, any resale of the MQA Securities in the Provinces must be made in accordance with applicable Canadian securities laws which may require resales to be made through a locally registered dealer and pursuant to prospectus requirements or in accordance with exemptions from dealer registration and prospectus requirements. Upon receipt of this document, each investor in Canada hereby con rms that it has expressly requested that all documents evidencing or relating in any way to the sale of the MQA Securities (including for greater certainty any purchase con rmation or any notice) be drawn up in the English language only. Par la réception de ce document, chaque investisseur canadien confirme par les présentes qu il a expressément exigé que tous les documents faisant foi ou se rapportant de quelque manière que ce soit à la vente des valeurs mobilières décrites aux présentes (incluant, pour plus de certitude, toute confirmation d achat ou tout avis) soient rédigés en anglais seulement.

17 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 13 Privacy and personal information MIG will need to collect personal information in connection with the General Meetings. The personal information may include the names, contact details and details of holdings of MIG Securityholders, plus contact details of individuals appointed by MIG Securityholders as proxies, corporate representatives or attorneys at the General Meetings. The collection of some of this information is required or authorised by the Corporations Act. MIG Securityholders who are individuals, and other individuals in respect of whom personal information is collected about them can contact MIG s company secretary if they wish to exercise those rights. The information may be disclosed to print and mail service providers, and to MIG and its advisers to the extent necessary to effect the Restructure Proposal. If the information outlined above is not collected, MIG may be hindered in, or prevent from, conducting the General Meetings or implementing the Restructure Proposal effectively or at all. MIG Securityholders who appoint an individual as their proxy, corporate representative or attorney to vote at the General Meetings should inform that individual of the matters outlined above. It is noted that all persons are entitled, under section 173 of the Corporations Act, to inspect and copy the MIG register. The MIG register contains personal information about MIG Securityholders. The arrangements relating to the proposed transfer of Tax File Number information from MIG to MQA is set out in section Disclosures regarding forward looking statements This Explanatory Memorandum contains certain forward looking statements. Forward looking statements can generally be identi ed by the use of forward looking words such as anticipate, believe, expect, project, forecast, estimate, likely, intend, should, will, could, may, target, plan and other similar expressions within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance or outlook on future earnings, distributions or nancial position or performance are also forward looking statements. The forward looking statements contained in this Explanatory Memorandum involve known and unknown risks and uncertainties and other factors, many of which are beyond the control of MIG, and may involve signi cant elements of subjective judgment and assumptions as to future events which may or may not be correct. There can be no assurance that actual outcomes will not differ materially from these forwardlooking statements. Currency Unless stated otherwise, all dollar values are in Australian dollars (A$) and nancial data is presented as at the date stated. Date This Explanatory Memorandum is dated 18 December 2009.

18 14 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING Autoroutes Paris-Rhin-Rhône, France

19 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 1: Details of the Restructure Proposal Background to the Restructure Proposal Previous initiatives designed to enhance MIG Securityholder value During the last 24 months, the MIG Boards have examined and implemented a range of initiatives designed to increase value for MIG Securityholders by addressing the valuation gap that existed between the traded security price of MIG Securities and the published Net Asset Backing of MIG. These initiatives have included: the reduction of MIG s interest in Westlink M7 from 50% to 25%, realising more than A$400 million; the sale of Lusoponte for more than A$200 million; conducting on market security buybacks in excess of A$250 million; and changes to MIG s distribution policy to align distributions with operating cash Strategic review Notwithstanding these initiatives, the MIG Boards believed that further action was required to narrow the valuation gap between the security price and the MIG Directors view of the underlying value of MIG s assets, and so undertook a further detailed strategic review. In particular, this strategic review investigated the continuation of MIG with no change, the potential for further asset sales, the selective early deleveraging of some assets within the MIG Portfolio, as well as the overall structure and management of MIG. This strategic review concluded: maintaining the status quo is a viable alternative; however, this option does not address underlying valuation issues, and so was not viewed as delivering any signi cant potential for improvement in the MIG Security price in the medium term; whilst the sales of the interests in the Westlink M7 and Lusoponte achieved sale consideration at or near Net Asset Backing of those assets, given market conditions, further asset sales were unlikely to achieve acceptable outcomes; all the roads were within their respective debt covenants, with the possible exception of the South Bay Expressway where there is a dispute in relation to the loan covenants, and no early debt reduction was necessary or appropriate. In particular, any equity raising at current MIG Security prices was considered to be highly dilutive to MIG Securityholders; and the structure and composition of MIG were contributing factors in the underperformance of the MIG Security price. The outcome of the strategic review has consequently led to the development of the Restructure Proposal.

20 16 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 1: Details of the Restructure Proposal continued Establishment of Independent Board Committees The MIG Boards established the IBCs to review some of the potential strategic options in more detail. Given Macquarie s personal interest in the Restructure Proposal, the IBCs comprised only directors who are independent of Macquarie. In determining the status of a director, MIG applies the standards of independence required by the Macquarie Funds Management Policy which has been adopted by MIG and is described in Appendix C. In this regard, it should be noted that this policy is not wholly consistent with the ASX Corporate Governance Principles and Recommendations, as MIG has previously disclosed in its annual reports and on its website. The main areas of difference between the Macquarie Funds Management Policy and the ASX Corporate Governance Principles and Recommendations are: the Macquarie Funds Management Policy does not speci cally provide that independent directors must be free of any business relationship that could reasonably be perceived to interfere with their independence this is managed by the Macquarie Group Corporate Governance Committee or the MIG Boards; Macquarie Group Corporate Governance Committee or the MIG Boards have a discretion to determine that a MIG Director is independent even if they do not meet all of the criteria of the Macquarie Funds Management Policy; the Macquarie Funds Management Policy criteria requires independence of relationships not only with MIG but also Macquarie Group and other Macquarie Group managed vehicles. None of the MIG Directors who are independent under the Macquarie Funds Management Policy would be independent under the ASX Corporate Governance Principles and Recommendations because they are either appointed by Macquarie or, in the case of Jeffrey Conyers, he is married to a senior executive and shareholder of a small Bermudian fund administrator which earns more than 5% of its income from other Macquarie managed vehicles. However, the IBC directors do meet the director independence criteria used by MIG which have been framed to cater for the fact MIG is an externally managed vehicle with sponsor appointed directors. Details of the independence of the MIG Directors are set out in section The composition of the IBCs is as follows: the MIIML IBC comprises Paul McClintock (Chairman), David Mortimer and David Walsh; and the MIGIL IBC comprises Robert Mulderig (Chairman) and Jeffrey Conyers. The IBCs engaged Grant Samuel as nancial adviser and Mallesons Stephen Jaques as legal adviser in respect of the Restructure Proposal. To ensure the best interests of MIG Securityholders were advanced on an independent basis, the MIG Boards also adopted IBC management protocols to govern their conduct. The protocols were designed to ensure that the MIG Independent Directors prefer and protect the interests of MIG Securityholders in their consideration of available alternatives and in any negotiations with Macquarie.

21 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Overview of the Restructure Proposal What the Restructure Proposal involves If approved by MIG Securityholders, the Restructure Proposal will be implemented by way of the reorganisation of ownership of the assets in the MIG Portfolio and the separation of MIG into two ASX listed toll road groups, Intoll and MQA. Key Aspects of the separation of the Restructure Proposal Refer to Section It is proposed that the current MIG Portfolio be reorganised into Intoll and MQA on the basis of risk pro le and management requirements (Portfolio Reorganisation). Intoll Intoll will be the new name for the entities that currently comprise MIG (being MIT(I), MIT(II) 4.1, Appendix B and MIGIL). Intoll will continue to hold a 30% interest in the 407 ETR in Toronto and a 25% interest in 4.4.1, Appendix B the Westlink M7 in Sydney. MIT(II) will acquire MIIML (the responsible entity of MIT(I) and MIT(II)) and the MIGIL Advisory 8.3, Appendix B Deed with Macquarie Capital Funds (Europe) Limited (MCFEL) will end so that Intoll will become a standalone entity which employs its own management team. MQA MQA will comprise a newly incorporated Australian company stapled to a newly 5.1, MQA incorporated Bermudian company. Prospectus MQA will hold a 100% interest in the M6 Toll, a 20.4% interest in Autoroutes Paris-Rhin , MQA Rhône (APRR), a 70.0% interest in Warnow Tunnel, a 50.0% estimated economic interest Prospectus in Dulles Greenway, a 22.5% interest in the Chicago Skyway, a 25.0% interest in the Indiana Toll Road and a 50.0% interest in the South Bay Expressway, as well as a 100% interest in the non toll road asset, Transtoll. MQA will be managed by Macquarie under new management agreements with a new fee 5.5, 8.4, MQA structure. Prospectus It is proposed that Intoll and MQA will be separately listed on the ASX MIG s expected cash balance on implementation of the Restructure Proposal will be A$308 million which will be allocated A$80 million to Intoll and A$228 million to MQA. Macquarie has agreed to facilitate a range of outcomes in connection with the Restructure 2.1, 8.2, 11.1 Proposal including: assisting Intoll with establishing an independent operation, including assisting in the transfer of certain personnel, provision of premises, reimbursement of Incremental Costs (including all employment costs) and other services over a 12 month period; facilitating a method of implementation for the Restructure Proposal which minimises the potential for pre-emptive rights and consent rights in asset level shareholder agreements being triggered; granting a licence of Macquarie intellectual property rights to Intoll; and transferring MIIML, the responsible entity of MIT(I) and MIT(II), to Intoll. Macquarie will be paid an amount estimated to be approximately A$103.9 million as 3.4.5, 8.2, 11.1 compensation in connection with the implementation of the Restructure Proposal. The actual amount may be higher or lower and comprises: A$50 million for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG. an advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll for nancial advisory services in connection with the Restructure Proposal, which does not extend to advice on the arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other hand) on which Grant Samuel advised the IBCs. That fee is estimated to be approximately A$28.3 million (assuming a post implementation 30 day VWAP trading price for Intoll of A$1.25 per Intoll Security. a payment of approximately A$25.6 million for the shares in MIIML. This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal.

22 18 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 1: Details of the Restructure Proposal continued Implementation steps The Restructure Proposal will be implemented as follows: the Portfolio Reorganisation will be implemented (which will involve the reorganisation of the MIG Portfolio into the Intoll Portfolio and the MQA Portfolio); MIG will be separated into two ASX listed toll road groups, Intoll and MQA. MIG Securityholders will receive MQA Securities through the In-Specie Distribution. The securities in Macquarie Atlas Roads Limited (MQA Australia) and Macquarie Atlas Roads International Limited (MQA Bermuda) will be stapled and traded together and constitute MQA Securities. MIG will be renamed Intoll; Intoll will acquire MIIML from a Macquarie subsidiary. MIIML is the responsible entity of MIT(I) and MIT(II); the arrangements under which Macquarie provides resources to MIIML will end; Intoll will receive a perpetual, royalty free, intellectual property licence from Macquarie (in respect of MIG related materials which are owned by Macquarie including the MIG internal nancial models); the MIGIL Advisory Deed will end and the MIGIL A Special Share held by MCFEL will be redeemed. The A Special share enables MCFEL to appoint 50% of the MIGIL Directors; and Macquarie will provide at its expense transitional support services to Intoll for a period of up to 12 months including access to personnel and providing assistance and support in relation to information technology, compliance and risk management assistance, human resources support and accounting and taxation compliance services, as well as providing interim premises and support services in relation to permanent premises. Section 11 summarises the material contracts relating to the Restructure Proposal Consequences for MIG Securityholders On implementation of the Restructure Proposal, MIG Securityholders will hold: one Intoll Security for every MIG Security held on the Record Date; and one MQA Security for every ve MIG Securities held on the Record Date. Each MIG Securityholder s entitlement to MQA Securities will be rounded to the nearest whole number. Where this would result in aggregate entitlements exceeding the number of MQA Securities held by MIG, the entitlement of MIG Securityholders will be reduced (starting with the MIG Securityholder holding the largest number of MIG Securities) until the aggregate entitlements to MQA Securities equals the number of MQA Securities held by MIG. As a result of the Restructure Proposal, MIG Securityholders will retain exposure to all of MIG s assets. However, in contrast to the current position, MIG Securityholders will be able to deal with their interests in the two portfolios separately following completion. The In-Specie Distribution of MQA Securities under the Restructure Proposal may have income tax and capital gains tax consequences for certain MIG Securityholders. Further, the Special Distribution will be treated as an unfranked dividend paid by MIT(II) and taxed accordingly. The tax implications for MIG Securityholders of the Restructure Proposal are set out in the Tax Opinion in section 9. The risks concerning the certainty of the expected tax outcomes are set out in section

23 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Key conditions to the Restructure Proposal The Restructure Proposal is subject to the following conditions: Condition MIG Securityholder approval: MIG Securityholders approving by ordinary resolution the Restructure Proposal including the bene ts provided to Macquarie for the purposes of Chapter 2E (as modi ed by Part 5C.7) of the Corporations Act and the MQA Management Agreements having regard to the principles set out in ASX Guidance Note 26. (A number of other resolutions will be considered at the time of the General Meetings to approve the Restructure Proposal but the Restructure Proposal is not dependent on the outcome of those resolutions, see section 10). The Implementation Deed not having been terminated: The Implementation Deed can be terminated for certain reasons outlined below, including if the majority of the IBC members change their recommendation on duciary grounds (including as a result of a superior competing transaction). ASIC relief and ASX waivers/con rmation: The Restructure Proposal will not be implemented unless each of the following conditions precedent are satis ed or waived in accordance with the Implementation Deed: the approval of ASX to the continued of cial quotation of MIT(I) Units, MIT(II) Units and MIGIL Shares as part of an Intoll Security; the approval of ASX to the admission of MQA Australia and MQA Bermuda to the Of cial List of ASX and for of cial quotation of MQA Securities; ASIC and ASX having issued or provided such consents or approvals or having done such other acts which the parties agree are reasonably necessary or desirable to effect the Restructure Proposal; and obtaining any other regulatory authority consent or approval or any other regulatory authority having done such other acts which the parties agree are reasonably necessary or desirable to effect the Restructure Proposal. Status of conditions Macquarie and its associates are excluded from voting on the Required Resolutions of MIT(I) and MIT(II). Macquarie does not intend to vote on the Required Resolutions of MIGIL. MIG is not aware of any such action. While some of the required ASIC relief and ASX waivers and con rmations have been agreed to in-principle, certain of the relief and waivers and con rmations, while agreed in-principle, will not be granted until after the General Meetings.

24 20 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 1: Details of the Restructure Proposal continued Macquarie and MIG have agreed in the Implementation Deed to use reasonable endeavours to procure that these conditions are satis ed as soon as practicable. MIG will announce to the ASX any material developments in the status of these conditions. MIG or Macquarie may terminate the Implementation Deed if: any of the conditions are not ful lled or waived by 30 June 2010 or such other date agreed by the parties; the Required Resolutions are not passed; a majority of the MIG Independent Directors change or withdraw their recommendation prior to the MIG Securityholder meetings to consider the Restructure Proposal; or there is a temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal or regulatory restraint or prohibition preventing implementation of the Restructure Proposal. In addition: MIG may terminate the Implementation Deed if there is a material breach by Macquarie of its warranties or obligations under the Implementation Deed or the Share Sale Agreement which is material to the Restructure Proposal as a whole or if Macquarie becomes insolvent; and Macquarie may terminate the Implementation Deed if a Change of Control Event occurs in respect of MIG, or there is a material breach by MIG of its warranties or obligations under the Implementation Deed or the Share Sale Agreement which is material to the Restructure Proposal as a whole or if MIG becomes insolvent Required MIG Securityholder approvals MIG Securityholders are required to approve all of the payments to be made to Macquarie under the Restructure Proposal for the purposes of Chapter 2E (as modi ed by Part 5C.7) of the Corporations Act as part of the approval of the Restructure Proposal. These amounts are estimated to be approximately A$103.9 million but they may vary. MIG Securityholder approval is also being sought having regard to the principles set out in ASX s Guidance Note 26 on Management Agreements as they relate to the new MQA management arrangements. Approval for the Restructure Proposal requires the passing of ordinary resolutions, meaning that it must be approved by more than 50% of MIG Securityholders present in person or by proxy and entitled to vote at each meeting. Macquarie will not vote on these resolutions. Associates of Macquarie will not vote on the resolutions to the extent they are precluded from doing so by the Corporations Act or their votes would be required to be disregarded under the Listing Rules. Further details of the MIG Securityholder resolutions required in relation to the Restructure Proposal as well as other resolutions to be considered at the General Meetings are set out in section 10.

25 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Management arrangements Management of Intoll Intoll will be a standalone listed entity and will have its own employees, rather than relying on a provider of management services. As such, Intoll will not pay management or performance fees to Macquarie. Instead, Intoll will incur the costs of relevant staff, resources and services that were previously provided by Macquarie to MIG. The MIG Boards expect that for Intoll these costs will amount to $7.8 million in the rst year after implementation of the Restructure Proposal. However, Macquarie will reimburse Intoll for these costs during this period (subject to a limit of A$8 million). In addition, Macquarie will licence the use of intellectual property and facilitate the transfer of certain employees, and provide access to Macquarie personnel, premises, IT, compliance and risk management assistance, human resources support, accounting and tax compliance services and other operational support and cooperation to assist Intoll to transition to its own management during its rst year as a stand alone entity. These services will be provided to Intoll at no additional cost to the amounts payable to Macquarie in connection with the Restructure Proposal, other than meeting Macquarie s out-ofpocket expenses. Under the Intoll Transitional Services Agreement, Macquarie has an obligation to provide suitably quali ed employees to carry out the services. Macquarie s obligations to provide transitional services or to reimburse Incremental Costs ceases if there is a Change of Control Event in relation to Intoll. Upon cessation of the Intoll Transitional Services Agreement, Intoll may or may not decide to outsource part or all of these functions, which will have an impact upon total employee numbers. Key aspects of management arrangements for Intoll Intoll will acquire all of the shares in MIIML (the responsible entity of MIT(I) and MIT(II)) from Macquarie. The existing MIGIL Advisory Deed with MCFEL, and the MIIML Funds Management Resources Agreement between MIIML and Macquarie will end. As a standalone entity Intoll will independently manage the entities comprising Intoll and employ its own management. Intoll will (subject to any necessary MIG Securityholder approvals) introduce a governance framework for Intoll that is similar to those in place for other ASX listed entities. Murray Bleach, a current Macquarie executive, will assume responsibility as the interim CEO of Intoll immediately upon implementation of the Restructure Proposal. Mr Bleach resigned from Macquarie effective 18 December Up to the end of the period during which MIG has the bene t of transitional services provided by Macquarie (being 12 months after implementation of the Restructure Proposal), Intoll will also seek to employ additional head of ce staff to allow it to operate independently of Macquarie. Refer to Section 2.1, 2.2, , 8.2, Appendix B 4.5, Appendix B 2.2,

26 22 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 1: Details of the Restructure Proposal continued Governance transition for Intoll The key features of Intoll s proposed governance framework include: Macquarie will no longer have any special rights to appoint directors to the Intoll Boards; 1 One third of directors will retire by rotation each year and may seek re-election; a majority of the Intoll Boards will be independent (currently comprising the members of the IBC). While independence will initially be determined in accordance with the current criteria applied by MIG, 2 this transition will also see Intoll adopt a position where it intends to apply the de nition of independence as set out in the ASX Corporate Governance Principles and Recommendations. Details of the transition arrangements to ensure continuity of the Intoll Board whilst also ensuring a refreshment of talent are set out in section 4.5.1; it is not intended that there will be any alternate directors on the Intoll Boards. On implementation of the Restructure Proposal, the MIIML Board will comprise Paul McClintock (Chairman), David Mortimer and David Walsh, and the MIGIL Board will comprise Robert Mulderig (Chairman), Jeffrey Conyers, Dr Peter Dyer and Paul McClintock (as MIIML s appointee). David Walsh intends to resign from the MIIML Board and will be replaced by a suitably quali ed independent director within six months of implementation of the Restructure Proposal. The MIGIL Board will consider whether it is appropriate for any incumbent director to resign and be replaced by suitably quali ed independent directors Management of Macquarie Atlas Roads MQA will be managed by Macquarie International Advisory Services Pty Limited (MQA Manager), a wholly owned subsidiary of Macquarie. MQA will be created by way of an In-Specie Distribution out of MIG of both a new Australian company and a new Bermudian company the shares in which will be stapled such that they will not be able to be traded separately. The companies comprising MQA - MQA Australia and MQA Bermuda - will enter into the MQA Management Agreements to appoint the MQA Manager as the manager of MQA. The management fee arrangements for MQA will differ from MIG s current arrangements in order to re ect the smaller asset base of MQA. The arrangements are intended to properly incentivise the MQA Manager to deliver performance for all MQA Securityholders and to align the interests of the MQA Manager and MQA Securityholders. 1 MCFEL holds one MIGIL A special share which gives MCFEL has the right to appoint up to 50% of the MIGIL directors. MIIML (as responsible entity of MIT(II)) currently has the right to appoint up to 25% of the directors of MIGIL as a result of holding the MIGIL B Special Share. Macquarie currently has the right to appoint all of the MIIML Directors as MIIML is a member of the Macquarie Group. Macquarie has given an undertaking until December 2011 to exercise these rights in accordance with a vote by MIG Securityholders. 2 In determining the status of a director, MIG applies the standards of independence required by the Macquarie Funds Management Policy which have been adopted by MIG and are described in Appendix C.

27 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 23 Key aspects of Management Arrangements for Macquarie Atlas Roads MQA will be a double stapled group, created by way of an In-Specie Distribution out of MIT(II) and MIGIL, of shares of a newly incorporated Australian company which will be stapled to the shares in a newly incorporated Bermudian company. MQA will enter into separate management agreements with Macquarie International Advisory Services Pty Limited, a wholly owned subsidiary of Macquarie. The management arrangements will be on a non discretionary basis as all key decision making will occur at the MQA Board level. The directors of MQA Australia will invite Macquarie to nominate a director to the MQA Australia Board. As with all directors of MQA Australia, the nominee will retire by rotation every three years and may seek re-election. A current senior executive of MIG, Peter Trent, will assume responsibility as CEO of MQA upon implementation of the Restructure Proposal. The current Chief Financial Of cer of MIG, Mary Nicholson, will assume responsibility as Chief Financial Of cer of MQA upon the implementation of the Restructure Proposal. Under the MQA Management Agreements, the MQA Manager responsibilities include: Investment and divestment evaluation and recommendations Implementation of investment / divestment instructions given by the Boards Providing Macquarie executives as nominees of MQA Australia and MQA Bermuda to act as directors of subsidiary entities that hold investments, and where appropriate, making recommendations to the MQA Boards to appoint non-macquarie nominees to these Boards Asset management Capital and nancial management recommendations and using reasonable endeavours to procure the raising of funds Financial reporting Investor communications and meetings Litigation management Provision of suitably quali ed personnel to perform the CEO and CFO roles for MQA and the company secretary role for MQA Australia. The MIG Independent Directors have agreed a new fee structure for the MQA Management Agreements, the details of which are: Base Fee - Payable quarterly. The base fee is 2.00% per annum of Market Value of MQA up to A$1 billion, plus 1.25% per annum of Market Value of MQA between A$1 billion and A$3 billion, plus 1% per annum of Market Value of MQA in excess of A$3 billion. Market Value of MQA at the end of a quarter means the aggregate of the market value of the MQA Securities calculated on the basis of the average number of MQA Securities on issue during the last 10 trading days of the ASX in the relevant quarter multiplied by the VWAP of all MQA Securities over those 10 trading days. If requested by Macquarie and approved by the non-executive directors of MQA, base fees payable may be reinvested in MQA Securities at a price being the VWAP of MQA Securities over the last 10 ASX trading days before the fee becomes payable. Refer to Section 2.3, , , , , , 11.4, MQA Prospectus 2.3, 3.4.6, 8.4.2

28 24 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 1: Details of the Restructure Proposal continued Key aspects of Management Arrangements for Macquarie Atlas Roads Performance Fee - payable at 30 June each year if earned. The performance fee is payable in the event that the MQA accumulation index (which measures the return on MQA Securities assuming that all distributions are reinvested on the ex-distribution date) outperforms the S&P/ASX 300 Industrials Accumulation Index in any nancial year having made up for underperformance in previous years. The base for the MQA accumulation index for the rst period will be set by the VWAP of MQA Securities for the rst 30 trading days of MQA post the implementation of the Restructure Proposal Performance fee is 15% of the dollar amount of out performance and is to be paid in three equal annual instalments. The second and third instalments will be paid only if MQA continues to outperform the index on a cumulative basis over the two and three year period. Any underperformance de cit from prior periods commencing on the Implementation Date of the Restructure Proposal must be made up before future performance fees can be earned. The current MIG under performance de cit will not carry across to the MQA performance fee arrangements. If the MQA Manager is terminated, any future second and third performance fee instalments will be crystallised and paid on termination. If requested by Macquarie and approved by the non-executive directors of MQA, performance fees payable may be reinvested in MQA Securities at a price being the VWAP of MQA Securities over the last 10 ASX trading days before the fee becomes payable. The appointment of the MQA Manager may be automatically terminated, without cause, by MQA Securityholder vote. The resolution must be passed by at least 50% of votes cast at a meeting by MQA Securityholders entitled to vote. Macquarie and its associates will be entitled to vote on any such resolution. The MQA Manager may also be removed if the manager is in liquidation, ceases to carry on business or lacks the appropriate licence or authorisation. The MQA Manager may resign by giving not less than 90 days written notice. The proposed MQA management arrangements are generally consistent with those that are in place currently for MIG. There are, however, some differences that should be noted: Base Fee differences Currently on the net investment value of MIG between zero and A$1bn, the base fee is 1.25%. Under the new arrangements, the base fee is proposed to increase to 2.0%. This represents a maximum potential increase on this tier of market capitalisation of A$7.5m per annum. The reason for the increase is to ensure that Macquarie is appropriately compensated for the management services it will provide as the assets in the MQA Portfolio will require signi cant active management and the market capitalisation of MQA is likely to be much lower than MIG s. Refer to Section MQA Prospectus Currently the Market Value of MIG is calculated as the market capitalisation based on the VWAP of MIG Securities over the last 10 ASX trading days of each quarter plus fund level borrowings and rm commitments for future investments less cash or cash equivalents. The Market Value of MQA will be calculated simply as the market capitalisation based on the VWAP of MQA Securities over the last 10 trading days of each quarter. The potential difference in fees that this change represents is unknown as the level of borrowings, rm commitments and cash in MQA will vary over time. See section for further detail on the rationale for the changes and section for the potential impact of these changes.

29 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 25 Performance Fee differences There are no differences in relation to the calculation and payment methodology of the performance fee of the MQA Manager in comparison to the current MIG arrangements. One of the key components of the performance fee mechanism is the requirement of MIG to make up any underperformance de cit from prior periods before future performance fees can be paid. MIG currently has an accumulated underperformance de cit equivalent to A$2.12 per MIG Security which in market capitalisation terms represents approximately A$4.8 billion. This underperformance de cit will not be carried forward. In the MIG Boards view, these new arrangements ensure appropriate incentives are present to encourage and incentivise the MQA Manager to build value in that portfolio for all MQA Securityholders. The MIG Boards recognise Macquarie is one of the pre-eminent global organisations in regard to the management of infrastructure assets with in excess of A$116 billion of infrastructure assets under management and MQA will be able to draw on the expertise of Macquarie s range of managers and advisers. However, MIG s recent underperformance has been notwithstanding Macquarie s management of MIG. See section for further detail on the rationale for the changes and section for examples of the performance fee calculation. Further details of the management arrangements for Macquarie Atlas Roads are set out in section Governance transition for Macquarie Atlas Roads On implementation of the Restructure Proposal, the MQA Australia Board will comprise Mark Johnson (Chairman), David Mortimer, David Walsh and John Roberts, and the MQA Bermuda Board will comprise Robert Mulderig (Chairman), Jeffrey Conyers, Dr Peter Dyer and Mark Johnson (common director with MQA Australia). Consequently and at this time, the boards will not be in compliance with the ASX Corporate Governance Principles and Recommendations and the Macquarie Funds Management Policy. David Mortimer intends to resign from the MQA Australia Board and will be replaced by a suitably quali ed independent director within six months of implementation of the Restructure Proposal Mark Johnson has indicated that he intends to resign from the MQA Boards no later than the rst annual general meeting of MQA Australia and MQA Bermuda. It is anticipated that David Walsh will be appointed as Chairman of MQA Australia and will replace Mark Johnson as a director of MQA Bermuda. The MQA Bermuda Board will consider whether it is appropriate for any other incumbent director to resign and be replaced by a suitably quali ed independent director.

30 26 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 1: Details of the Restructure Proposal continued 1.4 Macquarie Group s interests Macquarie has various roles and interests in respect of the Restructure Proposal. The broad nature of these roles and interests can be summarised as follows. This is a high level summary only. Refer to sections (Payments to Macquarie on implementation of the Restructure Proposal), Bene ts accruing to Macquarie from managing MQA), (IBCs conclusion regarding bene ts to Macquarie), and 8 (Macquarie Group interests) for further details. Current position Way affected if the Restructure Proposal proceeds 14.0% Principal Holding Macquarie will receive approximately 14.0% of the MQA Securities as its pro rata in MIG Securities entitlement to the proposed In-Specie Distribution. Macquarie will hold an approximately 14.0% principal holding in Intoll, immediately following the implementation of the Restructure Proposal. The above percentages assume there is no change in Macquarie s Principal Holding and the total number of MIG Securities on issue between 11 December 2009 and implementation of the Restructure Proposal. Existing management Since 1 July 2009 to the date of this Explanatory Memorandum MIG, has paid rights management fees of $8.5 million, and MIG will continue to pay management fees (estimated at A$9.8 million based one the Net Investment Value of MIG by reference to the 10 day VWAP of MIG Securities ending on 30 November 2009 and MIG s cash balance as at 30 November 2009) to Macquarie until the implementation of the Restructure Proposal. On completion of the Restructure Proposal, Macquarie will no longer provide management services to Intoll, as it will be a standalone group which employs its own management team. Intoll will acquire MIIML from Macquarie and the advisory agreement between MIGIL and MCFEL will end. Macquarie will provide certain transitional and support services to Intoll for a period of 12 months from completion of the Restructure Proposal to assist Intoll transition to its own management. Macquarie will lose any and all special MIG board appointment rights in respect of Intoll. New management agreements will be entered into with MQA as set out in section 11.4 of this Explanatory Memorandum. The directors of MQA Australia will invite Macquarie to nominate a director to the MQA Australia Board. As with all directors of MQA Australia, the nominee will be subject to shareholder election at least every three years. Services provided by Macquarie in connection with the Restructure Proposal Macquarie has agreed to facilitate a range of outcomes in connection with the Restructure Proposal including: assisting Intoll with establishing independent operation, including transfer of certain personnel, provision of premises, reimbursement of Incremental Costs (including all employment costs) and other services over a 12 month period; facilitating a method of implementation for the Restructure Proposal which minimises the potential for pre-emptive rights and consent rights in asset level shareholder agreements being triggered; granting of a licence of Macquarie intellectual property rights to Intoll; and transferring of MIIML, the responsible entity of MIT(I) and MIT(II) to Intoll. Macquarie will also provide nancial advisory services in connection with the Restructure Proposal. Macquarie s nancial advisory role excludes advice on arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other).

31 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 27 Current position Fees payable to Macquarie on implementation Ongoing management fees in relation to MQA Ongoing management costs Asset level advisory agreement Way affected if the Restructure Proposal proceeds Macquarie will be paid an amount estimated to be approximately A$103.9 million as compensation in connection with the implementation of the Restructure Proposal. The actual amount may be higher or lower and comprises: A$50 million for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG (see section 8.2 for further details); an advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll for nancial advisory services in connection with the Restructure Proposal. Macquarie s nancial advisory role does not extend to advice on the arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other hand) on which Grant Samuel advised the IBCs (see section 8.2). This fee is estimated to be approximately A$28.3 million (assuming a post implementation 30 day VWAP trading price for Intoll of A$1.25 per Intoll Security); and a payment of approximately A$25.6 million for the shares in MIIML. This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal. Base fee Payable Quarterly. The base fee = 2.00% per annum of Market Value of MQA up to A$1 billion; plus 1.25% per annum of Market Value of MQA between A$1 billion up to A$3 billion; plus 1% per annum of Market Value of MQA in excess of A$3 billion. Market Value of MQA is the volume weighted average market capitalisation over the last 10 ASX trading days of each quarter. Performance Fee 15% of the amount by which the MQA accumulation index outperforms the S&P/ASX 300 Industrials Accumulation Index in any nancial year having made up for under performance in previous years. The MQA accumulation index will be set by the 30 day VWAP of MQA after implementation of the Restructure Proposal. The existing MIG performance fee de cit is not being carried across to MQA. Any future performance de cits generated by MQA itself will need to be recovered prior to payment of performance fees. Refer to sections and for further details. Intoll will become a stand alone group which employs its own management team and Macquarie will cease to bear costs for managing Intoll (but Macquarie will be liable to reimburse certain costs incurred by Intoll as indicated above in section for up to 12 months after implementation of the Restructure Proposal). In the event that MQA ceases to be Macquarie managed, Macquarie will be entitled to the following fees under existing APRR arrangements in respect of MQA s investment in APRR for the provision of ongoing advisory services in relation to the investment in APRR: A base fee is calculated as 1.25% of base investment cost annually. This is estimated at 5 million per annum. Performance fees may also be triggered entitling Macquarie to 15% of cash ows from the APRR investment, after an 8% IRR is achieved. The performance fee threshold has not been met.

32 28 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 1: Details of the Restructure Proposal continued Current position Way affected if the Restructure Proposal proceeds Co-owned assets A number of MIG assets to be held by MQA are co-owned with other Macquarie managed funds (with and without other third party investors). The arrangements relating to governance and/or management of those assets are not affected by the Restructure Proposal. There are no co-ownership interests with other Macquarie managed funds in respect of the Intoll Portfolio. Other pre-existing roles A number of other Macquarie Group entities provide services to MIG such as transactional banking and depository services; from time to time, foreign exchange services; asset level advisory services; advice on rating issues; and use of premises. Fees and other amounts paid or agreed to be paid in relation to these services are: transaction banking provider: a member of the Macquarie Group received A$29,694 in fees during 12 months ended 30 June 2009; services to APRR: A member of the Macquarie Group receives a 500,000 annual fee for ongoing advice regarding debt rating matters. APRR has also entered into an advisory agreement with a member of the Macquarie Group in relation to re nancings under which fees are payable at 0.25% nominal value of debt issued; A$141,086 of fees for FX execution services were paid to Macquarie Group entities in the year ended 30 June 2009; and A$150,000 in respect of advisory services in respect of restructuring MIG s interests in Transtoll. Intoll has not made any decision as to whether they will continue these arrangements in the future. Any other arrangements between Intoll and Macquarie in the future will be assessed by the Boards of Intoll at the relevant time. These arrangements will remain generally unchanged for MQA. See section 8.6. For a description of how MIG has dealt with any actual or potential con icts arising from Macquarie s involvement in the development and negotiation of the Restructure Proposal, see section

33 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Special Distribution to MIG Securityholders After providing adequate working capital for both Intoll and MQA, the MIG Boards have determined that there will be surplus cash of approximately A$226 million. It is intended that this cash will be distributed to MIG Securityholders by way of a special distribution of A$0.10 per MIG Security upon implementation of the Restructure Proposal. 1.6 Independent Expert s Report and MIG Independent Directors recommendation The IBCs have appointed the Independent Expert to provide an opinion on the Restructure Proposal. On the basis of the matters discussed in the Independent Expert s Report, the Independent Expert has concluded that the Restructure Proposal is in the best interests of MIG Securityholders. The Independent Expert s Report is set out in full in Appendix A. The MIG Independent Directors have unanimously recommended that the MIG Boards agree to the related party elements of the Restructure Proposal involving bene ts being provided to Macquarie. As members of the MIG Boards, the directors who are MIG Independent Directors recommend that MIG Securityholders vote in favour of the Restructure Proposal, subject to there being no superior competing proposal and the Independent Expert not changing or withdrawing its conclusion that the Restructure Proposal is in the best interests of MIG Securityholders. Most of the MIG Independent Directors were appointed by Macquarie. However, they are required to satisfy independence criteria which are mostly consistent with the criteria set out in the ASX Corporate Governance Principles and Recommendations. The main differences in the criteria used by MIG are set out in Appendix C. Refer also to section 3.4 for details of fees and other nancial bene ts paid to the directors by Macquarie for their roles on the MIG Boards or the boards of other Macquarie managed vehicles. None of the MIG Directors who are independent under the criteria used by MIG would be independent under the ASX Corporate Governance Principles and Recommendations. The table in section also explains why the MIG Independent Directors meet the MIG independence criteria. 1.7 Ongoing Director fees Following the implementation of the Restructure Proposal, the boards of both Intoll and MQA will undergo a period of transition and refreshment. The appropriate level of remuneration for the Intoll and MQA Boards is currently under review. MIG directors who have participated in the development of the Restructure Proposal will be paid a work fee (see section 3.7.4). 1.8 Summary of the bene ts of the Restructure Proposal There are a number of potential bene ts for MIG Securityholders created by the Restructure Proposal. In summary, these bene ts include: separate ASX listed groups with interests in separate assets will lead to two portfolios with more easily identi able risk return pro les; the MIG Independent Directors believe that the Restructure Proposal has the potential to improve the combined market rating of Intoll Securities and MQA Securities in comparison to the market rating of MIG Securities through mitigating the negative sentiment and impact of those assets requiring active management from the more stable assets; the creation of these two portfolios may attract new strategic investors as it will allow investors to either trade one or both of these portfolios in accordance with their individual investment objectives; a reduction in the aggregate cost of management for Intoll and MQA compared to the current cost of MIG management; access to intellectual property and management in both Intoll and MQA by drawing on existing members of the current MIG management team; and Intoll may be regarded as more likely to be the subject of a control transaction. See section for more information on the bene ts of the Restructure Proposal.

34 30 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 1: Details of the Restructure Proposal continued 1.9 Disadvantages and risks of Restructure Proposal There are a number of factors arising from the Restructure Proposal which are both speci c to Intoll and MQA and of a more general nature that may be viewed as disadvantageous. In summary, these factors include: additional costs associated with the implementation of the Restructure Proposal as, in addition to the payments to Macquarie, MIG will incur one off external transaction and implementation costs associated with the Restructure Proposal for services such as nancial, legal and accounting advice; there is no certainty that the Restructure Proposal will improve the market rating or security price of Intoll Securities and MQA Securities as referred to above; there is a risk that the ATO may not grant a Class Ruling as to the availability of demerger relief for MIG Securityholders in relation to the Restructure Proposal which may have adverse tax implications for MIG Securityholders; there is a risk that certain conditions to the Restructure Proposal may not be satis ed and the Restructure Proposal will not proceed; the removal of Macquarie branding for Intoll may have an adverse impact on Intoll s business; the loss of MIG s priority over Macquarie s toll road opportunities; the current MIG performance fee de cit will not be carried forward to MQA which means there is a higher likelihood that a performance fee will be payable by MQA in the future than by MIG if the Restructure Proposal did not proceed; and additional corporate costs will be incurred because Intoll and MQA are separately listed. See section for more information on the disadvantages and risks of the Restructure Proposal Alternatives considered by the IBCs The strategic review investigated a number of alternatives including: retaining the status quo; the potential for further asset sales; the selective early deleveraging of some assets within the MIG Portfolio; and the overall structure and management arrangements for MIG. See section 3.1 for more information on the alternatives considered by the IBCs.

35 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING Indiana Toll Road, MACQUARIE United States INFRASTRUCTURE GROUP

36 32 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 2: Questions and answers 2.1 Details of the Restructure Proposal Question What is the Restructure Proposal? Why is MIG adopting the Restructure Proposal? How is the Restructure Proposal achieved? What are the main consequences of the Restructure Proposal for MIG Securityholders? What are the key conditions to the Restructure Proposal? What are the key documents for the Restructure Proposal? Answer The Restructure Proposal comprises: the separation of MIG s assets into two separate ASX listed toll road groups to be renamed Intoll and Macquarie Atlas Roads respectively; a transition of Intoll into a standalone entity with its own management team; and management of MQA by Macquarie. The MIG Boards have proposed the Restructure Proposal with the objective of enhancing MIG Securityholder value by creating two more de ned portfolios of assets that are more visible and aligned as an investment opportunity. The Restructure Proposal will be implemented as follows: the MIG Portfolio will be reorganised into the Intoll Portfolio and the MQA Portfolio; Intoll will acquire MIIML from a Macquarie subsidiary; MIIML resource arrangements with Macquarie will end; Intoll will receive a perpetual royalty free intellectual property licence from Macquarie; the MIGIL Advisory Deed will end and the MIGIL A Special Share held by MCFEL will be redeemed; MQA Securities will be transferred to MIG Securityholders via the In-Specie Distribution; Macquarie will provide transitional support services to Intoll for up to a 12 month period after implementation of the Restructure Proposal; and Macquarie will agree to manage MQA under new management agreements. On implementation of the Restructure Proposal MIG Securityholders will hold: one Intoll Security for every MIG Security held on the Record Date; and one MQA Security for every ve MIG Securities held on the Record Date (subject to rounding). The Restructure Proposal has certain conditions, including: MIG Securityholder approval - ordinary resolution with Macquarie and (in the case of MIT(I) and MIT(II)) its associates not voting; the Implementation Deed not having been terminated. MIG will announce to the ASX any material developments in the status of these conditions. The Implementation Deed, Share Sale Agreement, MIGIL Advisory Deed Termination Deed, Intoll Transitional Services Agreement, and MQA Management Agreements. Section for further information , ,

37 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 33 Question What amounts are payable to Macquarie in connection with the Restructure Proposal? How will the payment to Macquarie associated with the Restructure Proposal be paid? What is the current cash position of MIG and what will be the cash position post the implementation of the Restructure Proposal? How was the cash allocation between Intoll and MQA determined? Will the Restructure Proposal trigger any review provisions in MIG s nance facilities? Answer If the Restructure Proposal is implemented, MIG will pay to Macquarie an amount estimated to be approximately A$103.9 million as compensation in connection with the implementation of the Restructure Proposal. The actual amount may be higher or lower and comprises: A$50 million for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG; an advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll for nancial advisory services in connection with the Restructure Proposal. Macquarie s nancial advisory role does not extend to advice on the arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other hand) on which Grant Samuel advised the IBCs. This fee is estimated to be approximately A$28.3 million (assuming a post implementation 30 day VWAP trading price for Intoll of A$1.25 per Intoll Security); and a payment of approximately A$25.6 million for the shares in MIIML. This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal. Macquarie will also receive the new management fees under MQA management arrangements. All amounts associated with the Restructure Proposal (including the payment to Macquarie) will be paid in cash from MIG s current cash reserves. MIG had cash balances of $678 million as at 31 October Following payment of fees to Macquarie and the payment of the Special Distribution and transaction costs and the FY2010 Interim Distribution, it is estimated that the cash position remaining will be $308 million which is to be split between Intoll ($80 million) and MQA ($228 million). The allocation of cash resources between Intoll and MQA had regard to the following factors: Intoll s assets are expected to generate suf cient cash ow each year to meet its operating costs and make distributions to Intoll Securityholders. On that basis, Intoll s cash allocation re ects an assessment of its working capital needs; Not all of MQA s assets are currently making distributions, and the high leverage may contribute to volatility in future distributions. It was therefore considered appropriate to allocate suf cient cash to MQA to meet its medium term operating commitments. The Restructure Proposal if implemented will trigger both a review event and an event of default under the terms of an undrawn A$150 million standby facility held by MIG. As the facility is currently undrawn, this will not have any negative consequences for MIG, Intoll or MQA. It is anticipated that this facility will be renegotiated down to a new facility limit of $50 million. MQA will not have a corresponding loan facility. Section for further information 3.4.2,

38 34 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 2: Questions and answers continued Question Are there change of control provisions in the agreements relating to MIG s assets that are impacted by the Restructure Proposal? Can MIG Securityholders remove or replace Macquarie as the manager of MIG? Why should Macquarie be paid in relation to the Restructure Proposal? Answer The Restructure Proposal does not trigger any change of control provisions with respect to any asset. In respect of APRR, the restructuring of MIG will trigger a pre-emptive right held by Macquarie European Investment Fund (MEIF). MEIF and MIG have agreed to amend the MAF shareholders agreement to allow the transfer to a Macquarie associate. Accordingly, a waiver will not be required to implement the Restructure Proposal. MIIML may be removed as responsible entity of MIT(I) and MIT(II) and the MCFEL advisory agreement may be terminated by MIGIL directors if a resolution is passed by at least 50% of votes cast at a meeting by MIG Securityholders entitled to vote. Macquarie and its associates may vote their securities on the resolutions. Removal of Macquarie as manager of MIG by MIG Securityholders will result in a range of material adverse consequences for MIG Securityholders, including: default provisions are triggered under existing debt arrangements for M6 Toll, giving the lenders the right to accelerate repayment of those loans; additional fees become payable to Macquarie under existing APRR equity arrangements. In particular: A base fee is calculated as 1.25% of base investment cost annually. This is estimated at 5 million per annum. Performance fees may also be triggered entitling Macquarie to 15% of cash ows from the APRR investment, after an 8% IRR is achieved. The performance fee threshold has not been met. The MIG Boards have proposed the Restructure Proposal with the objective of enhancing MIG Securityholder value. The IBCs considered whether the Restructure Proposal could be implemented without signi cant assistance from Macquarie. For the reasons set out in 3.2.4, the IBCs determined that Macquarie s assistance was required. Details of the assistance to be provided by Macquarie is set out in section 3.4. Macquarie will facilitate a range of outcomes in connection with the Restructure Proposal, including: assisting Intoll with establishing an independent operation; facilitating a method of implementation for the Restructure Proposal which minimises the potential for pre-emptive rights and consent rights in asset level shareholder agreements being triggered; granting a licence of Macquarie intellectual property rights to Intoll; and transferring MIIML, the responsible entity of MIT(I) and MIT(II) to Intoll. Macquarie will also provide nancial advisory services in connection with the Restructure Proposal (excluding the arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQR (on the other hand); Section for further information 3.4.4, 5.4.4, , 3.4.4

39 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 35 Question How were the bene ts to be provided to Macquarie under the Restructure Proposal determined? What was MIG s process in considering the Restructure Proposal? What alternative options were considered by the IBCs? Where do I nd information about Macquarie s involvement in the Restructure Proposal? What other costs are payable in connection with the Restructure Proposal? Can either party terminate the Implementation Deed? What are the tax implications of the Restructure Proposal on MIG Securityholders? What are the risks of the Restructure Proposal not proceeding? What is the Independent Expert s opinion on the Restructure Proposal? Answer In determining the payment to Macquarie, the IBCs had regard to all of the potential bene ts that the Restructure Proposal would deliver MIG Securityholders, and in particular the view that engagement with Macquarie as the existing manager and a signi cant MIG Securityholder had the likelihood of delivering a better outcome for MIG Securityholders through Macquarie s cooperation and provision of a range of services. The MIG Boards considered the strategic alternatives for MIG. Given Macquarie s interests in the Restructure Proposal, the MIG Boards established the IBCs to consider the potential strategic options in more detail and to ensure the best interests of MIG Securityholders were advanced on an independent basis. The IBCs engaged Grant Samuel as nancial adviser and Mallesons Stephen Jaques as legal adviser. The strategic review investigated retaining the status quo, the potential for further asset sales, the selective early deleveraging of some assets within the portfolio, as well as the overall structure and management arrangements for MIG. Information about Macquarie s interests in the Restructure Proposal and its ongoing involvement with Intoll and MQA is set out in sections 1.3.4, 3.4, and 8. MIG expects to pay $7 million for advice and services provided by various external advisers and experts (excluding Macquarie). These amounts are payable even if the Restructure Proposal does not proceed. Yes, the termination rights include if the conditions are not satis ed by 30 June 2010 or such other date agreed by the parties or if the majority of the MIG Independent Directors change or withdraw their recommendation in relation to the Restructure Proposal. Macquarie can also terminate if a Change of Control Event occurs or if MIG breaches the Implementation Deed in certain circumstances. The In-Specie Distribution will have certain capital gains tax consequences for MIG Securityholders depending on their particular circumstances. MIG intends to apply to the ATO on approval of the Restructure Proposal for a class ruling on the availability of CGT demerger relief in relation to the In- Specie Distribution. There is a risk that this class ruling will not be granted (see section ). It is anticipated that the Special Distribution will be made by MIT(II) and will be treated as an unfranked dividend and taxed accordingly. The tax implications for MIG Securityholders of the Restructure Proposal are set out in the Tax Opinion in section 9. The Restructure Proposal will not occur in certain circumstances which include if the conditions are not satis ed or if the majority of the MIG Independent Directors change or withdraw their recommendation in relation to the Restructure Proposal. The Independent Expert has concluded that the Restructure Proposal is in the best interest of MIG Securityholders. Section for further information , , , 3.4, , 9 1.9, , Appendix A

40 36 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 2: Questions and answers continued Question Are there bene ts to MIG Securityholders under the Restructure Proposal? What are the disadvantages of the Restructure Proposal? What resolutions are required to approve the Restructure Proposal? Is Macquarie able to vote on the Resolutions? Answer Yes, the IBCs expect the Restructure Proposal to deliver a number of bene ts for MIG Securityholders including: separate groups with interests in separate asset Portfolios; potential market re-rating; potential to attract new investors; preservation of access to Intellectual property and management; and greater potential for a control transaction. While the Independent Directors recommend that MIG Securityholders vote in favour of the Restructure Proposal in the absence of a superior proposal and subject to the Independent Expert not changing or withdrawing its conclusion that the Restructure Proposal is in the best interests of MIG Securityholders, there are some disadvantages and risks associated with the Restructure Proposal which MIG Securityholders should consider, including: additional one off costs associated with the implementation of the Restructure Proposal; no certainty that the Restructure Proposal will improve the market rating or security price of Intoll Securities and MQA Securities; tax risk concerning the certainty of the expected tax outcomes of the Restructure Proposal for MIG Securityholders; risk that certain conditions may not be satis ed; the removal of Macquarie branding for Intoll; the loss of MIG s priority over toll road opportunities; and MIG in its current form prior to the implementation of the restructure proposal was carrying forward a performance fee de cit of $4.8 billion. Accordingly a performance fee was unlikely to be paid by MIG in the near or long term. The nil starting balance for the MQA performance fee calculations means that MQA is more likely than MIG was to generate a performance fee. The table in section sets out an illustrative range (from the accrual of underperformance through to the payment of a performance fee of $72.3 million) of potential performance fees payable by MQA under various assumed security price and market circumstances. MIG Securityholders are required to approve the bene ts to be provided to Macquarie under the Restructure Proposal for the purposes of Chapter 2E of the Corporations Act as part of the approval of the Restructure Proposal. MIG Securityholder approval is also being sought having regard to the principles set out in ASX s Guidance Note 26 on Management Agreements as they relate to the new MQA management arrangements. Macquarie is excluded from voting on the Required Resolutions of MIT(I) and MIT(II) as it is a related party interested in the Required Resolutions. Macquarie does not intend to vote on the Required Resolutions of MIGIL. The Additional Resolutions will also be considered at the General Meetings. Macquarie is not entitled to vote on the Additional Resolutions relating to MIT(I) and MIT(II), although Macquarie is entitled to vote on the Additional Resolution of MIGIL. Associates of Macquarie will not vote on these resolutions to the extent they are precluded from doing so by the Corporations Act or their votes would be required to be disregarded under the Listing Rules. Section for further information 1.8, ,

41 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 37 Question How will MIG be managed until the implementation of the Restructure Proposal? What are the implications if the Restructure Proposal does not proceed? Answer MIG will continue to be managed by Macquarie until implementation of the Restructure Proposal under the existing MIG management arrangements. If the Restructure Proposal does not proceed, MIG will continue as it currently does. In particular: MIG will remain as a single stapled group; Macquarie will continue to manage MIG and MIG will continue to pay base fees and potentially performance fees to Macquarie in future periods; MIG will not acquire MIIML or pay an amount equal to the net assets of MIIML on completion of the sale of MIIML (estimated to be $25.6 million of cash deposits); Intoll will not become a standalone entity and the assets will continue to be managed by Macquarie as part of MIG; MIG will not make a cash payment of $50 million to Macquarie for facilitating the Restructure Proposal; the Macquarie advisory fee of approximately $28.3 million (assuming a 30 day VWAP for Intoll of $1.25 per Intoll Security) will not be paid; MIG will have incurred approximately $7 million of costs in relation to the restructure proposal that are not recoverable; MIG will not change its name; the corporate governance features which are proposed to be introduced as part of the Restructure Proposal will not be implemented; and the Special Distribution will not be paid. Section for further information 8.1,

42 38 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 2: Questions and answers continued 2.2 Intoll Question What will be the corporate structure of Intoll? What will be the assets of Intoll? Who will be on the Intoll Boards? Will there be any changes to the constituent documents of MIG (to be renamed Intoll)? Who will be the CEO of Intoll? What will Macquarie s interest in Intoll be after the Restructure Proposal? Answer Intoll will remain a tripled stapled entity, containing the current entities that comprise MIG (being MIT(I), MIT(II) and MIGIL), but with the responsible entity of MIT(I) and MIT(II), MIIML, being owned by MIT(II) and MIIML being the adviser to MIGIL rather than MCFEL. Intoll will hold MIG s existing 30% interest in the 407 ETR in Toronto, and 25% interest in the Westlink M7 in Sydney. On implementation of the Restructure Proposal, the MIIML Board will comprise Paul McClintock (Chairman), David Mortimer and David Walsh, and the MIGIL Board will comprise Robert Mulderig (Chairman), Jeffrey Conyers, Dr Peter Dyer and Paul McClintock (as MIIML s appointee). David Walsh intends to resign from the MIIML Board and will be replaced by a suitably quali ed independent director within six months of implementation of the Restructure Proposal and the MIGIL Board will consider whether it is appropriate for any incumbent director to resign and be replaced by suitably quali ed independent directors. Yes. The General Meetings will consider the Additional Resolutions to approve amendments to the MIT(I) Constitution, the MIT(II) Constitution and the MIGIL By-Laws including to: reduce fees payable to the responsible entity of MIT(I) and MIT(II) which will be owned by Intoll; update and include further provisions regarding unstapling and restapling and other reorganisations of Intoll; expand the provisions relating to joint meetings; provide that the responsible entity s right of indemnity is not affected by an unrelated breach of trust; and amend the provisions of the MIT(I) Constitution and MIT(II) Constitution relating to rights issues, placements and other issues to take account of changes to the restrictions on capital raisings and to re ect best practice since these provisions were last amended. The Restructure Proposal is not conditional on the Additional Resolutions being passed. It is intended that the interim CEO of Intoll will be Murray Bleach, a current Macquarie executive. Mr Bleach resigned from Macquarie effective 18 December Macquarie will have the same total relevant interest in Intoll Securities immediately after the implementation of the Restructure Proposal as it has in MIG Securities immediately prior to that time. As at 11 December 2009 Macquarie had a total relevant interest of approximately 17.6% of MIG Securities. Macquarie will have the same principal holding of Intoll Securities immediately after the implementation of the Restructure Proposal as Macquarie s Principal Holding immediately prior to that time. As at 11 December 2009 Macquarie had a Principal Holding of approximately 14.0% of MIG Securities. Macquarie s Principal Holding and total relevant interest in MIG Securities may change between the above date and the implementation of the Restructure Proposal. Section for further information , 8.3.2

43 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 39 Question Answer What are Macquarie s Macquarie has provided no indication on its intentions for its principal intentions in relation to its holding in Intoll Securities after the Restructure Proposal is implemented. Intoll Security holding? What will be the distribution policy of Intoll? What will be the investment policy and mandate of Intoll? What will Macquarie s role in relation to Intoll be post-implementation of the Restructure Proposal? Intoll intends to pay distributions in line with the free cash ow of the assets in the Intoll Portfolio, post holding entity operating expenses. MIG s distribution reinvestment plan (currently suspended) will continue to apply to Intoll. Intoll, assuming its investment criteria can be met, will be able to participate in new investment opportunities. Primarily, future investment opportunities should be accretive to the Intoll Portfolio over the long term. Transitional services will be provided to Intoll by Macquarie for a period of up to 12 months post the implementation of the Restructure Proposal. Macquarie may also continue to have arm s length business dealings with Intoll in the ordinary course of business. Section for further information Westlink M7, Australia

44 40 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 2: Questions and answers continued 2.3 Macquarie Atlas Roads Question What will be the corporate structure of Macquarie Atlas Roads? What is my entitlement to securities in Macquarie Atlas Roads? What will be the assets of Macquarie Atlas Roads? What will be the dividend policy of Macquarie Atlas Roads? What will be the investment policy and mandate of Macquarie Atlas Roads? Who will be on the Macquarie Atlas Roads Boards? Will the Macquarie Atlas Roads constituent documents be the same as MIG? What are the management arrangements for Macquarie Atlas Roads? Answer MQA will be a double stapled security structure, created by way of an In-Specie Distribution out of MIT(II) and MIGIL of a share in Macquarie Atlas Roads Limited, a newly incorporated Australian public company, stapled to a share in Macquarie Atlas Roads International Limited, a newly incorporated Bermudian company. On implementation of the Restructure Proposal, current MIG Securityholders will receive one MQA Security for every ve MIG Securities they hold at the Record Date (subject to rounding). Atlas will hold MIG s existing 100% interest in the M6 Toll, 20.4% interest in Autoroutes Paris-Rhin-Rhône (APRR), 70.0% interest in Warnow Tunnel, 50.0% estimated economic interest in Dulles Greenway, 22.5% interest in Chicago Skyway, 25.0% interest in Indiana Toll Road, 50.0% interest in South Bay Expressway and 100% interest in Transtoll. Ordinary dividends are not anticipated in the near to medium term. Cash ows from the sale of assets, if any, will be assessed at the time for potential return to MQA Securityholders or, if considered bene cial, for reinvestment in the MQA Portfolio. MQA s strategy will be to deliver growth in the value of its existing Portfolio. Priorities will include active management of project operations to improve earnings, ef cient management and the re nancing of project debt as suitable opportunities emerge over the medium term. MQA will not have any priority over toll road opportunities sourced by the Macquarie Group. It is not expected that MQA will make any new asset acquisitions in the medium term. On implementation of the Restructure Proposal the MQA Australia Board will comprise Mark Johnson (Chairman), David Mortimer, David Walsh and John Roberts, and the MQA Bermuda Board will comprise Robert Mulderig (Chairman), Jeffrey Conyers, Dr Peter Dyer and Mark Johnson (common director with MQA Australia). David Mortimer intends to resign from the MQA Australia Board and will be replaced by a suitably quali ed independent director within six months of implementation of the Restructure Proposal. Mark Johnson has indicated that he intends to resign from the MQA Boards no later than the rst annual general meeting of MQA Australia and MQA Bermuda. It is anticipated that David Walsh will be appointed as Chairman of MQA Australia and will replace Mark Johnson as a director of MQA Bermuda. The MQA Bermuda Board will consider whether it is appropriate for any other incumbent director to resign and be replaced by a suitably quali ed independent director. The structure of MQA is different from MIG, in particular MQA will compromise an Australian public company and a Bermudian company and no trusts. However, the MQA Bermuda Bye-Laws are very similar to the MIGIL Bye-Laws. The MQA Manager will manage MQA. The MQA Manager will have a nondiscretionary mandate as all key decision making will occur at the MQA Boards level. The terms of this appointment will however differ from those applying to MIG in certain respects. Section for further information MQA Prospectus 1.3.3, 5.5

45 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 41 Question What will the MQA Manager be responsible for? What is the fee structure under the new management arrangements? What are the differences in fees compared to the current MIG management arrangements? Answer The MQA Manager under the terms of the MQA Management Agreements is responsible for: investment and divestment evaluation and recommendations; implementation of investment / divestment instructions given by the boards; providing Macquarie executives as nominees of MQA Australia and MQA Bermuda to act or directors of subsidiary entities that hold investments, and where appropriate, making recommendations to the MQA Boards to appoint non-macquarie nominees to these Boards; asset management; capital and nancial management recommendations; nancial reporting; investor communications and meetings; litigation management; and provision of suitably quali ed personnel to perform the role of CEO and CFO for MQA and the role of the company secretary for MQA Australia. Base fee Payable Quarterly. The base fee = 2.00% per annum of Market Value of MQA up to A$1 billion; plus 1.25% per annum of Market Value of MQA between A$1 billion up to A$3 billion; plus 1% per annum of Market Value of MQA in excess of A$3 billion. Market Value of MQA is the volume weighted average market capitalisation over the last 10 ASX trading days of each quarter. Performance fee 15% of the amount by which the MQA accumulation index outperforms the S&P/ASX 300 Industrials Accumulation Index in any nancial year having made up for under performance in previous years. The MQA accumulation index will be set by the 30 day VWAP of MQA after implementation of the Restructure Proposal. Given MQA is being created out of newly formed entities, the existing MIG performance fee de cit is not being carried across to MQA. Any future performance de cits generated by MQA itself will need to be recovered prior to payment of performance fees. Currently on the Market Value of MIG between zero and A$1bn, the base fee is 1.25% per annum and under the new arrangements the base fee is proposed to increase to 2.0% per annum. This represents a maximum potential increase on this tier of market capitalisation of A$7.5m per annum. Currently the Market Value of MIG is calculated as the volume weighted average market capitalisation over last 10 ASX trading days of each quarter plus fund level borrowings and rm commitments for future investments less cash or cash equivalents. The Market Value of MQA will be calculated simply as the volume weighted average market capitalisation over the last 10 trading days of each quarter. The reason for this is to incentivise the MQA Manager to conserve MQA s cash which may not be the case if it is exclude from the base fee calculation. The potential difference in fees that this change represents is unknown as the level of borrowings, rm commitments and cash in MQA will vary over time. Section for further information , 3.4.6, , 3.4.6, 8.4.2

46 42 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 2: Questions and answers continued Question What is the rationale for having Macquarie as manager of Macquarie Atlas Roads? What is the rationale for changing the fee structure for Macquarie Atlas Roads compared to the current MIG fees structure and for not carrying forward the underperformance in the performance fee to Macquarie Atlas Roads? Will the new management arrangements cause any default under any of Macquarie Atlas Roads nance facilities? Answer The IBCs determined that the assets within MQA required management that could draw upon extensive global experience in infrastructure and nancing to respond to the challenges of the portfolio. The Boards consider that the bene ts of the new management arrangements with Macquarie include: Macquarie s expertise and global presence will assist in the management of the assets with MQA which require a high level of active management Access to the expertise of a highly regarded global organisation in regard to the management of infrastructure assets Continuity of corporate knowledge and management of the assets within the MQA portfolio through the appointment of Peter Trent, a current senior MIG executive as CEO of MQA. In addition, there are consequences which may be to the detriment of MIG Securityholders if Macquarie was not appointed as Manager of MQA. For example, it would be dif cult for another manager to recreate a team of similar quality with the same levels of skills, experience and relationships as Macquarie; if a new management team was to be appointed there would be a transitional period during which the new team would need to build relationships and corporate knowledge. This would be disruptive to normal business operations and could potentially lead to a lower security price; certain lending documents include change of control provisions, which if triggered, would entitle lenders to accelerate all loans, or individual lenders to accelerate their participation in a loan; implementation of the Restructure Proposal could trigger pre-emption rights over MIG s rights with respect to its interest in the US assets; MQA would have to start paying advisory fees to Macquarie on its MAF interests. The IBCs consider the new fee arrangements are appropriate given the reduced value of the assets under management and the considerable ongoing management effort that will be required to manage the issues, in particular the re nancing issues, of the majority of assets in MQA. The fee structure to be paid by MQA is also intended to ensure appropriate incentives are present to encourage and incentivise the MQA Manager to build value in that Portfolio for all MQA Securityholders. No. Given Macquarie remains the manager of the assets in the MQA Portfolio, there are no change of control issues raised at any of the assets with respect to the nance facilities. Section for further information , 3.4.6,

47 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 43 Question What are the rights of MQA Securityholders in respect of termination of the new management agreement? Who will be the senior management team of Macquarie Atlas Roads? What will Macquarie s interest in Macquarie Atlas Roads be post the restructuring of MIG? What is the intention of Macquarie in relation to its MQA Security holding? Answer For both MQA companies a resolution must be passed by at least 50% of votes cast at meeting by Securityholders entitled to vote. Macquarie and associates may vote their securities on the resolution. The CEO of MQA will be Peter Trent, a current senior executive of MIG, and the CFO will be Mary Nicholson, the current CFO of MIG. Macquarie will have the same total relevant interest in MQA Securities immediately after the implementation of the Restructure Proposal as it has in MIG Securities immediately prior to that time. As at 11 December 2009 Macquarie held a total relevant interest of approximately 17.6% of MIG Securities. Macquarie will have the same principal holding of MQA Securities immediately after the implementation of the Restructure Proposal as Macquarie s Principal Holding immediately prior to that time. As at 11 December 2009 Macquarie had a Principal Holding of approximately 14.0% of MIG Securities. Macquarie s Principal Holding and total relevant interest in MIG Securities may change between the above date and the implementation of the Restructure Proposal. Macquarie has provided no indication on its intentions for its principal holding in MQA after the Restructure Proposal is implemented. Section for further information , Special Distribution Question What is the Special Distribution? What is the Record Date for the Special Distribution? Is the payment of the Special Distribution conditional on the approval of the Restructure Proposal? Does the payment of the Special Distribution affect the half yearly MIG distribution? Answer If the Restructure Proposal proceeds, MIG Securityholders as at the record date for the distribution will receive a distribution of A$0.10 per MIG Security. The Record Date for the Special Distribution is expected to be 2 February Yes. The Special Distribution will only be paid if the Restructure Proposal is implemented. No. MIG intends to pay a distribution of 2 cents per MIG Security with respect to the half year ended 31 December This distribution will be paid irrespective of the Restructure Proposal proceeding or not. Section for further information 1.5 Key Dates 1.5

48 44 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 2: Questions and answers continued 2.5 Meetings Question Answer Who is entitled to vote? All eligible MIG Securityholders on the MIG register at 7.00 pm on 20 January 2010 unless you are otherwise excluded in the manner set out in the Notices of Meeting. When and where are the The General Meetings to consider the Required Resolutions have been meetings? called for 22 January 2010 and will be held at the Heritage Ballroom, Westin Hotel, No. 1 Martin Place, Sydney NSW 2000, commencing at 11 am. Are there any other Yes. The Additional Resolutions which are resolutions put to MIG Resolutions in relation Securityholders in the context of the Restructure Proposal, although the to the Restructure Restructure Proposal is not conditional on the Additional Resolutions being Proposal? passed. The Additional Resolutions include Resolutions to approve the change of name of MIGIL and amendments to the MIT(I) Constitution, the MIT(II) Constitution and the MIGIL By-Laws including to: reduce fees payable to the responsible entity of MIT(I) and MIT(II) from base and performance fees to a fee determined on a costs plus basis; include further provisions regarding unstapling and restapling and other reorganisations of Intoll; expand the provisions relating to joint meetings; provide that the responsible entity s right of indemnity is not affected by an unrelated breach of trust; and amend the provisions of the MIT(I) Constitution and MIT(II) Constitution relating to rights issues, placements and other issues to take account of changes to ASIC and ASX s requirements in relation to these types of capital raisings and to re ect best practice since these provisions were last amended. What happens if a MIG Different voting thresholds apply to the relevant resolutions. If the Securityholder does resolutions are approved by the requisite majorities of voting MIG not vote on the various Securityholders, the Resolutions will be implemented even if you did not Resolutions or votes vote on the Resolutions or voted against the Resolutions. against the Resolutions? Can MIG Yes. The Restructure Proposal is not conditional on the approval of the Securityholders vote Additional Resolutions. If the Required Resolutions are approved but differently on each not the Additional Resolutions, then (subject to satisfaction of the other Resolution? conditions), the Restructure Proposal will still be implemented. Section for further information and Notices of Meeting and Notices of Meeting and Notices of Meeting and Notices of Meeting

49 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 45 Question Where and when are proxy forms submitted? Any other questions? Answer If you cannot attend the General Meetings in person, you should complete the enclosed Proxy Form and return it to Computershare Investor Services Pty Limited by: lodging it online through Computershare website at com.au (in which case your appointment will need to be authenticated in the manner described on that website). You will require your SRN/ HIN and Control Number, located on the front page of your Proxy Form; faxing your Proxy Form to (within Australia); or posting your Proxy Form in the reply paid envelope provided to GPO Box 242, Melbourne VIC 3001, Australia; or hand delivering your Proxy Form to Level 2, 60 Carrington Street, Sydney NSW 2000, Australia, as soon as possible and in any event by 11.00am on 20 January If, after reading this Explanatory Memorandum, you have any questions about the Restructure Proposal, please call MIG Securityholder information line on (within Australia) or (outside Australia) Monday to Friday between 8.30 am and 5.30 pm (AEDT). Section for further information Securityholder Information Chairman s letter Warnow Tunnel, Germany

50 46 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING Chicago Skyway, United States

51 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal Background The Restructure Proposal is the outcome of a strategic review initiated by the MIG Boards in early 2009 with the objective to reduce the gap between the market price and Net Asset Backing of MIG Securities. The strategic review was initiated in response to continued underperformance of MIG Securities relative to Net Asset Backing despite several initiatives undertaken in 2008 and early 2009 to address this underperformance. Those initiatives included the sales of MIG s interest in Lusoponte and part of its economic interest in Westlink M7 and the buyback of 142 million securities on market. The MIG Boards identi ed a number of underlying strategic issues relating to MIG which were considered as potentially contributing to the underperformance in MIG Security price. These included: high leverage in some of MIG s assets and the dislocation in global credit markets which generated negative market perceptions concerning the medium and long term re nancing requirements of these assets; and potential lack of investor appetite for MIG Securities due to the high leverage present in some assets despite the overall quality of the MIG Portfolio. The Boards considered that the scope of the review should be broad, encompassing strategic options with the capacity to deliver a re-rating in the MIG Security price. The options considered by the MIG Boards as part of the strategic review included: maintaining the status quo; further asset sales; raising capital for early de-leveraging; and restructuring of MIG s portfolio. Analysis of these options was conducted by MIG management. The MIG Boards conclusions in respect of each of these options is outlined below. Maintaining the status quo Whilst this option is a viable alternative for MIG and was considered carefully by the MIG Boards, it was viewed as not delivering any potential for signi cant improvement in the security price in the medium term. Maintaining the status quo would not address the underlying issues facing MIG in the near to medium term. Further asset sales Market conditions prevailing in the early part of 2009 were not conducive to asset sales in the infrastructure sector. The MIG Boards considered that it was unlikely that asset sales could be conducted at a price which would deliver adequate value to MIG Securityholders. While equity market conditions have improved during the course of 2009, there remains signi cant uncertainty over the strength of the European and North American economies where the majority of MIG s assets are located. Raising capital to de-leverage assets MIG does not have any holding entity debt; all debt is held at the asset level and is non-recourse to the holding entities themselves (and to other assets within the MIG Portfolio). Moreover the bulk of the debt issued by assets in the MIG Portfolio is of a medium to long term nature, and is attractively priced compared to current market benchmarks. The Boards considered that, as any equity raising would likely be at a signi cant discount to both the current price and long term value of MIG Securities, it would be dilutive to current MIG Securityholders. In addition, the majority of MIG s assets are held jointly with other investors, where the consent of those parties to early recapitalisations would be required and their participation necessary to reduce debt. There was no certainty that the consent or participation of other parties could be achieved in challenging market conditions and at a time when re nancing was not contractually required. A deleveraging strategy was therefore not viewed by the MIG Boards as bene cial for MIG Securityholders.

52 48 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal continued Restructuring of MIG s portfolio The implications of changed credit market conditions on market perceptions concerning medium and long term re nancing requirements for certain of MIG s assets led the MIG Boards to consider the potential restructuring of MIG s assets into two separate funds based on the risk pro le of the assets. A restructuring of the MIG Portfolio into two separate funds would not change the underlying gearing of any of MIG s assets however in the MIG Boards opinion it would address investor concerns that the performance and growth potential of the more stable assets would be diluted by the high leverage of the other assets. The MIG Boards determined that, of the options available to MIG, a split of MIG s assets into two separate ASX listed groups has the strongest potential to realise value and position the portfolio for further growth. Whilst external market conditions have improved somewhat since the beginning of the strategic review process, the MIG boards continue to maintain the view that none of maintaining the status quo, further asset sales, or raising capital to de-lever assets are preferable to the restructuring of MIG s portfolio as proposed is this Explanatory Memorandum. 3.2 Development of the Restructure Proposal At a relatively early stage in the strategic review the MIG Boards recognised that a restructure of the MIG Portfolio into two separate listed vehicles would have potential to realise value in the portfolio. The Restructure Proposal was subsequently developed over the course of several months through deliberation of the MIG Boards and negotiation between the Independent Board Committees and Macquarie. In developing the Restructure Proposal the MIG Boards deliberated on the following key elements: the strategy and asset allocation of the two new groups; the appropriate capital structure for the two new groups; the appropriate management arrangements for the two new groups; and the means by which the restructure would be implemented. While each of the above elements was considered in turn and analysed at length, they are not independent of each other and cannot be fully evaluated in isolation. The MIG Boards deliberations therefore revolved around combinations and packages of the above elements. The MIG Boards formed Independent Board Committees (IBCs) with responsibility for consideration of management arrangements for the two new funds and any other areas of potential con ict between MIG and Macquarie. The Australian IBC consists of Paul McClintock (chair), David Mortimer and David Walsh. The Bermudian IBC consists of Rob Mulderig (chair) and Jeffrey Conyers. During the development of the Restructure Proposal the IBCs met concurrently. Protocols were put in place for the IBCs, non-independent directors and MIG management to observe appropriate conduct in respect of IBC matters. The IBCs appointed Grant Samuel as nancial adviser and retained Mallesons Stephen Jaques as legal adviser.

53 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 49 Part of the IBCs considerations was the role of Macquarie in relation to the ongoing management of the two new groups. The IBCs deliberation on the Restructure Proposal proceeded concurrently with negotiations between the IBCs and Macquarie in relation to potential management arrangements for the new funds and other aspects of the Restructure Proposal involving Macquarie. Due to the range of elements comprising the Restructure Proposal, the complexity of the holding structures for MIG s assets and the necessary element of negotiation, development of the Restructure Proposal was a lengthy process. The MIG Boards found no single obvious answer; instead the Restructure Proposal is the result of the commercial judgment of the MIG Directors on the IBCs applied to the range of options available and exercised through careful deliberations and robust negotiations with Macquarie. The MIG Boards and IBCs conclusion is that, taken as a whole, the Restructure Proposal represents the best available option for MIG Securityholders to realise value from the MIG Portfolio at this time. While any one element taken in isolation could be seen as more or less favourable to MIG when compared with external benchmarks, the MIG Directors are not aware of any prior transaction directly comparable to the Restructure Proposal. The key elements of the Restructure Proposal are discussed below Strategy and asset allocation In considering the split of assets into two new funds, the MIG Boards considered a range of factors including: Asset nancing structure: following the substantial dislocation in credit markets, current debt packages on some assets are of concern to many investors, impacting either their willingness to invest in MIG or their view of value, or both. Gearing levels vary signi cantly across the MIG Portfolio; and Asset performance: the signi cant downturn in economic activity, particularly in the northern hemisphere, has impacted the traf c volumes on many of the toll road assets within the MIG Portfolio. Some of the assets have recently been faced with weak traf c and an uncertain recovery pro le while others continue to perform strongly. This divergence impacted investors views and/or willingness to invest in MIG. A key basis for the Restructure Proposal is that perceptions of high leverage in certain of MIG s assets are impacting investor interest in MIG Securities, notwithstanding that: a signi cant portion of MIG s assets by value (in particular, 407ETR and Westlink M7) do not have high levels of gearing; and the other more highly geared assets within MIG s portfolio are currently meeting all debt covenants (with the possible exception of South Bay Expressway, where there is a dispute in relation to the loan covenants), and the bulk of the relevant debt is of a medium to long term nature. The medium to long term nature of the debt means that deleveraging at the current time is not necessary. Moreover, raising capital at the current time would likely be dilutive to MIG Securityholders. Separating MIG into two separate groups does not change the underlying gearing of any of MIG s assets. However, the MIG Boards consider that it has the potential to address investor concerns that the performance and growth potential of the more stable assets to be held in Intoll would be diluted by the high leverage of the other assets The MIG Boards concluded that 407 ETR and Westlink M7 were distinguished from the remainder of the portfolio in each of these respects. A split of the MIG Portfolio between the 407 ETR and Westlink M7 interests on one hand and the remaining assets on the other would therefore result in two groups with more internally consistent portfolio characteristics. In particular the lower gearing of the 407 ETR and Westlink M7 could attract a class of investors not currently invested in MIG due to the high leverage in several of the other MIG assets.

54 50 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal continued Based on these considerations, the IBCs recommended that MIG s Portfolio be split along the following lines: Intoll consists of assets with stable capital structures and mature cash ows. Intoll s strategy is to invest in and develop quality toll road assets that are accretive to the Intoll Portfolio over the long term. Returns to Intoll Securityholders are expected to be in the form of both capital growth and distributions. More information on Intoll s strategy is outlined in section 4.2 and Appendix B; and Macquarie Atlas Roads consists of assets requiring substantial operational and nancial management to maximise value to MQA Securityholders. MQA s strategy will be to deliver growth in the value of the existing MQA Portfolio. Priority will include active management of project operations to improve earnings, ef cient capital management and the re nancing of project debt as suitable opportunities emerge over the medium term. More information on MQA s strategy is outlined in section 5.2 and MQA Prospectus Capital structure MIG has no debt at the holding entity level and as at 31 October 2009 held a cash balance of A$677 million. The MIG Boards considered the appropriate capital structure of the new groups as a function of the assets and strategies of those groups. The assets of MQA are not expected to generate material cash ows in the short and medium term. Certain of the MQA s assets may also require capital investment in the medium term to meet contractual obligations. It was therefore considered appropriate to allocate suf cient cash to Macquarie Atlas Roads to cover its operating costs and to provide a degree of exibility in managing re nancing events in the medium term. Intoll does not have substantial holding entity level debt obligations, it has lower debt at the asset level than MQA and its assets are expected to generate regular, positive ongoing cash ows. The MIG Boards believe that the appropriate means for Intoll to fund any future asset development is to access capital markets as and when development opportunities arise. Therefore Intoll will not require a substantial cash balance on implementation of the Restructure Proposal. After an allocation of cash to each new group is made on the basis outlined above, a balance of surplus cash will remain. The MIG Directors have determined that the most appropriate use of this cash is a return to MIG Securityholders in the form of the Special Distribution. Details of the pro forma balance sheet including cash allocation of Intoll and MQA are outlined in section Management arrangements The IBCs considered potential management arrangements for both new groups. Intoll s assets, the 407 ETR and Westlink M7, demand relatively less intensive management than the balance of MIG s assets. In the IBCs opinion the nature of these assets is such that active management by an investment adviser would not add substantial value in excess of a standalone management team. MIG s holdings in both these assets are also minority interests so that the underlying assets are not directly controlled by it. Given these considerations and the anticipated lower cost of its own management, the IBCs determined that a standalone management structure would be appropriate for Intoll. Conversely, in the IBCs opinion, management of MQA is a complex and demanding task. The assets of this group have a greater need for active management due to the complexity associated with those assets which means that they generally require greater management, speci cally in relation to the capital structures of the assets and the re nancing issues. These assets would therefore bene t from a manager experienced in the toll road sector globally and able to bring substantial resources to bear on an irregular basis to deal with re nancing and operational issues. The IBCs gave consideration to the potential of appointing a new manager to advise MQA, but discarded this as they unanimously held the view that Macquarie, with more than A$116 billion of infrastructure assets under management, and as manager and adviser to MIG since 1996, was best equipped to manage MQA. Further, there are consequences which may be to the detriment of MIG Securityholders if a Macquarie entity is not appointed as manager of MQA (see section for these detrimental consequences).

55 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 51 If Macquarie was not the manager of MQA, it would not have the bene t of the accumulated knowledge and experience of a number of the management team currently employed by Macquarie. Additionally, appointing a manager which is not a Macquarie Group entity may trigger change of control provisions in relation to the M6 Toll and APRR. The IBCs formed the view that it would be dif cult to identify a new adviser and team of similar quality and experience to Macquarie. Accordingly the IBCs sought Macquarie s agreement to act as manager of MQA. Macquarie s capabilities in the toll road sector and the continuity delivered by ongoing Macquarie management of these assets were important considerations for the IBCs. In negotiating ongoing fee arrangements for the MQA Manager, the IBCs sought to establish three important principles: a base fee covering the costs of the manager to deploy suf cient resources to meet the challenges of MQA plus a moderate margin on these costs; a performance fee regime delivering a real incentive for the manager to add value to MQA and to outperform the benchmark (in this case, the market). Whilst management fees will grow with security price growth, they do not embrace that relative performance incentive. Nor are they as highly leveraged to performance; and an incentive for the manager to conserve capital given the low positive cash ow and anticipated future funding requirements of the assets. In this process the IBCs had regard to MIG s existing fee arrangements: MIG s annual base fee is currently 1.25% of the rst A$3 billion of Net Investment Value plus 1.0% of Net Investment Value above A$3 billion. Net Investment Value is market capitalisation plus debt plus committed capital investment less cash; and MIG s performance fee de cit is currently approximately A$4.8 billion and it is not anticipated that a performance fee would be payable by MIG in the near to medium term. In the IBCs opinion, an appropriate base fee arrangement is necessary to ensure that the Manager is suf ciently compensated for, and therefore motivated to undertake, the management role. Inadequate compensation for the manager would be against the interests of MQA Securityholders. The IBCs accepted that a base fee of 2% of market capitalisation up to a market capitalisation of A$1 billion (and with a similar rate for market capitalisation in excess of A$1 billion to the existing MIG arrangements) was suf cient and appropriate remuneration for the manager. The change to the basis of calculation for the base fee from Net Investment Value to market capitalisation re ects the principle of the IBCs that the manager be incentivised to conserve capital. MQA will hold a cash balance on inception which is anticipated to be used to cover operating expenses, mandatory capital investment and to provide exibility in re nancing negotiations in the near and medium term. It is in the interests of MQA Securityholders that MQA conserve its cash resources to the greatest extent possible. In this regard the effective inclusion of the group s cash balance in the base fee calculation (by changing the basis of calculation from Net Investment Value to market capitalisation) is appropriate. If the Restructure Proposal is approved, the performance fee threshold for MQA will be based on the 30 day weighted average price of MQA Securities following implementation of the Restructure Proposal. The IBCs considered that a performance fee threshold which provides a real incentive for the manager to add value to the group is in the interests of MQA Securityholders. To carry over a performance fee de cit from MIG to MQA would, in the IBCs opinion, diminish the MQA Manager s incentive to add value to MQA. In particular, the IBCs consider that a nil opening balance to the performance fee arrangements for MQA will provide the MQA Manager with more opportunity (but no guarantee) of reward from outperformance of MQA, than if the performance fee arrangements contained a de cit. This will provide more incentive to the MQA Manager to pursue such opportunities.

56 52 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal continued While each of the elements of management structure and remuneration is discussed in turn in this section it should be noted that the IBCs and MIG Boards consider that the management arrangements form part of a single proposal which, taken as a whole, the MIG Directors believe is in the best interests of MIG Securityholders Implementation The holding structures of MIG s assets are complex and implementation of any restructure involves careful evaluation of complex legal, tax and regulatory issues across multiple jurisdictions. A restructure of the MIG Portfolio has the potential to affect shareholder agreements, lending agreements and concession agreements for some of the assets. The MIG Boards sought a process to implement the Proposed Restructure for the lowest cost possible, with minimal risk to Securityholders. The IBCs considered several potential mechanisms to implement the Restructure Proposal. In particular, the IBCs sought to develop an implementation process which would not require signi cant assistance from Macquarie. A structure was evaluated under which the Intoll assets would be distributed in specie to MIG Securityholders and MIG would continue to exist largely in its present form. However the existence of asset level shareholders arrangements with transfer restrictions and pre-emption rights for MIG s interests in Westlink M7 and the time required to complete a 407 ETR transfer did not give the IBCs suf cient con dence that the desired outcome could be achieved in a timely fashion. Consequently the IBCs sought Macquarie s assistance in implementing the transaction which led to the implementation process for the Proposed Restructure. Under the Proposed Restructure, Macquarie will: assist Intoll with establishing an independent operation, including assisting in the transfer of certain personnel, provision of premises, reimbursement of Incremental Costs (including all employment expenses) and other services over a 12 month period; facilitate a method of implementation for the Restructure Proposal which minimises the potential for pre-emptive rights and consent rights in asset level shareholder agreements being triggered (see section 3.3.4); grant a licence of Macquarie intellectual property rights to Intoll; and transfer MIIML, the responsible entity of MIT(I) and MIT(II), to Intoll. Macquarie will also provide nancial advisory services in connection with the Restructure Proposal, which does not include advice on the arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other hand). Full details of the assistance provided by Macquarie are set out in section 3.4 of this Explanatory Memorandum. Given the signi cant amount of work and cooperation that would be required to facilitate the successful implementation of the Restructure Proposal, the IBCs determined that it would be appropriate to compensate Macquarie for the assistance provided. Under the Restructure Proposal, Macquarie will be paid an amount estimated to be approximately A$103.9 million as compensation in connection with the implementation of the Restructure Proposal. The actual amount may be higher or lower and comprises: A$50 million for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG; an advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll for nancial advisory services in connection with the Restructure Proposal. Macquarie s nancial advisory role does not extend to advice on the arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other hand) on which Grant Samuel advised the IBCs. This advisory fee is estimated to be approximately A$28.3 million (assuming a post implementation 30 day VWAP trading price for Intoll of A$1.25 per Intoll Security); and

57 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 53 a payment of approximately A$25.6 million for the shares in MIIML. This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal. The IBCs consider that a payment of this amount is appropriate for the value of the assets acquired and services to be provided by Macquarie in the context of the whole Restructure Proposal. In particular, the IBCs evaluated the potential risks and costs to MIG Securityholders of implementing the Restructure Proposal without the assistance to be provided by Macquarie. The IBCs believe that the potential bene ts of the Restructure Proposal to MIG Securityholders outweigh the disadvantages of the Restructure Proposal. 3.3 Bene ts, disadvantages and risks of the Restructure Proposal Bene ts of the Restructure Proposal generally There are a number of potential bene ts that may arise for MIG Securityholders as a result of the Restructure Proposal Separate listed groups with interests in separate asset portfolios The restructuring of MIG will create two separately listed ASX groups, with different focus and different management teams. The split of assets between Intoll and MQA will lead to two portfolios with more easily identi able risk return pro les that are more transparent and aligned as an investment opportunity, such that an investor looking for regular distributions might invest in one group, whilst an investor looking for capital growth might invest in another. Each group will also have strategic exibility and have the bene t of access to a discrete pool of capital. The MIG Independent Directors believe the split of assets will provide: greater potential for market re-rating; potential to attract new strategic investors; independent strategy and nancial policy for each listed group; increased choice for investors; expected bene ts in terms of investment exibility, transparency and the alignment of management incentives with corporate performance; and greater potential for a control transaction. Intoll will invest in and develop quality assets that are accretive to the Intoll Portfolio in the long term. MQA with Macquarie as manager will actively manage MQA s initial assets. The creation of these two portfolios will allow current MIG Securityholders to either trade one or both of these portfolios in accordance with their individual investment objectives, risk appetite or allow them to continue to hold investments in both vehicles effectively replicating a current investment in MIG Potential for re-rating One of the key bene ts of the Restructure Proposal is its potential to unlock and increase value for all MIG Securityholders by addressing the gap between the current MIG Security price and of the underlying value of MIG s assets. The MIG Independent Directors believe that the Restructure Proposal has the potential to improve the combined market rating of Intoll Securities and MQA Securities in comparison to the market rating of MIG Securities through mitigating the negative sentiment and impact of those assets requiring active management from the more stable assets. Following the Restructure Proposal, MIG Securityholders should bene t from an investment in Intoll which will emerge as a standalone vehicle with two strong performing stable assets while retaining the potential upside from any future improvements in MQA. However, it is likely that Intoll and MQA will have reduced weighting in stock market indices when compared to MIG and this may put downward pressure on their respective security prices.

58 54 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal continued Potential to attract new strategic investors A number of MIG s assets are highly geared and have complex holding structures, and the relatively intense process (compared with the other assets) of managing the performance of those assets and future debt re nancing is of concern to some investors, impacting on either their willingness to invest in the security or their view of its value, or both. Conversely, other investors who recognise the performance and growth potential from meeting those management and nancing requirements may see this potential diluted by the more stable assets within the MIG Portfolio. The split of assets between Intoll and MQA will lead to two portfolios with a more de ned portfolio of assets that are more visible and aligned as an investment opportunity. The creation of these two portfolios will allow current MIG Securityholders to either trade one or both of these portfolios in accordance with their individual investment objectives, or continue to hold investments in both vehicles effectively replicating a current investment in MIG. Additionally, to the extent that institutional investors aggregate investments in Macquarie managed funds and the Macquarie Group for the purposes of assessing concentration risk, the Restructure Proposal will remove Intoll from this grouping and may increase such investors willingness to invest in each of Intoll and MQA Cost of management of Intoll and MQA expected to be lower than current cost of MIG management If the Restructure Proposal is implemented, Intoll and MQA will incur its own operational and management costs based on the differing management arrangements. Intoll will directly incur the costs of standalone management, whilst MQA will pay management fees to Macquarie under the new fee arrangements. The table below is designed to compare the current cost base of MIG (based on the 12 months ended 30 June 2009) to the combined ongoing annual cost base of Intoll and MQA following the implementation of the Restructure Proposal. This analysis ignores the bene t of the fact that certain Incremental Costs of Intoll will be met by Macquarie for a period of 12 months post the implementation of the Restructure Proposal. MIG 12 months ended 30 June 2009 $ 000 s Intoll Annual Cost Estimate 1,2 $ 000 s Macquarie Atlas Roads Annual Cost Estimate 1 $ 000 s Combined ost Restructure Annual Cost Estimate $ 000 s Management Costs Management Fee Fund Related Costs Borrowing Costs Total Management Costs The annual cost estimates for both Intoll and MQA refer to the anticipated costs of a full 12 month operating period. 2. The costs for Intoll include all of the anticipated standalone management costs and do not include any potential reimbursement to which Intoll will be entitled to recover from Macquarie under the terms of the Implementation Deed. 3. The assumptions on which the management fee estimate is based are set out below. A sensitivity analysis of the potential annual management fees based on various MQA Security prices is set out in Section Borrowing costs for Intoll have been based on the expectation that the current MIG stand-by facility of $150 million will be renegotiated down to a new facility limit of $50 million (however this is yet to be obtained), and assumes a 1.00% availability fee. MQA will not have any loan facility of any nature. 5. Reported management costs for MIG for the 12 months ended 30 June 2009 totalled $60.2 million, and included a number of Non recurring costs including: $10 million of asset transaction related costs for the sale of a 25% interest in the Westlink M7 and MIG s involvement in the Port Mann Highway bid, $0.6 million in one off legal costs, $0.9 million in one off consultancy costs and $0.5 million of other miscellaneous one off costs.

59 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 55 There are a number of assumptions that go into the estimate of the ongoing costs for both of Intoll and MQA as shown in the above table. Below is a discussion on the basis for estimation for a number of these items. Management and fund related costs for Intoll and MQA In deriving the management and fund related costs, MIG has drawn on advice from a number of external consultants as well as its own experience in managing MIG and its assets. In particular, MIG engaged external accountants to provide an assessment of a number of fund related costs for both Intoll and MQA, and a remuneration consultant to provide an estimation of the staff related expenses associated with the standalone management of Intoll. Base management fee for MQA The estimation of potential base management fees for MQA is highly subjective and entirely dependant upon the trading of MQA Securities post the implementation of the Restructure Proposal. The market capitalisation of MQA has been calculated, assuming: (a) the Portfolio valuation of MQA, based on MIG valuations as at 30 June 2009 was $1,450 million; (b) non-investment balances of $236 million, including the cash allocated to MQA post implementation of the Restructure Proposal is $228 million; (c) together these amounts give a Net Asset Backing of $1,686 million (representing $3.73 per MQA Security following the 1 for 5 in specie distribution); (d) based on recent trading of MIG it is likely that MQA Securities will trade at a discount to the Net Asset Backing and, a discount of 52% has been assumed, which is equivalent to the average discount to NAB at which MIG has traded for the period 2 January 2009 to 30 October 2009 (being the date of announcement of the Restructure Proposal): this would lead to a trading price of MQA of $1.80; a market capitalisation of $814.2 million; and an annual management fee of $16.3 million. A sensitivity analysis of the potential annual management fees based on various MQA Security prices is set out in Section Access to intellectual property and management Both Intoll and MQA will have management teams that draw on existing members of the current MIG management team. In doing so this will ensure that both funds bene t from the collective knowledge and expertise of their respective management teams. In addition, both groups will have access to Macquarie intellectual property for their daily operations. Intoll will acquire a perpetual, royaltyfree licence from Macquarie to relevant intellectual property developed before implementation of the Restructure Proposal and MQA will continue to bene t from Macquarie intellectual property through management by Macquarie Greater potential for a control transaction After the implementation of the Restructure Proposal, Intoll may be regarded as more likely to be the subject of a control transaction and this may have some positive impact on the security price. As with any takeover, any future potential acquirer of the securities in Intoll will need to take into account the position of substantial shareholders, including Macquarie. Change of control provisions in relation to Intoll s portfolio are set out in section As noted in that section, whilst pre-emption rights and certain consent requirements apply to transfers by Intoll of its interests in its underlying portfolio assets, those restrictions do not apply to a change of control transaction in respect of Intoll itself.

60 56 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal continued Disadvantages and risks of the Restructure Proposal generally There are a number of risks and disadvantages of the Restructure Proposal which are both speci c to Intoll and MQA and of a more general nature that may affect the future nancial performance and position of these two entities and the value of the securities of these two groups. Factors arising from the Restructure Proposal that may be viewed as disadvantageous include: Additional one off costs associated with the implementation of the Restructure Proposal In addition to the payments to Macquarie, MIG will incur one off external transaction and implementation costs associated with the Restructure Proposal for services such as nancial, legal and accounting advice. These costs are estimated at A$7 million. The one-off costs are in addition to those costs incurred by MIG as part of its normal operations No certainty that the Restructure Proposal will improve the market rating or security price of Intoll Securities and MQA Securities One of the key objectives of the Restructure Proposal is to increase value for all MIG Securityholders by addressing the gap between the current MIG Security price and published Net Asset Backing MIG s toll roads. While the MIG Independent Directors believe that the Restructure Proposal has the potential to improve the combined market rating of Intoll Securities and MQA Securities in comparison to the market rating of MIG Securities, there is no guarantee that the security price of each of Intoll and MQA will increase. Furthermore, the security price of each group may be affected by other factors that are unrelated to the Restructure Proposal such as performance of the underlying toll road assets and movements in debt and equity markets Tax Risk MIG intends to apply for an ATO Class Ruling for the bene t of Intoll and MQA Securityholders. The ruling will con rm the availability of demerger relief in relation to the Restructure Proposal and that the ATO will not apply certain tax integrity measures. If the ATO does not agree with the view of Intoll and its advisers that demerger relief is available, the impact of the In-Specie Distribution by MIT(II) and MIGIL would be as follows: MIG Securityholders would have a reduction in cost base of their investment in MIT(II) and MIGIL equal to the market value of the property being distributed to the extent that the In-Specie Distribution is debited against the contributed capital of MIT(II) and MIGIL. To the extent that amount is greater than a MIG Securityholder s cost base then a taxable gain could arise. To the extent the market value of the property being distributed exceeded the amount debited against the contributed capital of the entity (whether debited against reserves or not), such an amount is likely to be treated as an assessable dividend in the hands of MIG Securityholders for Australian tax purposes. If the ATO decided to apply tax integrity measures (in addition, or as an alternative, to denying demerger relief) all or part of the In-Specie Distribution could be treated as an assessable dividend. In a worst case scenario the impact to MIG Securityholders would be assessable income equal to the total In-Specie Distribution made by MIT(II) and MIGIL. In this instance the value of the In-Specie Distribution of $0.75 per MIG Security (based upon value of assets being distributed of $1,686 million divided by 2,262 million MIG Securities) would be treated as a fully assessable dividend. Such an amount would then be the tax cost base in MQA Securities. Section 9 of the Explanatory Memorandum contains the Tax Opinion which sets out the views of MIG s tax advisor, Greenwood and Freehills, that the ATO, acting reasonably, should con rm the availability of demerger relief to both MIT(II) and MIGIL.

61 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Conditions may not be satis ed The Restructure Proposal is subject to satisfaction of various conditions, which may or may not be satis ed (see section 1.2.4). If these conditions are not satis ed or waived the Restructure Proposal will not proceed Removal of Macquarie branding for Intoll MIG is currently branded with the Macquarie name and corporate logos. If the Restructure Proposal is implemented, MIG will cease to use the Macquarie name and logos and MIG and its businesses will be renamed as Intoll. There can be no certainty as to the impact that may have on the Intoll business or security price. MQA will use the Macquarie name and logos MIG s priority over toll road opportunities Currently MIG has priority over toll road investment opportunities provided to the Macquarie Capital specialist funds business that meet its investment criteria. This right has evolved as a convention over time and was neither present when MIG was established in 1996 as a general infrastructure fund nor is this right included in any constituent document or any agreement between Macquarie Capital and MIG. The priority is set out on the MIG website and has also been included in a number of investor presentations. Once MIG is restructured into two different entities, the MIG priority will be lost. A priority right in respect of new opportunities would not offer any signi cant bene t to MQA. MQA s strategy will be to deliver growth in the value of the initial MQA Portfolio. Priorities will include active management of project operations to improve earnings, ef cient capital management and the re nancing of project debt as suitable opportunities emerge over the medium term Current MIG Performance fee de cit will not apply to MQA MIG in its form prior to the implementation of the Restructure Proposal was carrying forward a performance fee de cit. As at 30 September 2009, the MIG underperformance de cit was the equivalent of A$2.12 per stapled security, which in market capitalisation terms represents approximately A$4.8 billion. The current MIG performance fee de cit will not apply to the calculation of the MQA performance fee and Intoll will not have any performance fees. The fee structure proposed to be paid by MQA will ensure appropriate incentives are present to encourage and incentivise the manager to build value in the MQA Portfolio for all MQA Securityholders. With the proposed MQA performance fee arrangements, there is a higher likelihood that a performance fee will be payable in the future than if the Restructure Proposal did not proceed. See section for an analysis of the performance fee arrangements Additional corporate costs After implementation of the Restructure Proposal, Intoll and MQA will be separately listed which will involve additional corporate and other administrative costs than those currently borne by MIG (eg listing fees). Further details of these additional costs are set out in the table in section

62 58 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal continued Other considerations for Intoll Intoll a standalone entity Intoll will become a standalone entity, which employs its own management team, separate from Macquarie and its associates, and the management team will implement its stated investment strategy, with direct control of its costs. As the effect of the Restructure Proposal means Macquarie s management relationship with Intoll will end, the ongoing liability for management fees to be paid by Intoll to Macquarie will end, and relevant amounts will (after deduction of costs) will be retained by Intoll for reinvestment or returned to Intoll Securityholders as part of future distributions Opportunity for Intoll to grow Should the potential security price re-rating of Intoll occur, then Intoll should have a better opportunity to consider potential new investments in quality assets that are accretive to the portfolio over the long term. In order for this to occur, future opportunities for investment should: be located in OECD or OECD-like countries; offer potential for increasing value; offer sustainable competitive advantages in a traf c corridor; and offer growth in operating cash ows Clearer control over representation on the boards of Intoll Currently, Macquarie has the right to appoint 75% of the directors of MIGIL and all of the directors of MIIML. Macquarie has given an undertaking until December 2011 to exercise these rights in accordance with a vote by MIG Securityholders. Macquarie s rights to appoint directors to the Intoll Boards (other than any rights it will have as a holder of Intoll Securities) and the undertaking described above will end if the Restructure Proposal is implemented. If the Restructure Proposal is implemented, Intoll will institute a corporate governance framework which, amongst other things, will provide for Intoll Securityholders to vote on the appointment of Intoll directors. See section 4.5 for a description of the director appointment process Reduced association with Macquarie If the Restructure Proposal is approved: the level of day to day interaction with Macquarie personnel and general access to opportunities identi ed by Macquarie and Macquarie resources and services will reduce; and Intoll will lose its ability to access Macquarie s networks at no cost, where currently MIG is able to access the knowledge and experience within the broader Macquarie Group. However, over the rst 12 months to assist Intoll transition to its own management team, Macquarie will provide transitional services including information technology, compliance and risk management assistance, human resources support and accounting and taxation compliance. We also note that historically Macquarie has been a source of acquisition opportunities for MIG and due to both the management arrangements and its security holding it has been in its interests to make transactions available to MIG. Immediately following completion of the Restructure Proposal, Macquarie will continue to be a major securityholder in Intoll and for as long as Macquarie remains a major securityholder, MIG expects that Macquarie will continue to be interested in the success of Intoll and MQA. However, after implementation of the Restructure Proposal, Intoll will not enjoy the same access to acquisition opportunities from the Macquarie networks as has historically been the case.

63 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Intoll will need to establish staff and infrastructure for a standalone entity As the manager of MIG, Macquarie currently provides key staff and head of ce services to MIG including information technology, compliance and risk management assistance, human resources support and accounting and taxation compliance services. The CEO and CFO of MIG are provided by Macquarie under existing management arrangements. Up to completion of the Restructure Proposal, Macquarie will provide management services under its existing management arrangements. Thereafter, Macquarie will provide certain transitional services to Intoll over a 12 month period to assist it in becoming a standalone entity. The transition may result in some disruption to Intoll s operations. There will be a number of staf ng changes for Intoll following the implementation of the Restructure Proposal. Apart from the CEO and CFO, Intoll will need to hire additional staff (including potentially from within the Macquarie executives currently providing services to MIG) to perform some functions. As a result, Intoll will incur the costs of employing staff directly. These costs have been factored into the additional costs analysis in section , however, these costs will be reimbursed by Macquarie for the rst 12 months. There is no assurance Intoll will be able to replicate the functions which Macquarie previously provided or the terms on which those functions were made available No pre-emptives are trigged in relation to Intoll assets The structure of the Portfolio Reorganisation means that pre-emptive rights contained within shareholder agreements for 407 ETR and Westlink M7 are not triggered Other considerations for Macquarie Atlas Roads Access to Macquarie expertise for MQA The IBCs have recommended that MQA be managed by Macquarie under new management arrangements. The IBCs gave consideration to the potential of appointing a new manager to advise MQA, but discarded this as they unanimously held the view that Macquarie was best equipped to manage MQA. In the MIG Boards view, Macquarie is one of the pre-eminent global organisations in regard to the management of infrastructure assets. Macquarie currently has in excess of $116 billion of infrastructure assets under management and MQA will be able to draw on the expertise of Macquarie s range of managers and advisers. However, MIG s recent underperformance has been notwithstanding Macquarie s management of MIG. In addition, Macquarie has detailed knowledge of MQA s assets and a depth of experience in the toll road industry. The IBCs considered that this expertise is required in addressing the challenges associated with some of the assets within MQA such as managing the performance of those assets. Macquarie also has relationships with debt and equity providers to the assets, which means it is strategically placed to assist in the eventual re nancing of the debt. In addition, there are consequences which may be to the detriment of MIG Securityholders if a Macquarie entity is not appointed as manager of MQA: MIG s asset managers and various other Macquarie executives have strong relationships with both the toll road management teams and all external parties, including toll road debt and equity providers, regulators and governments. It would be almost impossible for another manager to recreate a team of similar quality with the same levels of skills, experience and relationships. Assembling an inferior team may result in reputational damage, create issues upon re nancing and MIG losing operational in uence over its portfolio. As a Macquarie managed entity, MQA will have access to a wide network of support and advice beyond the asset management team including transaction advisory.

64 60 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal continued If a new management team was to be appointed there would be a transitional period during which the new team would need to build relationships and corporate knowledge. It will take time for a new manager to gain a full understanding of the assets in terms of operations and structuring. This would be disruptive to normal business operations and could potentially lead to a lower security price. The lending documents for the M6 Toll include a change of control provision, which if triggered, would entitle lenders to accelerate all loans, or individual lenders to accelerate their participation in a loan. This may allow lenders to demand payment of all or part of the existing M6 Toll nancing, resulting in the need to re nance approximately 1.03 billion of debt plus the break costs of interest rate swaps. Re nancing such a large quantum would be extremely dif cult in current market conditions especially considering M6 Toll s recent performance and its non-investment grade BB rating. Hence, there may be a need for further equity injections if a complete re nancing were not achieved. MIG is a co-investor with other Macquarie managed funds for its investment in the US assets. If a Macquarie entity was not appointed as manager it would trigger pre-emption rights over those interests on implementation of the Restructure Proposal. In addition, if those rights are not triggered or exercised, ongoing interface between the new manager and Macquarie will be required and a Macquarie managed fund will remain a co-investor. If a Macquarie entity was not appointed as the manager, MQA would have to start paying advisory fees to Macquarie on its APRR interests (see section for details). 3.4 Macquarie s involvement in the Restructure Proposal Rationale for involvement of Macquarie in the Restructure Proposal Having determined that the Restructure Proposal was the best strategic alternative for MIG, the IBCs also identi ed the need for capabilities and services to be provided to implement the Restructure Proposal, including nancial advisory services in relation to the Restructure Proposal. Additionally, and as part of the process of evaluating the Restructure Proposal, the IBCs took into account the likelihood of delivering a better outcome for MIG Securityholders by engaging the co-operation of Macquarie to facilitate the implementation of the Restructure Proposal and provide assets, services and resources to MIG (see section for further details). Given the signi cant amount of work and cooperation that would be required to facilitate the successful implementation of the Restructure Proposal, the IBCs determined that it would be appropriate to compensate Macquarie for their assistance in respect of this cooperation. It was on this basis that the IBCs entered into negotiations with Macquarie The negotiated outcome with Macquarie In negotiating with Macquarie, the IBCs sought a holistic solution that would address the issues that were identi ed and provide the necessary support and assistance to deliver a bene cial outcome for MIG Securityholders. The IBCs subsequently negotiated the following arrangements with Macquarie in relation to the Restructure Proposal: MIG has agreed to pay an amount estimated to be approximately $103.9 million. The actual amount may be higher or lower and comprises: A$50 million for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG;

65 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 61 an advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll for nancial advisory services in connection with the Restructure Proposal. Macquarie s nancial advisory role does not extend to advice on the arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other hand) on which Grant Samuel advised the IBCs. This fee is estimated to be approximately A$28.3 million (assuming a post implementation 30 day VWAP trading price for Intoll of $1.25 per Intoll Security); a payment of approximately A$25.6 million for the shares in MIIML. This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal. In return for these bene ts, Macquarie has agreed to: facilitate the Restructure Proposal being structured to minimise the potential for triggering asset ownership pre-emptive rights and debt re nancing requirements and consent to the necessary restructure of the MIG Portfolio; assist Intoll with establishing an independent operation by providing transitional services, including the transfer of certain personnel, provision of premises, reimbursement of Incremental Costs (including all employment costs) and other services over a period of 12 months from the implementation of the Restructure Proposal; grant a perpetual licence to use Macquarie s intellectual property rights in connection with Intoll; transfer the ownership of MIIML, the current responsible entity of MIT(I) and MIT(II), to Intoll; and provide nancial advisory services to MIG in connection with the Restructure Proposal. Macquarie will also manage MQA and be entitled to new base and performance fees under new arrangements Bene t to MIG from services provided by Macquarie under Restructure Proposal Services provided by Macquarie as nancial adviser The MIG Boards have engaged Macquarie to act as its nancial adviser in connection with the Restructure Proposal (other than in respect of the arrangements between Macquarie Group (on the one hand) MIG, Intoll and MQA (on the other hand). In connection with this engagement, Macquarie has to date and shall going forward until completion, provide nancial advice and assistance in relation to the Restructure Proposal, which may include nancial advice and assistance in relation to: developing the strategy with regard to the Restructure Proposal; the structure, timing and market implications of the Restructure Proposal; co-ordinating and advising on all aspects of the presentation and marketing of the Restructure Proposal to stakeholders, including assistance in the presentation and co-ordination of presentations and roadshows; in conjunction with MIG s legal advisers and if requested by MIG, liaising with regulatory authorities; liaising with MIG s other advisers in order to execute and implement the Restructure Proposal; determining appropriate responses to any signi cant developments on the register of MIG Securityholders relevant to the Restructure Proposal; assisting with the communications strategy in relation to the Restructure Proposal; and where appropriate, dealing with the media, institutional shareholders and analysts Transfer of personnel to management of Intoll Macquarie has agreed to facilitate the transfer of certain personnel currently involved in the management of MIG to Intoll. Those management personnel who are transitioning across will cease employment with Macquarie and become employed by Intoll under new contractual arrangements. The terms of the arrangements for the interim CEO are set out in section 4.5 of this Explanatory Memorandum.

66 62 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal continued Reimbursement of Incremental Costs (including all employment costs) for Intoll group for a 12 month period Macquarie has agreed to reimburse Intoll the cost of Incremental Costs (including employee costs) for the rst 12 months of operation (subject to a limit of A$8 million). These costs have been set out in section 3.4 of this Explanatory Memorandum and are estimated to be approximately A$7.8 million The provision of Transitional Services to Intoll Group for a period of up to 12 months Macquarie has agreed to provide Intoll with a range of transitional services for a period of up to 12 months post the implementation of the Restructure Proposal. The details of these transitional arrangements are set out in section 4.5 of this Explanatory Memorandum, but in summary these include transitional services in relation to: Premises Financial Reporting and Accounting Taxation Risk and Compliance Information Technology Legal and Company Secretarial Communication and Marketing Business Management Human Resources Asset Management Treasury Macquarie s obligation to provide transitional services or to reimburse Incremental Costs ceases if there is a Change of Control Event in relation to Intoll The grant of a licence for Macquarie s intellectual property rights Macquarie has agreed to provide to MIG a perpetual, royalty free, non-assignable licence permitting Intoll to use processes, policies, procedures and manuals used in the management of MIG prior to the completion of the Restructure Proposal The transfer of the responsible entity of MIT(I) and MIT(II) being MIIML MIIML acts as the responsible entity of MIT(I) and MIT(II) and also as trustee of certain trusts involved in the ownership of Intoll s interest in Westlink M7. A wholly-owned subsidiary of MIT(II) has agreed to acquire MIIML from Macquarie pursuant to the Share Sale Agreement. The purchase price payable for MIIML is an amount in cash equal to the net assets of MIIML as at completion of the sale. MIIML has cash balances of approximately A$25.6 million, and the estimated purchase price for MIIML is A$25.6 million payable in cash on the Implementation Date. A summary of the Share Sale Agreement is contained in section The Share Sale Agreement contains agreed representations and warranties by Macquarie in respect of the assets and liabilities, operations and nancial position of MIIML. Macquarie s aggregate liability in respect of claims under the Share Sale Agreement (other than claims under the Macquarie Litigation Indemnity) is capped at an amount equal to the purchase price payable under the Share Sale Agreement (expected to be A$25.6 million as noted above) less any amount above A$42 million which is paid by Macquarie under the Macquarie Litigation Indemnity. Macquarie Litigation Indemnity MIIML and MIGIL are parties to legal proceedings brought by OTPP in respect of the OTPP Claim. Further details of the OTPP Claim are set out in Section of Appendix B. Macquarie has provided an indemnity to MIIML (acting in its personal capacity) for any loss arising from the OTPP Claim should MIIML not be able to be indemni ed out of trust assets in respect of the OTPP Claim (Macquarie Litigation Indemnity). The Macquarie Litigation Indemnity is subject to a limit of $42 million plus an amount, if any, equal to the purchase price payable for the acquisition of MIIML under the Share Sale Agreement (estimated at $25.6 million) less any amount paid by Macquarie Group and certain related parties in respect of other claims under the Implementation Deed of other transaction documents. This means that (for example) other claims under the Share Sale Agreement can reduce the amount available under the Macquarie Litigation Indemnity.

67 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 63 The Macquarie Litigation Indemnity is subject to MIIML not offering or agreeing to settle or compromise the OTPP Claim in circumstances where the Macquarie Litigation Indemnity may be called upon without Macquarie s prior written consent and to compliance by MIIML with certain obligations with respect to conduct of the proceedings, including that MIIML will seek to join Macquarie, or consent to an application that Macquarie be joined, as a party to the proceedings. MIIML will need to strictly observe these requirements in order to be fully entitled to the Macquarie Litigation Indemnity. Based on an assessment undertaken by the MIIML Board it is considered unlikely that MIIML will lose its right of indemnity out of trust assets in connection with the OTPP Claim and therefore unlikely that the Macquarie Litigation Indemnity will be called upon. The potential consequences for Intoll if the liability of MIIML and MIGIL in respect of the OTPP Claim were to be found to be a personal liability of MIIML and to exceed the total of the Macquarie Litigation Indemnity and amounts otherwise available to MIIML from its own resources are set out in the Risks section of Appendix B. The merits of the case have not altered as a consequence of the implementation of the Restructure Proposal Bene ts to MIG arising from Macquarie s management of Macquarie Atlas Roads There is a bene t to MIG in engaging Macquarie as the manager of MQA given the asset pro le of the MQA Portfolio and Macquarie s expertise in infrastructure management. The IBCs considered Macquarie to be best placed to act as the manager of MQA given its knowledge of the assets, depth of experience in the toll road industry and global network of professionals with existing relationships in debt and equity markets. The MIG Boards recognise Macquarie is one of the pre-eminent global organisations in regard to the management of infrastructure assets with in excess of A$116 billion of infrastructure assets under management and MQA will be able to draw on the expertise of Macquarie s range of managers and advisers. However, MIG s recent underperformance has been notwithstanding Macquarie s management of MIG. In addition, MIG has been able to avoid change of control clauses in the debt documents being triggered with respect to the M6 Toll and in equity documents relating to APRR, by appointing a Macquarie entity as manager of MQA. If the M6 Toll debt facilities were re nanced at this time, under these dif cult debt market conditions, there could be a substantial increase in margins, re nancing fees would be incurred, and it would be dif cult to complete the re nancing without the involvement of MIG s experienced management team. In addition, it is possible that further equity may need to be contributed because the amount of debt equivalent to existing levels may not be available Consequences of change of Manager at APRR MIG holds its investment in APRR through Macquarie Autoroutes de France (MAF) and MAF Finance Sarl, in each of which it holds 50% + one share. Macquarie European Infrastructure Fund, another Macquarie managed fund (MEIF) holds the balance of the shares in MAF and MAF Finance. MAF and MAF Finance are managed by Macquarie through an advisory agreement (MAF Advisory Agreement) with Macquarie Capital Funds (Europe) Limited (MCFEL). MAF in turn owns 50% less one share in Financiere Eiffarie. The remaining interest in Financiere Eiffarie is owned by Eiffage SA, a French listed construction company and infrastructure developer unrelated to Macquarie Group. MAF Finance and an Eiffage subsidiary have provided loans to Financiere Eiffarie in corresponding proportions to the MAF/Eiffage shareholdings. Financiere Eiffarie (via its wholly owned subsidiary, Eiffarie) owns 81.48% of APRR. See the Macquarie Atlas Roads prospectus, section for further information concerning the APRR holding structure. Terms relevant to a change of manager are contained in the following documents.

68 64 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal continued MAF Advisory Agreement Under the terms of the MAF Advisory Agreement: Base fees and performance fees are payable by shareholders in MAF and MAF Finance, including MQA. These fees are waived if the shareholder is directly or indirectly managed by Macquarie Group, which is the case for MQA; and MCFEL exercises MAF s rights under the Financiere Eiffarie shareholders agreement, including the right to appoint directors to Financiere Eiffarie (and therefore APRR). MAF currently may appoint four directors out of eight to the board of Financiere Eiffarie, which is the primary decision making body for Financiere Eiffarie. The chair and casting vote are held by Eiffage. MAF Shareholders Agreement The MAF shareholders agreement governs the management of MAF and MAF Finance. Under the terms of the MAF shareholders agreement, MEIF has a put/call option allowing MEIF to call the MQA interests in MAF and MAF Finance, or put MEIF s interests in MAF and MAF Finance to MQA, both at fair market value. This option is exercisable if the MAF Advisory Agreement is terminated and MQA is not managed by a Macquarie Group entity. Financiere Eiffarie Shareholders Agreement The Financiere Eiffarie shareholders agreement governs the decision making in respect of that entity. Under the terms of that agreement: MAF loses its right to appoint directors to the Financiere Eiffarie board in the event that MAF ceases to be managed by a Macquarie Group entity; and if, in addition, MAF is not at least 50% owned by a Macquarie Group managed entity, then Eiffage would be entitled to exercise a call option in respect of all of MAF s shares in Financiere Eiffarie, at fair market value. Consequences of above arrangements If MQA ceased to be managed by a Macquarie Group entity, but MAF and MAF Finance remained managed by MCFEL: a base fee would be payable by MQA to MCFEL equal to 1.25% per annum of its total investment in APRR. The annual cost of this fee would currently be approximately 5 million; and a performance fee equal to 15% of the total cash ows from the APRR investment would also become payable by MQA to MCFEL after an 8% IRR is achieved by MQA. That 8% threshold has not yet been met. If the MAF Advisory Agreement is terminated, MAF would lose its right to appoint directors to the board of Financiere Eiffarie and consequently the right to appoint Directors to APRR. If, in addition, MQA ceases to be managed by a Macquarie Group entity: the put/call option with MEIF would be triggered, allowing MEIF to call the MQA interests in MAF and MAF Finance, or put MEIF s interests in MAF and MAF Finance to MQA, both at fair market value; or if MEIF did not acquire MQA s interest pursuant to that call option, Eiffage would be entitled to exercise a call option in respect of all of MAF s shares in Financiere Eiffarie, at fair market value Consequences of change of Manager at M6 Toll MQA holds its investment in M6 Toll via Macquarie Motorway Group (MMG). MMG has issued external debt of 1.03 billion to nance the M6 Toll. Under the terms of MMG s debt facilities, a Change of Control is deemed to occur if a member or members of the Macquarie Group cease to control, directly or indirectly, more than 50% of MMG, a wholly-owned subsidiary of MQA. While MMG is owned by an entity that is managed or advised by Macquarie (which is currently the case, for MQA Bermuda), it is deemed to be controlled by Macquarie Group for the purposes of this provision. If a Change of Control is triggered, individual lenders may determine that their portions of the loan are immediately due and payable, and a majority of lenders representing two-thirds of secured amounts including swap exposures may accelerate repayment of the entire loan. Acceleration of the repayment of the loans made under the debt agreements would also cause a termination event under the swap agreements. The Loan facility balance is 1.03 billion of debt, excluding the market value of interest rate swaps. The loans mature in August 2015.

69 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 65 In the event of an early re nancing of the debt, it is unlikely that an equivalent amount of debt could be sourced in the current bank market. This could allow the lenders to: take possession of the asset; or reprice the loans, with an additional 100 basis points on the loans costing approximately A$110 million over the remaining life of the loans Payments to Macquarie on implementation of the Restructure Proposal The MIG Boards have agreed to pay the amounts to Macquarie on the successful implementation of the Restructure Proposal in respect of the services provided by Macquarie to MIG and subsequent to implementation, to Intoll (other than the ongoing management of MQA) referred to in sections and 8.2. If the Restructure Proposal is implemented, Macquarie will be paid an amount estimated to be approximately A$103.9 million as compensation in connection with the implementation of the Restructure Proposal. The actual amount may be higher or lower and comprises the advisory fee payment and payment for facilitation and co-operation in the transitioning of MIG into two separate ASX listed groups described in the following sections Advisory fee payment In the event the Restructure Proposal is implemented, Macquarie will be paid an advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll for nancial advisory services in connection with the Restructure Proposal. Macquarie s nancial advisory does not extend to advice on arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other) (see section 8.2) on which Grant Samuel advised the IBCs. The advisory fee is approximately A$28.3 million (assuming a post implementation 30 day VWAP trading price for Intoll of $1.25 per Intoll Security). In deciding to agree to have the advisory fee referenced to the market capitalisation of Intoll alone, the IBCs considered that there is likely to be less volatility in the trading price of Intoll Securities given its assets and cash ows are more stable. The use of the 30 day VWAP is intended to create a balance between suf cient time for the price of Intoll Securities to stabilise following implementation of the Restructure Proposal and the need to determine a level of payment in an appropriate time frame in order to provide certainty for investors. The table below sets out the potential advisory fees payable to Macquarie, based on a range of potential outcomes for the 30 day VWAP of Intoll Securities in the rst 30 days post implementation. Assuming a post implementation VWAP trading price of $1.25 per Intoll Security, the fee is approximately $28.3 million. Market Capitalisation $millions Potential Advisory Fee Payable $millions Intoll 30 day VWAP $0.75 $1, $1.00 $2, $1.25 $2, $1.50 $3, $1.65 (NAB) $3, $1.75 $3, Payment for facilitation and co-operation in the transitioning of MIG into two separate ASX listed groups Macquarie will be paid: A$50 million for, among other things, its role in facilitating, the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG; and a payment of approximately A$25.6 million for the shares in MIIML. This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal. The bene ts to MIG associated with these payments are set out in sections of this Explanatory Memorandum.

70 66 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal continued Bene ts accruing to Macquarie from managing MQA In addition to the one off payments that MIG has agreed to make to Macquarie on implementation of the Restructure Proposal, the IBCs have agreed to appoint MQA Macquarie as the manager of MQA on the basis that the level of complexity associated with those assets imply that they generally require greater management, speci cally in relation to the capital structures of the assets, and will bene t from Macquarie s expertise and knowledge in the toll road sector. The IBCs considered Macquarie to be best placed to act as the manager of MQA given its knowledge of the assets, depth of experience in the toll road industry and global network of professionals with existing relationships in debt and equity markets. The IBC consider the new management and performance fee arrangements as appropriate given the reduced value of assets under management and the considerable ongoing management effort that will be required to manage the issues, in particular the re nancing issues, at the majority of assets in MQA. The IBC also believe that the new management and performance fee arrangements properly incentivise the MQA Manager to deliver performance for all MQA Securityholders, and that the interests of both the MQA Manager and MQA Securityholders will be aligned as a result of these arrangements New Base Management fee arrangements for MQA It is proposed that the new base management fee arrangements for MQA will be: 2.00% per annum of Market Value of MQA up to A$1 billion, plus 1.25% per annum of Market Value of MQA between A$1bn and up to $3 billion; plus 1.00% per annum of Market Value of MQA in excess of $3 billion. The Market Value of MQA is the volume weighted average market capitalisation over last 10 ASX trading days of each quarter. The table below sets out the potential base fees payable by MQA under this new base fee structure at different security prices. Assuming a trading price per MQA security of A$1.80, the annual management fee would be A$16.3 million. Market Capitalisation $millions Potential Annual Management Fee Payable $millions MQA Security Price 1 $ $ $2.30 1, $2.80 1, $3.30 1, $3.76 (NAB) 1, The MQA Security price illustrations re ect the 1:5 in specie distribution ratio (subject to rounding) and are indicative only. These numbers are not an indication of the expected performance of MQA securities. 2. $1.80 applies the same discount to the NAB of MQA Stapled Security as the average discount to NAB of MIG for the 10 months ending 31 October Under the proposed new management arrangements for MQA, there are two signi cant changes to the methodology under which the base management fee will be calculated compared to the base management fee for MIG. These changes are: The use of Market Capitalisation as opposed to Net Investment Value Currently the Market value of MIG is calculated as the volume weighted average market capitalisation over last 10 ASX trading days of each quarter plus fund level borrowings and rm commitments for future investments less cash or cash equivalents. The Market value of MQA will be calculated simply as the volume weighted average market capitalisation over the last 10 trading days of each quarter. The increase in base fee from 1.25% to 2.00% on the tier of market capitalisation up to A$1.0 billion. See section for further information on the rationale for these changes.

71 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 67 The table below provides an illustration of the impact of these two changes on the potential base management fee payable using a range of MQA Security prices assuming that the discount that applies at each security price is applied equally to the Portfolio valuation and to cash. Management fee at 1.25% based on Net Investment Value MIG Formula $millions Management fee at 1.25% based on Market Capitalisation $millions Management fee at 2.00% based on Net Investment Value $millions Management fee at 2.00% based on Market Capitalisation MQA Formula $millions MQA Stapled Security Trading Price $ $ $ $ $ $3.76 (NAB) New Performance fee arrangements for MQA The methodology for calculating the new performance fee for MQA will be the same as those that currently exist for MIG: The performance fee is payable in event that MQA accumulation index (which measures the return on MQA Securities assuming that all distributions are reinvested on the ex-distribution date) outperforms the S&P/ ASX 300 Industrials Accumulation Index in any nancial year having made up for underperformance in previous years. Performance fee = 15% of the dollar amount of out performance and is in three equal instalments. The second and third year instalments are only paid if MQA continues to outperform the index on a cumulative period over the two and three year period. Any underperformance de cit from prior periods must be made up before future performance fees can be earned. The starting point for the MQA accumulation index will be the VWAP of MQA Securities for the rst 30 days of trading after implementation of the Restructure Proposal. The table on the following page seeks to demonstrate how a performance fee would potentially accrue to Macquarie from the performance of MQA and how it might be paid, following implementation of the Restructure Proposal. Assuming: the 30 Day VWAP of MQA (post implementation) was A$ per stapled security; a 12 month period; the MQA Security price increases to $2.00 per MQA Security (indicating an accumulation return of 9.9%); and the ASX 300 Industrials Accumulation index increases by 7.5% (the S&P/ASX 300 Industrials Accumulation Index grew on average 7.4% per annum in the last 10 years). The performance fee payable by MQA to Macquarie would equate to 15% x (the outperformance of the MQA accumulation index over the S&P/ASX 300 Accumulation Index of 6.5 cents per MQA Security) x securities on issue of million = A$4.4 million. One third of this fee (being approximately A$1.5 million) would be payable immediately, with two subsequent equal instalments (each of approximately A$1.5 million) payable on the second and third anniversary, subject to the continuation of outperformance by MQA. 3 The A$1.80 applies the same discount to the NAB of MQA securities as the average discount to NAB of MIG for the 10 months ending 31 October 2009

72 68 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal continued The table below provides a sensitivity of the various potential performance fee payments based on the same assumed starting MQA benchmark of A$1.80, and an assumption that the S&P/ASX 300 Industrials Accumulation index increase in the same period by 7.5%. As outlined in the table below, should the MQA Security price fall to A$1.50, an underperformance de cit of A$197 million would arise and this de cit would need to be recovered prior to any future performance fee being payable. Macquarie Atlas Roads Stapled Security Price after 12 months Total Performance Fee accrued $millions Instalment Instalment Two One Paid Payable on immediately 2nd anniversary 1 $millions $millions Instalment Three Payable on 3rd anniversary 1 $millions Performance fee de cit if applicable $millions (196.8) (83.7) Subject to MQA outperformance of MQA over the S&P/ASX 300 Accumulation Index. MIG is carrying forward a performance fee de cit. As at 30 September 2009, the MIG underperformance de cit was the equivalent of A$2.12 per stapled security, which in market capitalisation terms represents approximately A$4.8 billion. Accordingly, a performance fee would be unlikely to be payable, in the short or long term. MQA will not carry forward the balance of the performance fees for MIG. If the de cit were to be carried forward new performance fees would be unlikely to be earned by the MQA Manager. Accordingly, the new fee structure proposed to be paid by MQA will ensure appropriate incentives are provided to encourage and incentivise the MQA Manager to build value in that portfolio for all MQA Securityholders IBCs conclusion regarding bene ts to Macquarie In determining the appropriateness of the arrangements with Macquarie, the IBCs received independent nancial advice from Grant Samuel. The Boards and IBCs of MIG consider that the bene ts that accrue to MIG Securityholders in undertaking the Restructure Proposal, including bene ts provided by Macquarie, outweigh the disadvantages and costs of the Restructure Proposal, including the bene ts provided to Macquarie, and that the Restructure Proposal is in the best interests of MIG Securityholders.

73 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Implications if the Restructure Proposal does not proceed If the Restructure Proposal is not approved by MIG Securityholders: MIG will remain as single stapled group; Macquarie will continue to manage MIG and MIG will continue to pay base fees and potentially performance fees to Macquarie in future periods; MIG will not acquire MIIML or pay an amount equal to the net assets of MIIML on completion of the sale of MIIML (estimated to be A$25.6 million of cash deposits); Intoll will not become a standalone entity and the assets will continue to be managed by Macquarie as part of MIG; MIG will not make a cash payment of A$50 million to Macquarie for facilitating the implementation of the Restructure Proposal; an advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll (A$28.3 million, assuming a 30 day VWAP for Intoll of A$1.25 per Intoll Security) will not be paid; MIG will have incurred approximately A$7 million of costs in relation to the Restructure Proposal that are not recoverable MIG will not change its name; the corporate governance features which are proposed to be introduced as part of the Restructure Proposal will not be implemented; and the Special Distribution will not be paid. 3.6 Independent expert s report The IBCs engaged the Independent Expert to provide an independent expert s report in relation to the Restructure Proposal. A copy of the Independent Expert s Report is attached as Appendix A. The Independent Expert s Report (prepared by Ernst & Young) provides an assessment of the Restructure Proposal. The conclusion reached by the Independent Expert is that the Restructure Proposal is in the best interests of MIG Securityholders. 3.7 MIG Independent Directors recommendation MIG Independent Director s recommendation For the reasons set out in this Explanatory Memorandum, subject to there being no superior competing proposal and the Independent Expert not changing or withdrawing its conclusion that the Restructure Proposal is in the best interests of MIG Securityholders, each MIG Independent Director recommends that MIG Securityholders vote in favour of the Required Resolutions Other directors Mark Johnson is a former Deputy Chairman of Macquarie. Peter Dyer is currently a consultant to Macquarie. As Macquarie will receive a nancial bene t in relation to the Restructure Proposal (see section ), these directors will not make any recommendations in respect of the Required Resolutions Directors independence and interests in the outcome of the Resolutions The table on the following page lists the MIG Boards assessment of the independence of the MIG Directors and the interests of those directors in the Restructure Proposal. For each of those directors who are assessed as being independent according to the independence criteria set out in Appendix C, it contains the quantum of fees or other nancial bene ts that the director received from a Macquarie entity in the 12 months to 30 June In addition to the amounts set out in the table below, members of the IBCs have been remunerated for their additional duties in performing those roles. MIG directors may also have an indirect interest in the outcome of the Restructure Proposal through their holding of any MIG Securities. Details of each director s holding in MIG Securities are set out in section

74 70 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal continued Director Independence assessment Status Mark Johnson (Chairman MIIML, Director MIGIL) Mr Johnson was re-elected as a director of MIIML at the MIG 2009 AGM under the new MIG corporate governance arrangements. Mr Johnson was also appointed a director of MIGIL by MIIML pursuant to its rights as the holder of the MIGIL B Special Share. Mr Johnson retired as deputy chairman of MBL in He has more than 40 years of experience in corporate nance and banking. He is a quali ed lawyer and has a Masters of Business Administration degree from Harvard University. He is chairman of AGL Energy. Mr Johnson was an executive director of MBL until 2007 and is therefore not considered independent. Mr Johnson receives $150,000 per annum in director fees from MIIML, a Macquarie entity, as responsible entity of MIT(I) and MIT(II). Prior to the 2009 annual general meeting, these fees were paid by MIIML in its personal capacity. Mr Johnson also receives $50,000 per annum in director fees from MIGIL. Not Independent Paul McClintock AO (Director MIIML) David Mortimer AO (Director MIIML) David Walsh (Director MIIML) Mr McClintock is a principal of the private investment banking rm McClintock Associates. He is chairman of Medibank Private Limited, Thales Australia and the COAG Reform Council. From July 2000 to March 2003, he was secretary to the Cabinet and head of the Cabinet Policy Unit for the Australian Government. He graduated from Sydney University with a Bachelor of Arts and a Bachelor of Law. Mr McClintock receives $125,000 per annum in director fees from MIIML, a Macquarie entity, as responsible entity of MIT(I) and MIT(II). Prior to the 2009 annual general meeting, these fees were paid by MIIML in its personal capacity. Despite these interests, the MIG Boards consider that Mr McClintock satis es the independence criteria set out in Appendix C. Mr Mortimer is Chairman of Australia Post, Crescent Capital Partners and Leighton Holdings Limited, a director of Petsec Energy Limited and a governor of the Australia Israel Chamber of Commerce. He was formerly a director of the Australian Graduate School of Management and the former chief executive of cer of TNT. He graduated from Sydney University with rst class honours in Economics. Mr Mortimer receives $125,000 per annum in director fees from MIIML, a Macquarie entity, as responsible entity of MIT(I) and MIT(II). Prior to the 2009 annual general meeting, these fees were paid by MIIML in its personal capacity. Despite these interests, the MIG Boards consider that Mr Mortimer satis es the independence criteria set out in Appendix C. Mr Walsh is an experienced corporate and commercial lawyer and company director. He was a partner of the law rm Mallesons Stephen Jaques from 1962 to Currently, he is the Chairman of Templeton Global Growth Fund. He is also a former director of Dyno Nobel Ltd, PaperlinX Ltd and Asia Paci c Speciality Chemicals Ltd. Mr Walsh receives $125,000 per annum in director fees from MIIML, a Macquarie entity, as responsible of MIT(I) and MIT(II). Prior to the 2009 annual general meeting, these fees were paid by MIIML in its personal capacity. Despite these interests, the MIG Boards consider that Mr Walsh satis es the independence criteria set out in Appendix C. Independent Independent Independent

75 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 71 Director Independence assessment Status Robert Mulderig (Chairman MIGIL) Appointed to MIGIL Board by MCFEL pursuant to its rights as the holder of the Independent MIGIL A Special Share. Mr Mulderig is also a director of another Macquarie managed fund, Macquarie International Infrastructure Fund. He receives US$40,000 per annum in director fees from MIGIL and US$72,500 per annum in director fees from Macquarie International Infrastructure Fund. Mr Mulderig is chairman of the board of nancial services company Woodmont Trust Company Ltd, and is also chairman of the Bermudan Bank of N.T. Butter eld and Son Ltd. Mr Mulderig is chairman of Butter elds and a director of BFS, and has advised that he owns 122,600 common shares (out of 98,399,858 common shares) and does not own any of the US$200 million in preferred shares in Butter elds. He has no direct interest in BFS. He is a former member of the board of governors of the Bermuda Stock Exchange, and was chairman and chief executive of cer of Mutual Risk Management Ltd for 20 years until He attended Columbia University and the Fordham University School of Law. MIG s Bermuda administrative and secretarial services were provided by Butter eld Fulcrum Group, which is 40% owned by the Bermudian Bank of N.T. Butter eld and Son Ltd. Mr Mulderig is a director of Butter eld Fulcrum Group and N.T. Butter eld and Son Ltd. Neither entity is a signi cant supplier of MIG. Fees paid to BFS for the nancial year ending 30 June 2009 across the whole of the Macquarie Capital Funds group totalled approximately A$200,000 (under A$100,000 in relation to MIG), and the Macquarie services represent a de minimis proportion of the total Butter elds business, which reported total revenue in excess of US$460,000,000 for calendar year Despite these interests, the MIG Boards consider that Mr Mulderig satis es the independence criteria set out in Appendix C. Jeffrey Conyers (Director MIGIL) Mr Conyers was re-elected as a director of MIGIL at the MIG 2009 AGM. Mr Conyers director fees of US$40,000 per annum are paid by MIGIL. Mr Conyers began his professional career as a stockbroker in Toronto and returned to Bermuda in 1985 to join the Bank of Bermuda where his focus was investments and trusts. Mr Conyers is a founding executive council member and deputy chairman of the Bermuda Stock Exchange. Mr Conyers is the chief executive of cer of First Bermuda Group Limited, which provides an advisory and execution service on worldwide offshore mutual funds to individuals and local companies based in Bermuda. Jeffrey Conyers is married to Ede Conyers, who is Executive Director, Chief Executive Of cer and a shareholder in ISIS Fund Services Limited, a Bermuda based rm which provides company secretarial and funds administration services to various Macquarie managed vehicles. Macquarie managed funds have paid approximately US$711,000 to ISIS Funds for services during the nancial year ended 30 June 2009, and ISIS Law has been paid approximately US$92,000 for the same period. Of this amount, MIG has paid approximately US$31,000 to ISIS Funds and US$9,000 to ISIS Law. Jeffrey Conyers has no involvement with the operations of ISIS Fund Services Limited but is a bene ciary of his wife s investment in the business. Ede Conyers is an independent business woman of 30 years standing as a fund administrator in Bermuda. She is not involved with the day to day provision of services to MIG. Jeffrey Conyers appointment to the MIG board was made in view of his expertise. Independent

76 72 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 3: Evaluation of the Restructure Proposal continued Director Independence assessment Status Jeffrey Conyers (Director MIGIL) The MIGIL Board has assessed Mr Conyers limited association with ISIS Funds does not impact his independence of mind, including his ability to constructively challenge and independently contribute to the board or his ability to act in the best interests of MIG. The quantum of fees, salaries and other bene ts received by Mr Conyers from Macquarie Group (excluding MIG) during the preceding 12 months was approximately US$35,000 for acting as chairman of MAp Airports International Limited (formerly Macquarie Airports Limited), part of a fund that was until recently managed by a Macquarie Group entity. Despite these interests, the MIG Boards consider that Mr Conyers satis es the independence criteria set out in Appendix C. Independent Peter Dyer (Director MIGIL) Payment of fees to IBC Appointed to MIGIL Board by MCFEL pursuant to its rights as the holder of the MIGIL A Special Share. Mr Dyer s director fees of 40,000 per annum are paid by MIGIL. Mr Dyer was previously executive director of Kværner Corporate Development Limited (now Macquarie Infrastructure (UK) Limited). He gained extensive experience in the development of Kværner s UK-based PFI projects, including the Birmingham Northern Relief Road (now M6 Toll) and the A1-M1 Road in Yorkshire. He was employed by the Kværner Group from 1981 and became a director of Macquarie European Infrastructure pic (now replaced by MIGIL), following the acquisition of Kværner Corporate Development Limited. Mr Dyer is a Senior consultant to the Investment Committee of Macquarie European Infrastructure Fund (MEIF) and has been appointed by MEIF as a non-executive director of the Kemble Water Group of companies. He receives 60,000 and 45,000 per annum respectively in respect of these two appointments. Mr Dyer is not independent Ongoing Director Fees Additional fees are payable to the members of the IBCs in recognition of the additional time and duties that they have been required to undertake in relation to the consideration of the initiatives. These services have included undertaking activities generally performed by management, including spending time evaluating the initiatives, reviewing and negotiating the terms of the Restructure Proposal with Macquarie, and attending IBC meetings. The fees payable in respect of these additional services performed by the IBCs, calculated as a at fee for both the IBC and the due diligence process in connection with the Restructure Proposal, total as at the date of this Explanatory Memorandum approximately A$315,000. Mark Johnson will also receive fees of A$37,500 in relation to his participation in the due diligence process in connection with the Restructure Proposal. Not Independent The appropriate level of remuneration for the Intoll and MQA Boards (Australian and Bermudian) is currently under review.

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78 74 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 4: Pro le of Intoll This section gives a high level overview of Intoll if the Restructure Proposal proceeds. Further details on Intoll are set out in Appendix B. 4.1 Overview and corporate structure Intoll will be a tripled stapled structure consisting of: MIT(I) (to be renamed Intoll Trust(I)) (an Australian registered managed investment scheme); MIT(II) (to be renamed Intoll Trust(II)) (an Australian registered managed investment scheme); and MIGIL (to be renamed Intoll International Limited) (an exempted mutual fund company incorporated in Bermuda). Intoll will own and manage the interests in the Intoll Portfolio being the interests in the 407 ETR in Toronto, Canada and the Westlink M7 in Sydney, Australia. The total capital of Intoll will comprise approximately 2,262 million Intoll Securities (each Intoll Security comprising a unit in each of MIT(I) and MIT(II) and a share in MIGIL which cannot be traded separately). 4.2 Strategy and Investment mandate Intoll s strategy is to invest in and develop quality toll road assets that are accretive to the Intoll Portfolio over the long term. Returns to MIG Securityholders are expected to be in the form of both capital growth and distributions. Intoll s current portfolio of assets provides investors with a investment proposition that includes the following characteristics, including: long term assets (83 year weighted average concession life); experienced management team; established track record of strong asset performance; stable cash ows from asset distributions; long term debt maturity pro le; effective hedging pro le; agreed toll escalation mechanisms; and transparent governance framework. Over the medium term, the Intoll strategy will be to maximise the cash generation of the assets within the Intoll Portfolio for the bene t of Intoll Securityholders and to look to optimise the potential for organic growth opportunities. Should a re-rating of the Intoll Securities occur, then it will provide Intoll with an opportunity to consider potential new investment opportunities. Future opportunities for investment will be assessed on the following criteria: be located in OECD or OECD-like countries; offer potential for increasing value; offer sustainable competitive advantages in a traf c corridor; and offer growth in operating cash ows. 4.3 Distributions Intoll will have a distribution policy that aligns the distributions to the cash generated by the Intoll Portfolio. The classi cation of Intoll s distributions depends on how these funds have been derived. The components of Intoll s distributions can vary every nancial year and will be disclosed in an annual tax guide. The key components may include: franked distributions; capital gains; tax deferred distributions; and foreign distributions. MIG s current distribution reinvestment plan (currently suspended) will continue to apply to Intoll.

79 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Assets, valuations and key metrics Assets within the Intoll Portfolio 30% interest in 407 ETR 407 International Inc is the concessionaire of 407 ETR, a 108 kilometre, multi-lane all-electronic toll highway in Toronto, Canada that runs alongside some of the fastest growing areas in the Greater Toronto area. 407 ETR was designed to be a congestion reliever to Highway % interest in Westlink M7 Westlink M7 is a 40 kilometre toll road in the west of Sydney, Australia, which links the M2 Motorway at Baulkham Hills in the north, the M4 Motorway at Eastern Creek and the M5 Motorway at Prestons in the south. It forms a major part of Sydney s 110 kilometre orbital network, linking major employment, industrial and residential areas of western Sydney. The Sydney orbital network also acts as an outer bypass for traf c through Sydney as well as a primary link to inter- and intra-state highways Valuation of Intoll 30 June 2009 Natural Currency m Valuation Portfolio Weighting 30 June 2009 Asset Discount Rate 30 June June 2009 A$m 407 ETR (30% interest) 9.5 C$3,081 3, % Westlink M7 (25% interest) 12.0 A$ % Portfolio Valuation 9.8 n/a 3, % Non Investment Balances 68 A$68 68 Distribution Net Assets n/a n/a 3,711 Based on the value of net assets as at 30 June 2009, the Net Asset Backing per Intoll Security is A$ Key metrics as at 30 June 2009 Tolling Concession Valuation Net Debt Ent. Value Gearing Revenue EBITDA Net Debt/ Asset Structure End A$m A$m A$m % A$m 1 A$m 1 EBITDA 407 ETR Mkt Based Nov ,284 1,324 4, x Westlink M7 AUS CPI Feb x 83 years 3,643 1,621 5, % x 1. Extracted from MIG s management information report for the year ended 30 June In the statutory income statement both these assets are accounted for as investments in nancial assets with the income statement re ecting the movement of fair value of these investments.

80 76 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 4: Pro le of Intoll continued Change of control and pre-emptive provisions for Intoll Portfolio 407 ETR On 12 April 1999 CDPQ, Cintra, Ferrovial, and SNC-Lavalin entered into an amended and restated subscription and unanimous shareholders agreement, as further amended on 27 May 1999 and 31 May 2000 (the Shareholders Agreement) pursuant to which the shareholders of 407 International (the Company) agreed upon the terms on which the business and affairs of the Company (together with the interests of the parties therein) will be conducted and governed. There have been several prior transactions involving the transfer of the Company s shares from a shareholder to a third party (when a subsidiary of MIG acquired the convertible debenture from CDPQ on April 26, 2002, CDPQ was released from the Shareholders Agreement, and the MIG subsidiary became party to the Shareholders Agreement). The Shareholders Agreement provides each shareholder with the right to nominate a speci ed number of directors to the Company s board, depending on the level of the shareholder s interests. At present, MIG s subsidiary has the right to nominate four of the Company s 13 directors. In addition, the Shareholders Agreement provides that certain matters of fundamental importance to the Company require the approval of all shareholders, subject to certain exceptions. The Shareholders Agreement also restricts the ability of shareholders to transfer their shares of the Company. A proposed transfer of Company shares by one shareholder to a third party gives rise to pre-emptive rights (rights of rst refusal and piggy-back rights) in favour of other shareholders. Subject to certain conditions, a shareholder may transfer its shares in the Company to a permitted transferee such as a wholly-owned af liate. There have been several reorganization transactions pursuant to which shareholders have transferred their shares of the Company to wholly-owned af liates. The shareholder arrangements do not apply to transfers of shares in Intoll. There are no change of control provisions contained in the Master Trust Indenture for the 407 ETR, which governs 407 ETR s debt terms. Westlink M7 MIG holds a 50% interest in Western Sydney Road Group (WSRG). WSRG is owned in equal parts by Intoll and funds managed by QIC Private Capital Pty Limited (ABN ) (a wholly owned subsidiary of Queensland Investment Corporation, a leading Australian institutional investment manager (QIC)) on behalf of its clients. WSRG holds a 50% interest in the Westlink M7. The other 50% interest is owned by Transurban Group. The Westlink Equity Participants Deed provides for pre-emption rights in respect of transfers of interests in Westlink M7, and Western Sydney Road Group. Under those arrangements, a sale by Intoll of its interests in WSRG would be subject to pre-emption by both QIC and Transurban Group. The Equity Participants Deed also provides that a change of control of a partner or shareholder will automatically trigger the pre-emptive rights process discussed above. However, changes of control of listed investors, including Intoll, are exempt from this requirement. The Westlink investors have provided certain undertakings to the Westlink project lenders. In particular, the investors have undertaken that they will not transfer (i.e. sell dispose of, part with possession of, or create) any interest in the Westlink Motorway Partnership, any subordinated loan notes issued by the Westlink Motorway Partnership or any marketable securities in the capital of the borrower, the Westlink entities or a Westlink Partner) unless certain conditions are satis ed. The conditions include but are not limited to: The transfer does not give rise to an event of default under the Westlink loan documents, or breach the change of control clause in the Westlink Project Deed; and The agent giving its prior written consent to the transfer (such consent not to be unreasonably withheld). This undertaking does not apply to transfers of shares in Intoll.

81 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 77 The Westlink Project Deed restricts the transfer of interests in Westlink in certain circumstances. In particular, Intoll must not transfer its interest in Westlink (or its indirect interests), without the prior written consent of the New South Wales Road and Traf c Authority. This consent is not to be unreasonably withheld. Such consent is not required where a transfer occurs, among other circumstances, between existing investors (including to pursuant to the operation of the pre-emption provisions). Consent is not required in the circumstance of a change of control of a listed Westlink Investor. 4.5 Management and corporate governance arrangements Intoll is to be a stand-alone entity with its own management team and employees. As such, except for the rst 12 months after implementation of the Restructure Proposal (see section 1.3.1), Intoll will incur the costs of staff and services currently provided Board of Directors Interim Intoll Boards As a consequence of the corporate structure, Intoll will have two separate Boards of Directors; one for MIIML, and one for MIGIL. These boards will act together and will co-operate in accordance with the Cooperation Deed. All of the Intoll Directors, other than the managing director, will stand for re-election on a rotational basis as required by the Listing Rules. The role of MIIML is to act as responsible entity for MIT(I) and MIT(II) and will, after implementation of the Restructure Proposal, also act as adviser to MIGIL. The MIIML Board will comprise three directors each with broad industry experience. All of these members of the MIIML Board will be independent directors. On implementation of the Restructure Proposal the MIIML Board will comprise: Paul McClintock (Chairman, Independent Director); David Mortimer (Independent Director); and David Walsh (Independent Director). The MIGIL Board has four directors each with broad industry experience. It is a requirement of the MIGIL Bye-Laws that no more than two directors may be resident in the same jurisdiction (other than Bermuda) and a majority of the directors must not be resident for tax purposes in a jurisdiction other than Bermuda. The MIGIL Board comprises: Robert Mulderig (Chairman, Independent Director); Jeffrey Conyers (Independent Director); Peter Dyer (Non-Independent Director); and Paul McClintock (Independent Director, MIIML appointee) Intoll Boards Transition Following the implementation of the Restructure Proposal, the Intoll Board will undergo a period of transition and refreshment. These transition arrangements are designed to ensure continuity from MIG to the two separate ASX listed vehicles, whilst also ensuring a refreshment of talent and compliance with the Principles. For Intoll: Mr David Walsh intends to resign from the MIIML Board and will be replaced by a suitably quali ed independent director within six months of implementation of the Restructure Proposal; Mr David Walsh intends to resign from the MIIML Board and will be replaced by a suitably quali ed independent director within six months of implementation of the Restructure Proposal; Paul McClintock will be appointed as the new chairman of Intoll with effect from the date of implementation of the Restructure Proposal;

82 78 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 4: Pro le of Intoll continued following these changes, the MIIML Board will comprise four directors, being three independent directors, including an independent chairman, as well as the managing director and CEO; currently, Mr Johnson sits on the MIGIL Board through the appointment rights (the Special B Share) held by MIIML. Consequently, once MIIML is owned within Intoll it is envisaged that Paul McClintock, the chairman of MIIML, will be appointed (under those same appointment rights) to the MIGIL Board to replace Mr Johnson; in addition, the MIGIL Board will consider whether it is appropriate for any incumbent directors to resign as MIGIL Directors and be replaced by suitably quali ed independent directors (pursuant to the MIGIL Bye-Laws, one of the replacements must be a resident of Bermuda with the other being either Bermudian or not a resident of Australia); and all directors (other than any managing director) will stand for re-election on a three year rotational cycle Management Team Intoll will employ its own management team that draws on existing members of the current MIG Management and will also include the recruitment of external staff to complete Intoll s management structure. The anticipated costs associated with the management of Intoll are set out in Section Intoll intends to appoint Murray Bleach as interim Chief Executive Of cer of Intoll from implementation of the Restructure Proposal. Murray resigned from Macquarie Group on 18 December Prior to that he was Global Head, Macquarie Private Placements Group. Murray was employed by Macquarie from its acquisition of Bankers Trust Australia (which he joined in 1987) in 1999 and he held his nal position from Murray will be paid A$75,000 per month for an inde nite period and will be eligible for a discretionary bonus on completion of his interim appointment. Intoll intends to undertake a search for a permanent Chief Executive Of cer and to make offers to a number of Macquarie personnel for key and other positions between the date of this Explanatory Memorandum and the General Meetings Support Arrangements from Macquarie For up to 12 months after implementation of the Restructure Proposal, Macquarie will provide a range of transitional services to Intoll until Intoll is independently resourced. The arrangement is set out in the Intoll Transitional Services Agreement, a summary of which appears in section 8.3 of Appendix B Corporate Governance Arrangements Intoll will implement a Governance Deed that provides a number of undertakings to Intoll Securityholders around the governance arrangements in respect of Intoll. It is intended that this deed will ensure Intoll s governance arrangements mirror those of an Australian listed company. Speci cally the undertakings in this deed would ensure: Intoll will hold a general meeting for MIT(I) and MIT(II) in conjunction with the MIGIL AGM each calendar year by 30 November; the annual MIG nancial report, directors report and audit report must be considered by the AGM; Intoll Securityholders may submit written questions to the auditor; an advisory resolution on the remuneration report will be put to the AGM; MIG s auditor will be required to attend the AGM; the chair of the AGM must allow a reasonable opportunity to ask questions or comment on the management of MIG and on the remuneration report, and ask questions of the auditor; the directors of MIIML will be appointed by its shareholder in accordance with an ordinary resolution of Intoll security holders; one-third of directors of MIIML and MIGIL (or the number nearest one-third) and any other director of MIIML and MIGIL (excluding the CEO if also a director) who has held of ce for at least three years is required to retire from of ce at each AGM. There must be an election of directors each year;

83 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 79 directors of MIIML and MIGIL may be removed by an ordinary resolution of MIG Securityholders; the CEO and CFO must make certain declarations to the Intoll Board in relation to the nancial statements; the directors report must include information to reasonably allow members to make an informed assessment of Intoll s operations, nancial position, and business strategies and prospects; the annual report must include details of directors and the company secretary s quali cations and experience, and the directors attendance at board and committee meetings; the annual report must include details of directors relevant interests in Intoll Securities or issued by a related body corporate and other listed company directorships in the last three years; the directors report must include a remuneration report; and the audit report needs to include statements about non-audit services and auditor independence. Intoll will include on its website details of its corporate governance regime and a corporate governance statement will be included in Intoll s rst annual report. A summary of the corporate governance regime that will apply to Intoll is set out in section 6 of Appendix B. 4.6 Key Risks Intoll s nancial performance, distributions and the market price of Intoll Securities may be adversely affected, sometimes materially, by a number of risk factors. Intoll Securityholders should be aware that an investment in Intoll has a number of risks which are associated with investing in both toll roads and listed securities generally, some of which are beyond the control of Intoll. Accordingly, the price and value of Intoll Securities may rise or fall over any given period. The risks that may affect the performance and value of Intoll Securities are set out in detail in section 4 of Appendix B. These key investment risks include: traf c volumes; borrowings; toll prices; operations; economic conditions; and foreign exchange uctuations.

84 80 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 5: Pro le of Macquarie Atlas Roads This section gives a high level overview of MQA if the Restructure Proposal proceeds. Further details on MQA are set out in the MQA Prospectus which accompanies this Explanatory Memorandum. 5.1 Overview and corporate structure MQA will be a new double stapled structure consisting of: Macquarie Atlas Roads Limited (an Australian public company) (MQA Australia); and Macquarie Atlas Roads International Limited (an exempted mutual fund company incorporated in Bermuda) (MQA Bermuda). MQA will be created out of the reorganisation of MIG. MQA will own and manage the interests in the MQA Portfolio, as well as an interest in Transtoll, a tolling technology company. The MQA Australia Shares and MQA Bermuda Shares which together comprise an MQA Security are stapled together and cannot be traded separately. MQA Australia and MQA Bermuda will apply for admission to the Of cial List of ASX, and quotation of MQA Australia Shares and MQA Bermuda Shares on ASX (one MQA Australia Share will be quoted jointly with one MQA Bermuda Share as part of one MQA Security such that the securities in the Stapled Entities cannot be traded separately) within seven days after the date of the MQA Prospectus. The total capital of MQA will comprise million MQA Securities. As part of the Proposal, MQA Securities will be transferred to MQA Securityholders in the ratio of one MQA Security for every ve MIG Stapled Securities held on the Record Date. 5.2 Investment mandate MQA s strategy will be to deliver growth in the value of its existing Portfolio. Priorities will include active management of project operations to improve earnings, ef cient capital management and the re nancing of project debt as suitable opportunities emerge over the medium term. It is not expected that MQA will make any new asset acquisitions in the medium term. 5.3 Dividends Ordinary dividends are not anticipated in the near to medium term. Cash ows from the sale of assets, if any, will be assessed at the time for potential return to MQA Securityholders or, if considered bene cial, for reinvestment in the MQA Portfolio. 5.4 Assets, valuations and key metrics Assets within the Macquarie Atlas Roads Portfolio 100% interest in M6 Toll The M6 Toll is a 42 kilometre six-lane toll road that bypasses a congested stretch of the M6 Motorway near Birmingham, in the United Kingdom. The M6 Toll is three lanes in each direction and has nine entry and exit points. The southern end of the M6 Toll commences at the merge of the M42 and M6, two of the busiest motorways in the UK. The northern end of the M6 Toll merges with the M6 just south of Cannock, allowing motorists to avoid congestion on the M6 around Birmingham % interest in APRR Autoroutes Paris-Rhin-Rhône is the concessionaire of a toll road network located in the east of France. APRR is a listed company on the Euronext and consists of four separate concessions: Autoroutes Paris-Rhin-Rhône, Autoroutes Rhône-Alpes and the Maurice Lemaire Tunnel. The APRR motorway network is located in the heart of Western Europe and serves major business centres, including the Paris Lyon corridor that links France s two largest metropolitan areas, as well as Northern Europe (the UK, Benelux and Germany), Switzerland and Southern Europe, including Italy and the Iberian peninsula via the Rhône Valley or the Massif Central mountain range. The network also serves as a gateway to Central and Eastern Europe. 25% interest in Indiana toll road The Indiana Toll Road is a 253 kilometre, limited access, divided highway in Indiana, US. The road spans northern Indiana, from its border with Ohio to the Illinois state line near Chicago, feeding directly into two toll roads at the state lines the Chicago Skyway in the west and the Ohio Turnpike in the east.

85 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP % interest in Chicago Skyway The Chicago Skyway is a 12.5 kilometre, six lane median -divided toll road south of Chicago that links the Indiana Toll Road (I 90), from the Illinois- Indiana state line, over the Calumet River into a junction with the Dan Ryan Expressway (I 94) in the City of Chicago. The road contains 8.0 kilometres of elevated roadway pavement supported on embankment. The remaining 4.5 kilometres consists of various types of elevated bridge structures including overpasses, the Calumet River Bridge and viaduct sections. 50% estimated economic interest in Dulles Greenway The Dulles Greenway is a 22 kilometre toll road located in northern Virginia, west of Washington D.C. It runs from Dulles International Airport through Loudoun County to Leesburg. Loudon County has been one of the fastest growing counties in the United States, with signi cant housing and economic development in the corridor. Currently six lanes wide (at the Main Line Toll Plaza), the road has the potential to be expanded up to 12 lanes. Other assets Macquarie Atlas Roads will also have a 70% interest in the Warnow Tunnel in Rostock, Germany, a 50% interest in the South Bay Expressway in California, USA, and a 100% interest in Transtoll, a provider of hardware and software to the tolling industry. These businesses are valued at zero or very close to zero, and are not considered material to the portfolio Valuation of the Macquarie Atlas Roads Portfolio 30 June 2009 Natural Currency m Valuation Portfolio Weighting 30 June 2009 (%) Discount Rate Asset Interest 30 June 2009 (%) 30 June 2009 A$m M6 Toll 100% Chicago Skyway 22.5% US$ Indiana Toll Road 25% US$ Dulles Greenway 50% US$ APRR 20.37% Other 1 - Portfolio Valuation 1,450 Non Investment Balances Distribution - Net Asset Backing 1,686 Based on the value of net assets as at 30 June 2009, and the reduced number of shares on issue, the Net Asset Backing per security of MQA is $3.73.

86 82 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 5: Pro le of Macquarie Atlas Roads continued Key metrics Asset Tolling Structure Concession End Valuation A$m* Net Debt A$m* Ent. Value A$m* Gearing % Revenue A$m (1) ** EBITDA A$m (1) ** Net Debt/ EBITDA M6 Toll Mkt Based Jan ,457 2, x Chicago Skyway US CPI + Jan x Indiana Toll Road US CPI + Jun ,164 1, x Dulles Greenway US CPI + Feb x APRR % of FR CPI Dec ,048 4, x 46 years 1,449 8,650 10, % x 1. Extracted from MIG s Management Information Report for the year ended 30 June In the statutory income statement all the assets except for the M6 Toll will be accounted for using the equity accounting method which requires that the respective share of net pro t/(loss) after tax is included in the income statement Change of control provisions for Macquarie Atlas Roads Portfolio M6 Toll MQA holds its investment in M6 Toll via Macquarie Motorway Group (MMG). MMG has issued external debt of 1.03 billion to nance the M6 Toll. Under the terms of MMG s debt facilities, a Change of Control is deemed to occur if a member or members of the Macquarie Group cease to control, directly or indirectly, more than 50% of MMG, a wholly-owned subsidiary of MQA. While MMG is owned by an entity that is managed or advised by Macquarie (which is currently the case, for MQA Bermuda), it is deemed to be controlled by Macquarie Group for the purposes of this provision. If a Change of Control is triggered, individual lenders may determine that their portions of the loan are immediately due and payable, and a majority of lenders representing two-thirds of secured amounts including swap exposures may accelerate repayment of the entire loan. Acceleration of the repayment of the loans made under the debt agreements would also cause a termination event under the swap agreements. The Loan facility balance is 1.03 billion, excluding the market value of interest rate swaps. The loans otherwise mature in August In the event of a re nancing of the debt, it is unlikely that an equivalent amount of debt could be sourced in the current bank market. This could allow the lenders to: take possession of the asset; or reprice the loans, with an additional 100 basis points on the loans costing approximately A$110 million over the remaining life of the loans. No pre-emptive rights exist over MQA s investment in the M6 Toll, given MQA owns a 100% interest. Autoroutes Paris-Rhin-Rhône (APRR) Section of this document contains an analysis of the impact of a change of manager of MQA in respect of the APRR investment. MQA holds its interests in APRR through two entities jointly owned by MQA and Macquarie European Infrastructure Fund (MEIF), another Macquarie managed entity. These entities are Macquarie Autoroutes de France (MAF) and MAF Finance Sarl. MQA s interests in MAF and MAF Finance are subject to pre-emptive rights in favour of MEIF, with the exception where the transfer of the interests is to another Macquarie managed entity.

87 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 83 MAF in turn owns shares in Financière Eiffarie (FE), an entity jointly owned by Eiffage SA, a French construction company and infrastructure developer. Transfers of MAF s shares in FE are also subject to pre-emptive rights in favour of Eiffage. See the Macquarie Atlas Roads prospectus, Section 2.2 for further information concerning the APRR holding structure. Dulles Greenway MQA has an estimated 50% economic interest in the Dulles Greenway including a 50% interest in Shenandoah Greenway Corporation (SGC), the general partner of Toll Road Investors Partnership II (TRIP II), a Virginian Limited Partnership, that has day-to-day responsibility for the management and operation of the concession. This economic interest comprises a mixture of a direct limited partner interest, a loan to one of to the remaining limited partners and call options over the remaining limited partner interests. There are restrictions in respect of the assignment of MQA of the direct limited partner interest, and rights to the loan to one of the remaining limited partners and call option over the remaining limited partner interests held by MQA. The remaining 50% economic interest in Dulles Greenway is held by MIP, a Macquarie group managed vehicle. MQA and MIP each hold 50% of Dulles Greenway Partnership, through which a 100% interest in SGC and 100% economic interest in the Dulles Greenway is held. The Dulles Greenway Partnership general partnership agreement contains rights of rst offer in favour of the other partner, in the event of a disposal of an interest in Dulles Greenway Partnership, however these rights do not apply to transfers to Macquarie group members or af liates. The non-transferring partner may designate another member of the Macquarie group to exercise these rights of rst offer where applicable. The Dulles Greenway Partnership general partnership agreement also contains change of control restrictions where a change of control (including a change of manager, advisor or responsible entity or a change in voting power of 50% or more in a partner) would be deemed an intended transfer of all of a partner s partnership interest at a cash amount equal to the fair market value of such partnership interest and the provisions of the rights of rst offer in the Dulles Greenway Partnership general partnership agreement described above would become applicable. However, a change of manager of a Macquarie af liate (such as MQA) or change of ownership of more than 50% of the securities in a Macquarie af liate (such as MQA) is speci cally carved out from the change of control de nition. Indiana Toll Road The ITR concession is held by Indiana Toll Road Concession Company LLC (ITRCC), the concessionaire, pursuant to the ITR Concession Agreement. MQA has a 25% indirect interest in ITRCC. Under the ITR Concession Agreement there are restrictions on direct transfers of interests in ITRCC, or a change of control in respect of ITRCC (i.e. such that 50% or more of the direct or indirect voting or economic interests in ITRCC, or the power to directly or indirectly direct or cause the direction of management and policy of ITRCC, is transferred to a person or group of persons acting in concert). These restrictions are subject to certain exceptions (including transactions in the shares of publicly traded entities, except if it causes such entity to no longer be publicly traded, or transfers to entities under common control). The other investors in ITR are Cintra and MIP, who hold a 50% and 25% interest respectively. MQA and MIP are parties to the Indiana Toll Road Partnership general partnership agreement, through which they hold a collective 50% interest in the ITR. The Indiana Toll Road Partnership general partnership agreement contains rights of rst offer in favour of the other partner, in the event of a disposal of an interest in Indiana Toll Road Partnership, however these rights do not apply to transfers to Macquarie group members or af liates. The non-transferring partner may designate another member of the Macquarie group to exercise these rights of rst offer where applicable.

88 84 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 5: Pro le of Macquarie Atlas Roads continued The Indiana Toll Road Partnership general partnership agreement also contains change of control restrictions where a change of control (including a change of manager, advisor or responsible entity or a change in voting power of 50% or more in a partner) would be deemed an intended transfer of all of a partner s partnership interest at a cash amount equal to the fair market value of such partnership interest and the provisions of the rights of rst offer in the Indiana Toll Road Partnership general partnership agreement described above would become applicable. However, a change of manager of a Macquarie af liate (such as MQA) or change of ownership of more than 50% of the securities in a Macquarie af liate (such as MQA) is speci cally carved out from the change of control de nition. Indiana Toll Road Partnership and Cintra are parties to the Statewide Mobility Partners LLC Agreement, which indirectly owns 100% of ITRCC. Under the Statewide Mobility Partners LLC Agreement, transfers (including indirect or upstream transfers of interests) to parties that are not af liates give rise to a right of rst refusal of the non-transferring members. In such cases a member is not permitted to transfer to the third party, directly or indirectly, its interest without rst offering the interest to the other members for the same price and on the same terms offered by such third party. However, transfers (including indirect or upstream transfers of interests) to af liates are speci cally carved out from the right of rst refusal and expressly permitted. Chicago Skyway The Chicago Skyway concession is held by Skyway Concession Company LLC (SCC), pursuant to a concession agreement (CS Concession Agreement). Under the CS Concession Agreement there are restrictions on direct transfers of interests in SCC, or a change of control in respect of SCC (i.e. such that 50% or more of the direct or indirect voting or economic interests in SCC, or the power to directly or indirectly direct or cause the direction of management and policy of SCC, is transferred to a person or group of persons acting in concert). These restrictions are subject to certain exceptions for transactions in respect of publicly traded entities or transfers to entities under common control. The other investors in Chicago Skyway are Cintra and MIP, who hold a 55% and 22.5% interest respectively. MQA and MIP are parties to the Chicago Skyway Partnership general partnership agreement, through which they hold a collective 45% interest in the Chicago Skyway. The Chicago Skyway Partnership general partnership agreement contains rights of rst offer in favour of the other partner, in the event of a disposal of an interest in Chicago Skyway Partnership, however these rights do not apply to transfers to Macquarie group members or af liates. The non-transferring partner may designate another member of the Macquarie group to exercise these rights of rst offer where applicable. The Chicago Skyway Partnership general partnership agreement also contains change of control restrictions where a change of control (including a change of manager, advisor or responsible entity or a change in voting power of 50% or more in a partner) would be deemed an intended transfer of all of a partner s partnership interest at a cash amount equal to the fair market value of such partnership interest and the provisions of the rights of rst offer in the Chicago Skyway Partnership general partnership agreement described above would become applicable. However, a change of manager of a Macquarie af liate (such as MQA) or change of ownership of more than 50% of the securities in a Macquarie af liate (such as MQA) is speci cally carved out from the change of control de nition. Chicago Skyway Partnership and Cintra are parties to the Skyway Concession Company Holdings LLC (SCCH LLC) Agreement, which directly owns 100% of SCC. Under the SCCH LLC Agreement, transfers (including indirect or upstream transfers of interests) to parties that are not af liates give rise to a right of rst refusal of the non-transferring members. In such cases a member is not permitted to transfer to the third party, directly or indirectly, its interest without rst offering the interest to the other members for the same price and on the same terms offered by such third party. However, transfers (including indirect or upstream transfers of interests) to af liates are speci cally carved out from the right of rst refusal and expressly permitted.

89 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Change of control triggers in Macquarie Atlas Roads Portfolio nancing documents M6 Toll A change of control provision within the loan documents is triggered in the event that the Macquarie Group ceases to control, directly orindirectly, more than 50% of MMG, a whollyowned subsidiary of MQA. While MMG is owned by an entity that is managed or advised by Macquarie (that is MQA Bermuda), it is deemed to be controlled by Macquarie Group for the purposes of this provision. If triggered, individual lenders may determine that their portions of the loan are immediately due any payable, and a majority representing two-thirds of secured amounts including swap exposures may accelerate repayment of the entire loan. Acceleration of the repayment of the loans made under the debt agreements would also cause a termination event under the swap agreements. Autoroutes Paris-Rhin-Rhône (APRR) Under the Eiffarie Senior Facilities Agreement, the acquisition facility must be repaid immediately if Eiffarie ceases to be more than 50% owned (indirectly) by Eiffage and Macquarie managed funds. Dulles Greenway MQA s 50% interest in SGC is held through a subsidiary, MIG Investments 3 (US) LLC. The consent of the trustee for the bond nancing of the project, or of MBIA, the bond insurer, would be required for any disposal by MIG Investments 3 (US) LLC of its interests in SGC. Indiana Toll Road Under the bank debt which was used to fund the ITR acquisition, it is an event of default on the part of ITRCC if there is a default under the ITR Concession Agreement (including in respect of the change of control restrictions) or if Cintra or MIG (as de ned in the relevant agreements) collectively ceasing to hold no less than 50% of the Concessionaire, directly or indirectly, without the consent of the Administrative Agent. Chicago Skyway SCC has issued two tranches of credit wrapped bonds totalling US$1.40 billion and SCCH has issued subordinated debt of US$150 million. Under the bond debt, it is an event of default on the part of SCC if there is a default under the CS Concession Agreement (including in respect of the change of control restrictions) or a change of control of 50% or more of interests in SCC, directly or indirectly, subject to certain exceptions. Under the subordinated debt, there are restrictions on Cintra and Macquarie Group and its af liates collectively ceasing to hold at least 37.5% of SCC, directly or indirectly. 5.5 Management and corporate governance arrangements The IBCs have determined that MQA will be managed by Macquarie under new management arrangements. The IBCs have determined different management fee arrangements in comparison to MIG s current agreement, to re ect the high level of active capital management that will be required and the reduced amount of capital under management. Full details of the new management arrangements for MQA are set out in section 11.4 of this Explanatory Memorandum Board of Directors Interim MQA Board As a consequence of the corporate structure, MQA will have two separate Boards of Directors; one for the MQA Australia and one for the Bermudian company, MQA Bermuda. These boards will act together and will co-operate in accordance with the Cooperation Deed. The MQG Boards will be the key decision making bodies for MQA. The MQA Australia Board will have four directors each with broad industry experience. From implementation of the Restructure Proposal two of the four members of the MQA Australia Board will be independent directors (one will be nonindependent and non-executive, while the other will be a Macquarie appointed executive director). All of the directors of MQA Australia, including John Roberts, will stand for re-election on a rotational basis as required by the Listing Rules.

90 86 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 5: Pro le of Macquarie Atlas Roads continued On implementation of the Restructure Proposal the MQA Australia Board will comprise: Mark Johnson (Chairman, Non-Independent Director); David Mortimer (Independent Director); David Walsh (Independent Director); and John Roberts (Non-Independent Director, Macquarie nominee). The MQA Bermuda Board has four Directors each with broad industry experience. It is a requirement of the MQA Bermuda Bye-Laws that no more than two directors may be resident in the same jurisdiction (other than Bermuda) and a majority of the Directors must not be resident for tax purposes in a jurisdiction other than Bermuda. All of the directors of MQA Bermuda, other than the MQA Australia appointee, will stand for re-election on a rotational basis as required by the Listing Rules. The directors of MQA Bermuda are: Robert Mulderig (Chairman, Independent Director); Jeffrey Conyers (Independent Director); Peter Dyer (Non-Independent Director); and Mark Johnson (Non-Independent Director, MQA Australia common director) MQA Boards transition Following the implementation of the Restructure Proposal, the board of MQA will undergo a period of transition and refreshment. These transition arrangements are designed to ensure continuity from MIG to MQA, whilst also ensuring a refreshment of talent and compliance with the ASX guidance note on independence of directors. For MQA: On implementation of the Restructure Proposal, Mr John Roberts (an Executive Director of Macquarie Group) will be invited to join the MQA Australia Board as Macquarie s nominee. Mr Roberts appointment will be on a casual vacancy basis and he will stand for re-election at the rst Annual General Meeting of MQA Australia company which is anticipated to be held in October Mr David Mortimer intends to resign from the board and will be replaced with a suitably quali ed independent director within six months of implementation of the Restructure Proposal. Mr Mark Johnson has indicated that he intends to retire from the MQA Australia Board at or before the rst Annual General Meeting of MQA Australia An independent director will replace Mr Johnson as Chairman. Following these changes, the MQA Australia Board will comprise four directors, being three independent directors, including an independent Chairman, and Mr John Roberts; Mark Johnson has also indicated that he intends to retire from the MQA Bermuda Board by no later than the rst Annual General Meeting of MQA Bermuda. It is anticipated that David Walsh will replace Mark Johnson as the MQA Australia common director on the MQA Bermuda Board. Following these changes, the MQA Bermuda Board will comprise four directors, being three independent directors, including an independent Chairman, and Dr Peter Dyer. As per the MQA Corporate Governance statement set out in section 5.5.3, all directors will stand for re-election on a three year rotational cycle Management Team MQA will be managed by Macquarie under the MQA Management Agreements. Consequently the key management of MQA will be Macquarie employees. Macquarie has indicated that the following personnel will be designated senior management of MQA: Peter Trent (Chief Executive Of cer) has been appointed Chief Executive Of cer of MQA. Peter is currently a Division Director with Macquarie, having held senior advisory and fund management roles for Macquarie in both Europe and in Australia over the past ten years. With over 25 years of infrastructure and capital markets experience covering a broad range of major investment transactions, principally within the transportation sectors, Peter is uniquely placed to lead MQA through a necessary period of restructure and re nance over the medium term.

91 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 87 Mary Nicholson (Chief Financial Of cer) has been appointed Chief Financial Of cer of MQA. Mary is the current Chief Financial Of cer of MIG, a position she has held for more than four years. Mary is currently a Division Director with Macquarie Capital, and is a chartered accountant. Mary has been involved with MIG since joining Macquarie in 2002, prior to which she worked for PricewaterhouseCoopers in London and Sydney Corporate governance arrangements MQA will include on its website details of its corporate governance regime and a corporate governance statement will be included in MQA rst annual report. A summary of the corporate governance regime that applies to MQA is set out in section 6 of the MQA Prospectus. 5.6 Key risks MQA nancial performance, distributions and the market price of MQA Securities may be adversely affected, sometimes materially, by a number of risk factors. MQA Securityholders should be aware that an investment MQA has a number of risks which are associated with investing in both toll roads and listed securities generally, some of which are beyond the control of MQA. Accordingly, the price and value of MQA Securities may rise or fall over any given period. The risks that may affect the performance and value of MQA Securities are set out in detail in section 5 of the MQA Prospectus. These key investment risks include: traf c volumes; borrowings; toll prices; operations; economic conditions; foreign exchange uctuations; post-demerger price risk; and liquidity of MQA Securities. Autoroutes Paris-Rhin-Rhône, France

92 88 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING Westlink M7, Australia

93 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 6: Financial Information for Securityholders Introduction This section contains nancial information relating to the Restructure Proposal assuming that: for MIG, the Restructure Proposal is not implemented; and for Intoll and MQA, completion of the Restructure Proposal as described in section 3. MIG Financial Information The following nancial information relating to MIG, assuming the Restructure Proposal is not implemented, has been presented: summary pro forma statutory income statement for the year ended 30 June 2009; summary pro forma statutory balance sheet as at 30 June 2009 (together with the summary pro forma statutory income statement for the year ended 30 June 2009, the MIG Pro Forma Historical Financial Information); pro forma proportionate earnings for the year ended 30 June 2009; pro forma aggregated operating cash ows for the year ended 30 June 2009 (together with the pro forma proportionate earnings for the year ended 30 June 2009, the MIG Pro Forma Management Information); and assumptions and notes relevant to the above. Intoll Financial Information The following nancial information relating to Intoll, assuming the Restructure Proposal is implemented, has been presented: summary pro forma statutory income statement for the year ended 30 June 2009; summary pro forma statutory balance sheet as at 30 June 2009 (together with the summary pro forma statutory income statement for the year ended 30 June 2009, the Intoll Pro Forma Historical Financial Information); pro forma proportionate earnings for the year ended 30 June 2009; pro forma aggregated operating cash ows for the year ended 30 June 2009 (together with the pro forma proportionate earnings for the year ended 30 June 2009, the Intoll Pro Forma Management Information); and assumptions and notes relevant to the above. MQA Financial Information The following nancial information relating to MQA, assuming the Restructure Proposal is implemented, has been presented: summary pro forma statutory income statement for the year ended 30 June 2009; summary pro forma statutory balance sheet as at 30 June 2009 (together with the summary pro forma statutory income statement for the year ended 30 June 2009, the MQA Pro Forma Historical Financial Information); pro forma proportionate earnings for the year ended 30 June 2009; pro forma aggregated operating cash ows for the year ended 30 June 2009 (together with the pro forma proportionate earnings for the year ended 30 June 2009, the MQA Pro Forma Management Information); and assumptions and notes relevant to the above. Important Notes The MIG Pro Forma Historical Financial Information, the Intoll Pro Forma Historical Financial Information and the MQA Pro Forma Historical Financial Information (collectively the Pro Forma Historical Financial Information) has been reviewed by PricewaterhouseCoopers Securities Ltd whose Investigating Accountant s Report relating to this information is included in section 7. The Pro Forma Historical Financial Information has been prepared in an abbreviated form. It does not contain all the disclosures that are usually provided in an annual report prepared in accordance with the Corporations Act.

94 90 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 6: Financial Information for Securityholders continued 6.2 Basis of preparation (a) Statutory Financial Information The Pro Forma Historical Financial Information set out in this section is derived from MIG s audited Financial Report for the year ended 30 June 2009 and in relation to MQA from the audited accounts of the respective toll road assets for the year ended 31 December 2008, has been prepared on the basis set out in Section 6.3 and is prepared in accordance with Australian Accounting Standards (AASBs). (b) Non Statutory Management Information The MIG Pro Forma Management Information, Intoll Pro Forma Management Information and the MQA Pro Forma Management Information set about below is derived from the MIG 30 June 2009 Management Information Report and has been prepared on the basis set out in section 6.4. MIG s Management Information Report is not subject to audit or review. Copies of MIG s audited Financial Report and MIG s Management Information Report for the year ended 30 June 2009 can be found on MIG s website at and include the signi cant policies used in their preparation Accounting consequences of the Restructure Proposal (a) Intoll MIG had previously designated its non controlled toll road assets as investments in nancial assets at fair value through pro t or loss. As Intoll is effectively a continuation of MIG, it will continue to account for its investments in 407 ETR and Westlink M7 on this basis. As these assets are mature in nature this continues to be an appropriate measurement basis. The Restructure Proposal will result in the payment to Macquarie of A$50 million plus an amount equal to the net assets of MIIML on completion of the sale of MIIML for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG, and the payment to Macquarie of an advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll for nancial advisory services in connection with the Restructure Proposal. While the allocation of the A$50 million is not yet complete it is likely that the majority will be expensed in the income statement of Intoll. The advisory fee will also be expensed by Intoll. Pro forma adjustments have been re ected in the pro forma income statement shown in Section Intoll will record a one-off gain on the In- Specie Distribution of the MQA securities to MIG Securityholders. This gain will be re ected in the statutory income statement of Intoll for the year ended 30 June 2010, but has not been re ected in the Intoll pro forma income statement for the year ended 30 June 2009 on the basis that it is non recurring. Intoll will acquire MIIML, the responsible entity of MIT(I) and MIT(II), for an amount equal to the net assets of MIIML at the time of completion of the sale. As the net assets of MIIML will comprise of cash deposits this transaction has no net impact on the pro forma nancial information.

95 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 91 (b) MQA MQA on its initial adoption of accounting policies intends to apply equity accounting for its investments in non controlled toll road assets over which MQA has signi cant in uence. Application of equity accounting for its associates will result in MQA s controlled and non controlled toll road assets being recognised on a consistent basis under the historical cost convention. This policy will likely result in lower volatility in MQA s results than under fair value accounting due to the stage of development of its portfolio of toll road assets. As toll road concessionaires typically report accounting losses during their early stages of development (due primarily to non cash depreciation and amortisation), MQA will recognise its share of losses from its non controlled toll road assets in earlier years. These equity accounted losses will result in a reduction to the carrying value of MQA s investments in associates recorded on the balance sheet. Consequently it is expected that this will result in MQA having a net liability position on its balance sheet, given that the consolidated M6 Toll reports a net liability position. This is an outcome on application of accounting standards and does not in itself re ect any going concern or solvency issues in MQA as it does not impact on the cash ows of MQA. The debt borrowed by each of MQA s toll road assets is limited-recourse debt i.e. project nance, where MQA provides no guarantee in relation to its equity contributions and is not required to provide further funding for the losses made by the toll road assets. The lenders only have recourse to the cash ows of the toll road asset. MQA has no corporate level debt and has suf cient working capital to carry out its stated objectives. The securities in MQA will be distributed in specie to security holders, MQA will be demerged from MIG and this structure will be a stapled structure. MQA will have a 31 December year end, consistent with the majority of its investments in toll road assets. 6.3 Pro Forma Historical Financial Information The Pro Forma Historical Financial Information set out below is based on the following assumptions: MIG Pro Forma Historical Financial Information assumes that the Restructure Proposal is not implemented. The Intoll Pro Forma Historical Financial Information and the MQA Pro Forma Historical Financial Information assumes that the Restructure Proposal is implemented as follows: For the purposes of the income statements the Restructure Proposal is assumed to be implemented on 1 July 2008 for Intoll and MQA. For the purposes of the balance sheets, the Restructure Proposal is assumed to be implemented on 30 June An allocation of the income and expenses and assets and liabilities has been made to either Intoll or MQA on the following basis: Any income or expenses and assets or liabilities directly attributable to a toll road asset were allocated to Intoll or MQA depending on ownership of the toll road asset post implementation of the Restructure Proposal. Items relating to corporate balances which were not directly attributable to a toll road asset continue to be recognised by the entity which was party to the transaction. Assets divested during the year ended 30 June 2009, comprising MIG s interest in Lusoponte and a 25% interest in Westlink M7, have been excluded for the full year ended 30 June 2009 from all of the pro forma income statements presented in the table at

96 92 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 6: Financial Information for Securityholders continued Summary Pro Forma Statutory Income Statements MIG Pro forma year ended 30 June 2009 (i) $ m MQA pro forma year ended 30 June 2009 $ m Intoll pro forma year ended 30 June 2009 (x) $ m Revenue and other income from continuing activities Toll revenue Revaluation (loss)/gain from continuing activities (ii) (2,383.8) - (199.1) Share of pro t/(losses) of associates (ii) - (275.2) - Interest income (iii) Other income (iv) 34.9 (4.0) - Total revenue and other income from continuing activities (2,190.3) (144.4) (195.5) Operating expenses from continuing activities Finance costs (183.3) (183.3) - Asset operating expenses (109.9) (109.9) - Corporate operating expenses (28.2) (6.5) (14.1) (v) Restructure Proposal Transaction costs (vi) (7.0) - (7.0) Management Fee (vii) (36.9) (16.3) - Facilitation and Co-Operation Payment (viii) - - (50.0) Reimbursement of corporate operating expenses (v) Advisory Fee (ix) - - (28.3) Total operating expenses from continuing activities (365.3) (316.0) (91.6) Loss from continuing activities before income tax bene t/(expense) (2,555.6) (460.4) (287.1) Income tax bene t/(expense) (xi) (0.2) (6.4) Loss from continuing activities after income tax bene t/(expense) (2,432.3) (460.6) (293.5) Loss attributable to: MIG/MQA/Intoll Securityholders (1,747.5) (371.3) (293.5) Minority interests (684.8) (89.3) - (2,432.3) (460.6) (293.5) The above Pro Forma Historical Income Statements should be read in conjunction with the accompanying notes.

97 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 93 MQA on its initial adoption of accounting policies intends to apply equity accounting for its investments in non controlled toll road assets over which it has signi cant in uence. MIG previously accounted for these investments as investments in nancial assets at fair value through the income statement. As a consequence MQA s pro forma results are signi cantly different to those previously reported by MIG. Refer to note ii below for further details. Notes: i) MIG s reported income statement for the year ended 30 June 2009 has been adjusted as follows: a. Revaluation amounts have been adjusted to re ect the closing ownership interest in toll road assets at 30 June b. Transaction costs associated with the Restructure Proposal have been recognised. ii) Post the Restructure MQA will account for its investments in nancial assets as equity accounted investments which requires that the share of associates pro t/(loss) after tax be recorded in the income statement. As detailed in section toll road concessionaries typically report accounting losses during their early stages of development and the proforma results for MQA re ect $275.2 million of losses, being MQA s share of the results of its equity accounted investments. MIG previously accounted for these investments as investments in nancial assets at fair value through the income statement and reported changes in the fair value of MQA s investments in its income statement. The use of fair value accounting can produce volatility in the income statement because increases and decreases in asset values are recorded as pro ts or losses. In the year ended 30 June 2009 MIG recognised $2.2 billion relating to losses on revaluations of MQA s associate investments. As MQA will no longer account for its associates as investments in nancial assets at fair value through the income statement these changes have been excluded from the pro forma MQA results and have been replaced by the equity accounted results which for the year ended 30 June 2009 were $275.2 million on a pro forma basis. The difference between this amount and the $2.2 billion fair value loss is re ective of the different basis of accounting rather than a change in underlying performance of the toll road assets. As noted in section the balance sheet carrying value of the investments will be reduced in the future by the equity accounting losses and consequently it is expected that this will result in MQA having a net liability position on its rst year end balance sheet. As detailed in section MQA will be required to perform a notional purchase price allocation which will likely increase the quantum of accounting losses re ected in the income statement, but does not impact on the cash ows of MQA. At the date of this document the purchase price allocation has not yet been undertaken. Refer to section for further details. iii) Pro forma interest income for Intoll and MQA re ects the following: a. Pro forma opening cash positions for Intoll and MQA of $80 million and $293 million respectively b. An assumed average interest rate of 4.5% for the year ended 30 June 2009 based on the allocated cash balances to Intoll and MQA. iv) An adjustment has been made to MQA and Intoll s other income to exclude foreign exchange gains/(losses) on cash balances denominated in foreign currencies on the basis that they are non recurring. v) An adjustment has been made to Intoll corporate operating expenses to re ect the costs which will be incurred as a standalone listed entity. Management costs of $14.1 million have been estimated which include staff related expenses associated with the standalone management of Intoll. Certain costs incurred by Intoll during its rst 12 months will be recoverable from Macquarie. Refer to section 8 for further details. The above re ects a full year s corporate operating expenses and the reimbursement of an estimated $7.8 million from Macquarie being the amount recoverable in the rst 12 months.

98 94 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 6: Financial Information for Securityholders continued vi) MIG will incur transaction costs of approximately $7 million if the Restructure Proposal is not implemented. These costs relate to legal, accounting and advisory expenses which will be expensed in the income statement for the year ending 30 June 2010, but have been re ected as a pro forma adjustment for both MIG and Intoll, being effectively a continuation of MIG. vii) Management Fee adjustments relate to the following: a. Intoll will no longer pay a management fee post the Restructure Proposal. b. MQA after implementation of the Restructure Proposal will be managed by Macquarie based on a new management agreement. An adjustment has been made to re ect the estimated base management fees that would have been payable if this agreement had been in place from 1 July Refer to section 3 for further details, including sensitivities to the management fees payable. In calculating this amount the following assumptions have been made: i. The same discount applied to the net asset backing of MQA as was the average discount to the net asset backing of MIG for the period 2 January 2009 to 30 October 2009, resulting in an assumed market capitalisation of $814.2 million. ii. The fee is calculated for a full 12 month period. No performance fee is assumed to be payable. viii) The payment of A$50 million is the amount payable to Macquarie for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG. The allocation of this amount to its respective components is not yet complete but it is likely that the majority would be recorded in the income statement. There will also be a payment of approximately A$25.6 million for the shares in MIIML. This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal. ix) Macquarie will be paid an advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll for nancial advisory services in connection with the Restructure Proposal. Macquarie s nancial advisory role excludes advice on arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other). The estimated fee is A$28.3 million (assuming a post implementation 30 day VWAP trading price for Intoll of $1.25 per Intoll Security). Refer to section 3 for further details and sensitivities if the Intoll 30 day VWAP is not $1.25. x) Intoll will record a gain on the in specie distribution of the MQA Securities to MIG Securityholders. This gain will be recorded in the statutory income statement of Intoll for the year ending 30 June 2010, but has not been re ected in the Intoll pro forma income statement for the year ended 30 June 2009 on the basis that it is non recurring. An estimation of this gain based on the 30 June 2009 fair values is $1.7 billion. This gain will be recalculated based on the fair values at the date the Restructure Proposal is implemented. xi) While MQA and Intoll are recording losses from continuing activities before income tax, deferred tax assets have not been recognised for the tax losses and consequently the income tax bene t/(expense) reported is minimal.

99 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Summary Pro Forma Statutory Balance Sheets The table below sets out consolidated balance sheets of MIG as reported at 30 June 2009 and Pro Forma MIG at 30 June 2009 assuming that the Restructure Proposal is not implemented. In addition the table sets out the Intoll and MQA Pro Forma Balance Sheets at 30 June 2009 assuming the Restructure Proposal was effective on 30 June MIG reported as at 30 June 2009 Adjustments Pro forma MIG as at 30 June 2009 MQA pro forma as at 30 June 2009 Intoll pro forma as at 30 June 2009 $ m $ m $ m $ m $ m Current assets Cash and cash equivalents (226.2) Receivables and other assets Total current assets (226.2) Non-current assets Investments in nancial assets 5, , ,642.7 Investments in associates , Property, plant and equipment 1, , , Tolling concessions Total non-current assets 6, , , ,642.7 Total assets 7,302.9 (226.2) 7, , ,726.1 Current liabilities Distribution payable (226.2) Payables (39.5) - (39.5) (30.2) (9.3) Derivative nancial instruments (63.8) - (63.8) (63.8) - Current tax liabilities (6.3) - (6.3) (0.5) (5.8) Total current liabilities (335.8) (109.6) (94.5) (15.1) Non-current liabilities Payables (184.5) - (184.5) (184.5) - Interest-bearing nancial liabilities (2,512.1) - (2,512.1) (2,512.1) - Derivative nancial instruments (4.9) - (4.9) (4.9) - Deferred tax liabilities (105.7) - (105.7) (105.7) - Total non-current liabilities (2,807.2) - (2,807.2) (2,807.2) - Total liabilities (3,143.0) (2,916.8) (2,901.7) (15.1) Net assets 4, , ,711.0 Equity Securityholders interest Contributed equity 3, , , ,341.0 Retained pro ts and reserves (1,653.9) Total securityholders interest 4, ,011.8 (329.7) 3,711.0 Equity attributable to equity holders of MQA Australia (as minority interests) Other minority interests Total equity 4, , ,711.0

100 96 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 6: Financial Information for Securityholders continued The net asset position of MQA is sensitive to movements in the fair value of its investments in associates between 30 June 2009, being the date of the pro forma, and the date the Restructure Proposal is implemented. Refer to section 6.5 for sensitivities on the carrying value of MQA s investments. For example, were revenue forecasts for all of MQA s investments to be 5% lower, MQA would have net liabilities of $237.4 million on a pro forma basis at 30 June Considered in isolation this would also result in MQA having net liabilities at the implementation date of the Restructure Proposal, but does not in itself re ect any going concern or solvency issues in MQA as it does not impact on cash ows of MQA Adjustments to the pro forma balance sheets The pro forma historical balance sheets have been derived from the audited nancial statements of MIG for the year ended 30 June 2009 and adjusted for the following: Pro Forma MIG at 30 June 2009 Distributions (i) Year ended 30 June 2009 The MIG cash position has been adjusted to re ect the payment of the distribution on 14 August 2009 of $226.2 million which was funded from cash and resulted in a reduction of the Distribution Payable to $Nil. (ii) Year ending 30 June 2010 An interim distribution will be paid to MIG/Intoll Securityholders in February 2010 irrespective of the Restructure Proposal. As this relates to the rst half of the nancial year ending 30 June 2010, no adjustment has been made in the MIG pro forma balance sheet. However, this payment has been included in the cash reconciliation below. Cash allocation between Intoll and MQA The table below reconciles the pro forma MIG cash balance to the pro forma opening cash balances of MQA and Intoll. Cash and cash equivalents $ m MIG proforma Interim distribution February 2010 (45.2) Restructure Proposal Transaction costs (7.0) Restructure Proposal: Special distribution (226.2) Facilitation and Co-Operation Payment refer section 3 for further details (50.0) Advisory Fee refer section 3 for further details (28.3) MIG proforma adjusted for Restructure Proposal Cash allocation: MQA Intoll

101 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 97 The actual cash balances that will be allocated to MQA and Intoll will be based on the cash balance as at the date the Restructure Proposal is implemented and therefore will include cash from operations from 1 July 2009 to the date the Restructure Proposal is implemented. Pro forma MQA at 30 June 2009 Transfer of assets The transfer of assets and entities resulting from the Restructure Proposal occurs prior to the In Specie Distribution and while all relevant assets and entities are under the control of MIT(II), being the accounting parent of MIG. It is likely that the transfer will represent transactions under common control and as such will be excluded from the scope of AASB 3 Business Combinations. While AASB 3 has not been applied for the purposes of the pro forma MQA balance sheet, the application of AASB 3 would be expected to result in a similar outcome. Stapling AASB 3: Business Combinations requires that an acquirer be identi ed for the stapled group. MQA Bermuda has been deemed to be the accounting acquirer of the stapled group and as such will prepare consolidated MQA accounts, consolidating MQA Australia from the date of stapling. The stapling represents a business combination under AASB 3, but as the net assets of MQA Australia are already re ected at amounts that are not materially different from their fair values in MIG s 30 June 2009 balance sheet no further purchase price accounting adjustments are necessary. The interests of MQA Securityholders in MQA Australia (and its subsidiaries) are shown as minority interests in the income statement and balance sheet of MQA. Other minority interests are interests in partly owned subsidiaries which are not held directly or indirectly by MQA Bermuda or MQA Australia. Equity Accounting MQA applies the equity method of accounting to its investments in associates in accordance with AASB 128: Investments in Associates. The equity method of accounting involves the recognition of MQA s share of its associates post-acquisition pro ts or losses after tax in the income statement and its share of postacquisition movements in reserves. When MQA s share of losses in an associate equals its investment in the associate, MQA does not recognise further losses, unless it has obligations or made payments on behalf of the associate. Upon commencement of equity accounting MQA will be required to perform a notional purchase price allocation for these investments. For the purposes of the pro forma income statement the notional allocation has been made based on estimated values with the difference between the cost of the investment and the net assets allocated to the tolling concession. This amount has then been notionally amortised with the additional amortisation re ected in the income statement. The nal determination of fair values will not be nalised prior to the issue of this Explanatory Memorandum. Once this allocation is nalised it will likely increase the amount of losses that are recorded in the income statement. Pro Forma Intoll as at 30 June 2009 Consolidation As Intoll is effectively a continuation of MIG the existing parent of MIG, MIT(II), will continue to be the parent of Intoll for the purposes of preparing consolidated nancial reports. The securities in MQA will be distributed in specie to MIG Securityholders and MQA will be demerged from MIG.

102 98 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 6: Financial Information for Securityholders continued 6.4 Pro Forma Management Information This section includes the Pro Forma Management Information which provides information supplementary to the Pro Forma Historical Financial Information. This information has been derived from the MIG Management Information Report for the year ended 30 June 2009 and is based on the policies detailed in that report. Intoll and MQA intend to continue to provide information supplementary to their Annual Reports Pro Forma Proportionate Earnings Detailed in the table below are the pro forma proportionate earnings for MIG assuming that the Restructure is not implemented. In addition the pro forma proportionate earnings for MQA and Intoll are presented assuming that the Restructure took effect from 1 July MIG pro forma year ended 30 June 2009 (i) MQA pro forma year ended 30 June 2009 Intoll pro forma year ended 30 June 2009 $ m $ m $ m Operating revenue 1, Operating expenses (312.9) (263.3) (49.6) EBITDA Asset maintenance capex (51.7) (45.4) (6.4) Asset net interest expense (426.1) (340.0) (86.1) Asset net tax expense (45.9) (45.9) - Proportionate earnings from road assets Corporate net interest income (ii) Corporate net expenses (62.2) (22.8) (iii) (14.1) (iv) Proportionate earnings The above Pro Forma Proportionate Earnings should be read in conjunction with the accompanying notes and MIG s Management Information Report for the year ended 30 June 2009.

103 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 99 Notes: i) MIG s reported proportionate earnings for the year ended 30 June 2009 have been adjusted as follows: a. To exclude the gain on sale of road assets of $308.9 million on the basis of its non recurring nature b. The closing ownership interest in toll road assets at 30 June 2009 is assumed for the full year ended 30 June 2009 c. The proportionate earnings of all assets denominated in foreign currencies have been restated using the rate of exchange as at 30 June The exchange rate assumptions are: 30 June 2009 Canadian Dollar Euro Pound Sterling United States Dollar iv) Corporate expenses for Intoll have been adjusted to re ect post Restructure management arrangements. As detailed in section 3 the estimate of corporate costs post the Restructure are $14.1 million. Certain costs incurred by Intoll during its rst 12 months will be recoverable from Macquarie. Refer to section 8 for further details. The above re ects a full years management costs and does not assume any amounts are recoverable even though in the rst 12 months certain costs will be recovered from Macquarie. v) Costs relating to the Restructure Proposal have been excluded on the basis that they are non recurring. ii) iii) Pro forma interest income for MQA and Intoll re ects: a. An allocation of the cash balance between Intoll and MQA of $80 million and $228 million respectively. The MQA corporate cash balance and interest income excludes balances relating to the M6 Toll which are included for statutory purposes b. An assumed average interest rate of 4.5% for the year ended 30 June 2009 based on the allocated cash balances to Intoll and MQA Corporate expenses for MQA have been adjusted to re ect the impact of the revised management agreements with Macquarie as detailed in section 8.

104 100 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 6: Financial Information for Securityholders continued Pro Forma Aggregated Operating Cash Flows Detailed in the table below is the MIG pro forma aggregated cash ows and the MQA and Intoll pro forma aggregated cash ows. MIG pro forma year ended 30 June 2009 MQA pro forma year ended 30 June 2009 Intoll pro forma year ended 30 June 2009 $ m $ m $ m Cash ow received from assets 407 ETR M6 Toll Financière Eiffarie (APRR) Westlink M7 (i) Indiana Toll Road Chicago Skyway Total cash ow received from assets Other operating cash ows Interest received on corporate cash balances (iii) 3.6(iii) Responsible entity and manager base fees paid (iv) (46.3) (16.3) - Other receipts and payments (25.4) (6.5) (14.1) (iv)(v) Total operating cash ows The above Pro Forma Operating Cash ows should be read in conjunction with the accompanying notes. The cash ows received from assets are historic and future cash ows may differ signi cantly. Notes: i) During the year ended 30 June 2009 MIG sold its interest in Westlink M7 to Western Sydney Road Group (WSRG). MIG retains an effective 25% interest in Westlink M7 through its 50% ownership of WSRG. Cash ows received from Westlink M7 have been adjusted for the closing ownership position of 25% for the full year ended 30 June 2009 in both the MIG and Intoll cash ows above. ii) Cash ows received from assets are re ected at the historical rate of exchange at the time of the transaction and have not been restated. iii) The interest income for MQA and Intoll has been adjusted as follows: a. An allocation of the cash balance between Intoll and MQA of $80 million and $228 million respectively. The MQA corporate cash balance and interest income excludes balances relating to the M6 Toll which are included for statutory purposes b. Assumed average interest rate of 4.5% for the year ended 30 June 2009 based on the allocated cash balances to Intoll and MQA iv) MQA payments re ect the new management arrangements. A management fee will no longer be payable by Intoll. An adjustment has been made to the cash ows for MQA to re ect the new management arrangements and for Intoll to re ect the standalone costs. Refer to section for further details on the calculation of these adjustments. It is assumed that MQA management fees are settled in cash and not reinvested in MQA securities. v) Certain costs incurred by Intoll during its rst 12 months will be recoverable from Macquarie. Refer to section 8 for further details. The above re ects a full year s management costs cash ows and does not assume any amounts are recoverable even though in the rst 12 months certain costs will be recovered from Macquarie. vi) Costs relating to the Restructure Proposal have been excluded on the basis that they are non recurring and will be funded from the cash balances of MIG.

105 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Valuations and Net Asset Backing Per Security Detailed in the table below are the valuations of the assets as extracted from the MIG Management Information Report for the year ended 30 June Valuation 30 June June 2009 Asset MQA $ m Intoll $ m 407 ETR - 3,284 M6 Toll Financière Eiffarie (APRR) Westlink M7-359 Dulles Greenway Chicago Skyway Indiana Toll Road 98 - Other 1 - Portfolio valuation 1,450 3,643 Non-investment Balances Net asset valuation 1,686 3,711 Number of stapled securities on issue (#) 452,346, ,261,732,048 Net asset backing per security ($) The MQA net asset backing re ects the 1:5 in specie distribution ratio (subject to rounding) The following matters are reconciling items between the amount re ected in the Pro Forma Balance Sheet for MQA and the above Portfolio Valuation: i) MIG s/mqa s interest in the M6 Toll is carried at historical cost and does not re ect the above valuation ii) MIG s/mqa s interest in Financiere Eiffarie (APRR) is held through Macquarie Autoroutes de France (MAF) and MAF Finance Sarl (MAF Finance), companies owned 50% plus one share by MIG/MQA and 50% less one share by Macquarie European Infrastructure Fund (MEIF). For statutory reporting purposes the entire interest held by MAF and MAF Finance is consolidated with MEIF s share recognised as minority interests. The above valuation re ects MIG s/mqa s effective interest and excludes the component allocated to minority interests. The portfolio valuation sensitivity at 30 June 2009 to movements in revenue forecasts and foreign exchange rates is disclosed in the table below. 5% lower 5% higher MQA Intoll MQA Intoll Change in valuation of portfolio due to movement in revenue forecasts (259.6) (249.1) % appreciation in A$ 5% depreciation in A$ MQA Intoll MQA Intoll Change in valuation of portfolio due to movement in foreign exchange rates (72.5) (164.2) The above sensitivities for MQA include changes in the valuation of the M6 Toll, which is carried at historical cost in the statutory balance sheet, and excludes MEIF s interest in APRR which is recognised in the statutory balance sheet. Excluding the M6 Toll and including MEIF s interest in APRR, the sensitivity of MQA s investments in associates, as reported on its statutory balance sheet, to 5% lower revenue forecasts and a 5% appreciation in the Australian Dollar were decreases of $329.6 million and $74.3 million. Sensitivities to 5% higher revenue forecasts and a 5% depreciation in the Australian Dollar were increases of $344.8 million and $74.3 million.

106 102 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 6: Financial Information for Securityholders continued 6.6 MIG s valuation approach Valuation Policy The values of MIG s road asset investments are determined by the valuation framework adopted by the directors of MIIML and MIGIL in conjunction with the requirements under Australian Accounting Standards. This policy therefore requires MIG to value its assets based on a sale price that could be achieved between knowledgeable, willing parties taking into account current market conditions at valuation date. Discounted cash ow (DCF) analysis is the methodology applied in the valuation framework, as it is the generally accepted methodology for valuing toll road assets and the basis upon which market participants have derived valuations for speci c transactions. This methodology has been consistently applied in all periods since listing in December Discounted cash ow analysis is the process of estimating future cash ows that are expected to be generated by an asset and discounting these cash ows to their present value, by applying an appropriate discount rate. The valuations will be internally produced by Intoll. External or independent valuations will not be sought as a matter of course, however the valuations derived from the discounted cash ow analysis will be periodically benchmarked to other sources, such as recent market transactions Valuation Assumptions A large number of variables are incorporated in the valuation models, including: revenue (mainly derived from traf c and toll price forecasts) operating and capital expenditure for the asset macroeconomic factors such as in ation, interest rates and foreign exchange rates discount rates the capital structure used to nance the asset the tax position of the asset. Forecasts for a number of these variables are made by MIG in conjunction with various third party experts Discount Rates Forecast equity cash ows are discounted using a discount rate for each asset that is individually determined by the MIIML and MIGIL Boards and re ects the uncertainty associated with each road s cash ows. Discount rates, which re ect the return required by direct investors in an asset, have historically been made up of the risk free rate plus a premium re ecting the uncertainty in the relevant cash ows (which is a re ection of the inherent risk at an asset given its stage of development and other asset speci c factors). In the recent dislocated market, this relationship no longer holds. Risk free rates are at or close to historic lows, but due to a number of factors, direct investors required returns have not fallen in line with the fall in risk free rates. These factors include: Falling economic activity (impacting views on future performance); Speci c concerns arising from the tightening of credit and the combined effect of this and the contraction of the economy; and Newer unlisted direct and fund investors operating with hurdle returns that render low bond rates irrelevant. Whilst the assets within MIG s portfolio are not externally or independently valued, the valuations derived from the discounted cash ow analysis are periodically benchmarked to other sources, such as recent market transactions, to ensure that the valuations are providing a reliable measure Net Asset Backing per MIG Security MIG revalues its investments every six months, with these valuations then used to calculate MIG s Net Asset Backing (NAB) per MIG Security. The NAB is simply the total Net Asset Value (derived by the valuation process) divided by the number of MIG Securities on issue.

107 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Chicago Skyway, United States

108 18 December 2009 The Directors Macquarie Infrastructure Investment Management Limited As responsible entity of Macquarie Infrastructure Trust (I) and Macquarie Infrastructure Trust (II) No 1 Martin Place Sydney NSW 2000 Macquarie Infrastructure Group International Limited Rosebank Centre 11 Bermudiana Road Pembroke HM 08 Bermuda PricewaterhouseCoopers Securities Ltd ACN ABN Holder of Australian Financial Services Licence No Darling Park Tower Sussex Street GPO BOX 2650 SYDNEY NSW 1171 DX 77 Sydney Australia Telephone Facsimile Dear Directors Subject: Investigating Accountant s Report and Financial Services Guide We have prepared this report on certain financial information of Macquarie Infrastructure Trust (I) ( MIT (I) ), Macquarie Infrastructure Trust (II) ( MIT (II) ), Macquarie Infrastructure Group International Limited ( MIGIL ) which together comprise a stapled group (Macquarie Infrastructure Group MIG ) for inclusion in a explanatory memorandum dated on or about 18 December 2009 (the Explanatory Memorandum ) to be issued in relation to the reorganisation of MIG into two separate ASX listed groups being Intoll and Macquarie Atlas Roads (the Restructure Proposal). Expressions defined in the Explanatory Memorandum have the same meaning in this report. The nature of this report is such that it should be given by an entity which holds an Australian Financial Services licence under the Corporations Act 2001 (C th). PricewaterhouseCoopers Securities Ltd, which is wholly owned by PricewaterhouseCoopers, holds the appropriate Australian financial services licence. This report is both an Investigating Accountant s Report, the scope of which is set out below, and a Financial Services Guide, as attached at Appendix A. Background MIG is a tripled stapled structure consisting of MIT (I), MIT (II) and MIGIL. Macquarie Infrastructure Investment Management Limited ( MIIML ) is the responsible entity of MIT (I) and MIT (II). The reorganisation of MIG will result in the creation of two separate ASX listed groups ( Intoll and Macquarie Atlas Roads ( MQA )). Intoll will cease to be managed by the Macquarie Capital Group Limited. MQA will be managed by the Macquarie Capital Group Limited.

109 Scope You have requested PricewaterhouseCoopers Securities Ltd to prepare this Investigating Accountant s Report (the Report ) in relation to the following information: (a) the summary pro forma statutory balance sheet of MIG as at 30 June 2009; (b) the summary pro forma statutory balance sheet of Intoll as at 30 June 2009; (c) the summary pro forma statutory balance sheet of MQA as at 30 June 2009; (the Pro Forma Balance Sheets ) as set out in Sections and Appendix B Section ; (d) the summary pro forma statutory income statement of MIG for the year ended 30 June 2009; (e) the summary pro forma statutory income statement of Intoll for the year ended 30 June 2009; and (f) the summary pro forma statutory income statement of MQA for the year ended 30 June 2009, (the Pro Forma Income Statements as set out in Section and Appendix B Section 3.3.1) (the Pro Forma Balance Sheets and the Pro Forma Income Statements collectively the Pro Forma Historical Financial Information ) This Report has been prepared for inclusion in the Explanatory Memorandum. We disclaim any assumption of responsibility for any reliance on this Report or on the Pro Forma Historical Financial Information to which this Report relates for any purposes other than the purpose for which it was prepared. Scope of review of Pro Forma Historical Financial Information The Pro Forma Historical Financial Information set out in Sections 6.3.2, 6.3.1, Appendix B Section and Section of the Explanatory Memorandum has been derived from the audited financial statements of MIG and in respect of MQA, the audited financial statements of the associates. Those financial statements were audited by PricewaterhouseCoopers that issued an unqualified audit opinion on them, except for the Warnow Tunnel which is not material to the summary pro forma statutory income statement of MQA. The Pro Forma Historical Financial Information incorporates such pro forma transactions and adjustments as the respective Directors of MIIML and MIGIL (collectively the MIG Directors ) in respect of the MIG Pro Forma Historical Financial Information and the Intoll Pro Forma Historical Financial Information and the MIG Directors and Directors of MQA Australia and MQA Bermuda (collectively the MQA Directors ) in respect of the MQA Pro Forma Historical Financial Information (2)

110 considered necessary to reflect the impact of the reorganisation of MIG and the operations of Intoll and MQA going forward. The basis of the Pro Forma Historical Financial Information including the pro forma transactions and adjustments are set out in Sections 6.3, 6.3.1, , and Appendix B Section The MIG Directors are responsible for the preparation of the MIG Pro Forma Historical Financial Information and Intoll Pro Forma Historical Financial Information and the MIG Directors and MQA Directors for the MQA Pro Forma Historical Financial Information, including the determination of the pro forma transactions and adjustments. We have conducted our review of the Pro Forma Historical Financial Information in accordance with Australian Auditing Standards applicable to review engagements. We made such inquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances including: a review of the derivation of the Pro Forma Historical Financial Information from the audited financial information of MIG as at 30 June 2009 and in respect of MQA, the audited financial statements of the associates for the year ended 31 December 2008 a review of work papers, accounting records and other documents a review of the adjustments made to the Pro Forma Historical Financial Information a review of the assumptions used to compile the Pro Forma Historical Financial Information a comparison of consistency in application of the recognition and measurement principles under Australian Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies adopted by MIG, Intoll and MQA disclosed in Sections and Appendix B of the Explanatory Memorandum, and enquiries of the MIG Directors and the MQA Directors, management and others. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion on the Pro Forma Historical Financial Information. Limitation of scope of review of the MQA Pro Forma Historical Financial Information The MIG Directors and MQA Directors are responsible for the preparation of the MQA Pro Forma Historical Financial Information. AASB 128 Investments in Associates requires that in applying the equity method the difference between the reporting date of the associate and that of the investor shall be no more than 3 months. In preparing the MQA Pro forma Historical Financial Information, however, the audited financial statements of the associates for the year ended 31 December 2008 have been used as the basis for calculating the equity accounted net profit/ (loss) after tax for the year ended 30 June 2009 respectively. This approach has been adopted as no audited or reviewed financial statements have previously being prepared by the associates at 30 June, given MQA did not exist on a historical basis and MIG did not apply the equity method for these investments. (3)

111 In addition, only a preliminary notional purchase price allocation has been undertaken for the purposes of calculating the share of equity accounted results. Accordingly, the historical pro forma income statements for MQA do not necessarily reflect the equity accounted results that would be required if financial statements for the year ended 30 June 2009 had been prepared by each associate or a final notional purchase price allocation had been undertaken. We are unable to quantify the possible effects on the MQA summary pro forma statutory income statement. Review statement on Pro Forma Historical Financial Information Based on our review of the Pro Forma Historical Financial Information, which is not an audit, except for the impact, if any, resulting from the limitation of scope described above, nothing has come to our attention which causes us to believe that: the Pro Forma Historical Financial Information have not been properly prepared on the basis of the pro forma transactions and adjustments the pro forma transactions and adjustments do not form a reasonable basis for the Pro Forma Historical Financial Information the Pro Forma Historical Financial Information, as set out in Sections 6.3.1, 6.3.2, Appendix B Section and of the Explanatory Memorandum, does not present fairly: (g) the summary pro forma statutory balance sheet of MIG as at 30 June 2009; (h) the summary pro forma statutory balance sheet of Intoll as at 30 June 2009; (i) the summary pro forma statutory balance sheet of MQA as at 30 June 2009; (j) (k) (l) the summary pro forma statutory income statement of MIG for the year ended 30 June 2009; the summary pro forma statutory income statement of Intoll for the year ended 30 June 2009; and the summary pro forma statutory income statement of MQA for the year ended 30 June 2009, in accordance with the recognition and measurement principles prescribed under Australian Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies adopted by the MIG, Intoll or MQA respectively as disclosed in Sections and Appendix B of the Explanatory Memorandum. (4)

112 Subsequent events Apart from the matters dealt with in this Report, and having regard to the scope of our Report, to the best of our knowledge and belief no material transactions or events outside of the ordinary course of business of MIG, Intoll and MQA have come to our attention that would require comment on, or adjustment to, the information referred to in our Report or that would cause such information to be misleading or deceptive. Independence or disclosure of interest PricewaterhouseCoopers Securities Ltd does not have any interest in the outcome of the Restructure of MIG other than the preparation of this Report and the performance of certain due diligence procedures for which normal professional fees will be received. Liability PricewaterhouseCoopers Securities Ltd has consented to the inclusion of this Report in the Explanatory Memorandum in the form and context in which it is included. The liability of PricewaterhouseCoopers Securities Ltd is limited to the inclusion of this Report in the Explanatory Memorandum. PricewaterhouseCoopers Securities Ltd makes no representation regarding, and has no liability for, any other statements or other material in, or any omissions from, the Explanatory Memorandum. Financial Services Guide We have included our Financial Services Guide as Appendix A to our Report. The Financial Services Guide is designed to assist retail clients in their use of any general financial product advice in our Report. Yours faithfully Clara Cutajar Authorised Representative PricewaterhouseCoopers Securities Ltd (5)

113 APPENDIX A PRICEWATERHOUSECOOPERS SECURITIES LTD FINANCIAL SERVICES GUIDE This Financial Services Guide is dated 18 December About us PricewaterhouseCoopers Securities Ltd (ABN , Australian Financial Services Licence no ) ("PwC Securities") has been engaged by Macquarie Infrastructure Investment Management Limited as responsible entity of Macquarie Infrastructure Trust (I) and Macquarie Infrastructure Trust (II) and Macquarie Infrastructure Group International Limited which together comprise a stapled group, Macquarie Infrastructure Group ( MIG ), to provide a report in the form of an Investigating Accountant's Report ( IAR ) in relation to the Pro Forma Historical Financial Information (the Report ) for inclusion in the Explanatory Memorandum dated 18 December You have not engaged us directly but have been provided with a copy of the Report as a retail client because of your connection to the matters set out in the Report. 2. This Financial Services Guide This Financial Services Guide ("FSG") is designed to assist retail clients in their use of any general financial product advice contained in the Report. This FSG contains information about PwC Securities generally, the financial services we are licensed to provide, the remuneration we may receive in connection with the preparation of the Report, and how complaints against us will be dealt with. Financial services we are licensed to provide Our Australian financial services licence allows us to provide a broad range of services, including providing financial product advice in relation to various financial products such as securities, interests in managed investment schemes, derivatives, superannuation products, foreign exchange contracts, insurance products, life products, managed investment schemes, government debentures, stocks or bonds, and deposit products. 3. General financial product advice The Report contains only general financial product advice. It was prepared without taking into account your personal objectives, financial situation or needs. You should consider your own objectives, financial situation and needs when assessing the suitability of the Report to your situation. You may wish to obtain personal financial product advice from the holder of an Australian Financial Services Licence to assist you in this assessment. (6)

114 4. Fees, commissions and other benefits we may receive PwC Securities charges fees to produce reports, including this Report. These fees are negotiated and agreed with the entity who engages PwC Securities to provide a report. Fees are charged on an hourly basis or as a fixed amount depending on the terms of the agreement with the person who engages us. Our fees are outlined in section of the Explanatory Memorandum. Directors or employees of PwC Securities, PricewaterhouseCoopers, or other associated entities, may receive partnership distributions, salary or wages from PricewaterhouseCoopers. 5. Associations with issuers of financial products PwC Securities and its authorised representatives, employees and associates may from time to time have relationships with the issuers of financial products. For example, PricewaterhouseCoopers may be the auditor of, or provide financial services to, the issuer of a financial product and PwC Securities may provide financial services to the issuer of a financial product in the ordinary course of its business. PricewaterhouseCoopers is the auditor of MIG and Macquarie Group Limited and will be the auditors of Intoll and MQA. 6. Complaints If you have a complaint, please raise it with us first, using the contact details listed below. We will endeavour to satisfactorily resolve your complaint in a timely manner. In addition, a copy of our internal complaints handling procedure is available upon request. If we are not able to resolve your complaint to your satisfaction within 45 days of your written notification, you are entitled to have your matter referred to the Financial Ombudsman Service ("FOS"), an external complaints resolution service. FOS can be contacted by calling You will not be charged for using the FOS service. 7. Contact Details PwC Securities can be contacted by sending a letter to the following address: Clara Cutajar Authorised Representative Darling Park Tower Sussex Street SYDNEY NSW 2000 GPO Box 2650 SYDNEY NSW 1171 (7)

115 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING Section 8: Macquarie Group interests MACQUARIE INFRASTRUCTURE GROUP 111 This section sets out Macquarie Group s interests with respect to MIG and how these are affected by the Restructure Proposal. Further analysis of the bene ts Macquarie will receive from the Restructure Proposal is set out in sections 3.4.5, and Overview of current arrangements with Macquarie Management of MIG by Macquarie Macquarie currently provides management services to MIG through two entities, MIIML and MCFEL. MIIML is the responsible entity of MIT(I) and MIT(II). MCFEL is the adviser to MIGIL pursuant to the MIGIL Advisory Deed. MIIML and MCFEL collectively manage the day to day operations of MIG under the supervision and instruction of the MIG Boards. MIIML and MCFEL are entitled to quarterly management fees consisting of base fees (calculated at 1.25% per annum of the market value of MIG up to $3 billion and 1% per annum of market value of funds in excess of $3 billion) and performance fees payable at 30 June in the event that certain returns are achieved. In addition, MIG s current management arrangements provide for additional fees for other services such as underwriting, broking and hedging provided on a transactional basis by Macquarie Group if approved under MIG s related party protocols. The Corporations Act and MIGIL Advisory Deed provide for the removal or termination of MIIML and MCFEL respectively. These rights of removal or termination are summarised in section 8.9. If either MIIML or MCFEL are removed or terminated the second and third performance quarterly fee instalments will be crystallised and paid on termination, together with base fees accrued to the date of termination MIG s major Securityholder As at 11 December 2009 : (a) Macquarie had a Principal Holding of million MIG Securities (approximately 14.0% of MIG Securities on issue). This Principal Holding is held by Macquarie Capital Group Limited ABN ; and (b) Macquarie had a relevant interest in million MIG Securities (approximately 17.6% of MIG Securities on issue). This includes the Principal Holding. The above percentages have been determined on the basis that as at 11 December 2009 MIG had 2,261,732,048] MIG Securities on issue Board structure Macquarie Group entities currently have the right to appoint directors to the boards of MIG. Under the MIGIL Bye-Laws, MCFEL holds the MIGIL A Special Share (and has rights under the MIGIL Advisory Deed) which entitles it to appoint the managing director and other director(s) constituting up to 50% of the MIGIL Board. MIIML, as responsible entity of MIT(II), has been issued with the MIGIL B Special Share which entitles it to appoint director(s) constituting up to 25% of the MIGIL board while the entities are stapled. Macquarie undertook from December 2008 to exercise its director appointment rights in respect of MIIML and MIGIL under the A and B Special Shares in accordance with a MIG Securityholder vote and subject to certain conditions. Macquarie s rights to appoint directors fall away if it is not the responsible entity and manager of the MIG entities

116 112 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 8: Macquarie Group interests continued Other Macquarie Group involvement A number of other Macquarie Group entities provide services to MIG, including: MBL which is a member of the Macquarie Group provides services to MIG for transactional banking. Also from time to time, MIG places funds on deposit with MBL and uses MBL for nancial exchange services. All services are provided on arm s length; MBL is the counterparty to 575m million of the interest rate swaps held by Eiffarie at market rates; MBL is also the counter party to 785m of forward starting interest rate swaps held by Eiffarie at market rates; Macquarie has been appointed by Eiffarie to advise APRR on debt rating issues (for which APRR pay a market based annual fee of 500,000) and on debt raising (for which APRR pay a market based fee of 0.25% of the nominal value of debt issued); Macquarie has been appointed to provide advisory services in respect of restructuring MIG s interests in Transtoll (for which Macquarie will be paid a fee of A$150,000); There is a contract in place between MAF and Macquarie Capital (Europe) Limited, Paris Branch for use of its registered address Total fees paid to Macquarie Total fees paid by MIG to Macquarie Group (including management fees, fees relating to the buy backs, nancial advisory fees and debt advisory fees) in the nancial year ending 30 June 2009 were $45.7 million. For the nancial year ended 30 June 2009, no performance fees were payable to Macquarie and no instalments of performance fees relating to previous periods became payable. From 1 July 2009 to the date of this Explanatory Memorandum, MIG has paid management fees of $8.5 million, and MIG will continue to pay management fees (estimated at $9.8 million based on the Net Investment Value of MIG by reference to the 10 day VWAP of MIG Securities ending on 30 November 2009 and MIG s cash balance as at 30 November 2009) to Macquarie until the implementation of the Restructure Proposal Impact of the Restructure Proposal Following implementation of the Restructure Proposal, a number of the arrangements between Macquarie and MIG will change. Set out below is the impact of and the Restructure Proposal on the current arrangements between Macquarie and MIG. 8.2 Payments to Macquarie in connection with the Restructure Proposal If the Restructure Proposal is completed, Macquarie will receive an aggregate amount estimated to be approximately A$103.9 million as compensation in connection with the implementation of the Restructure Proposal. The actual amount may be higher or lower and comprises the payments described below. Macquarie will receive: a cash payment of A$50 million for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG; and a payment of approximately A$25.6 million for the shares in MIIML. This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal. This includes: assisting Intoll with establishing an independent operation, including assisting in transfer of certain personnel, provision of premises, reimbursement of Incremental Costs (including all employment costs) and other services over a 12 month period; facilitating a method of implementation for the Restructure Proposal which minimises the potential for pre-emptive rights and consent rights in asset level shareholder agreements being triggered; granting a licence of Macquarie intellectual property rights to Intoll; and transferring MIIML, the responsible entity of MIT(I) and MIT(II) to Intoll.

117 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 113 Macquarie s obligation to provide transitional services or to reimburse Incremental Costs ceases if there is a Change of Control Event in relation to Intoll. Advisory Fee MIG has appointed Macquarie as nancial adviser for advice and assistance in relation to the Restructure Proposal and will pay Macquarie a fee of 1.0% of the market capitalisation of Intoll for nancial advisory services in connection with the Restructure Proposal. Macquarie s nancial advisory role does not extend to advice on arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other) on which Grant Samuel advised the IBCs. That fee is approximately A$28.3 million (assuming a post implementation 30 day VWAP trading price for Intoll of $1.25 per Intoll Security). 8.3 Impact of the Restructure Proposal on Macquarie s relationship with Intoll Management of Intoll (formerly MIG) and management fees Following the implementation of the Restructure Proposal, Intoll will be a standalone group which employs its own management team and manages its own costs (excluding the rst 12 months where Macquarie will provide transitional services support and reimburse Incremental Costs of Intoll (subject to a limit of A$8 million) estimated at $7.8 million. Intoll will not be making any ongoing management fee payments to Macquarie if the Restructure Proposal is implemented. Macquarie s obligation to provide transitional services or to reimburse Incremental Costs ceases if there is a Change of Control Event in relation to Intoll. Currently MIG has priority over toll road investment opportunities provided to the Macquarie Capital specialist funds business that meet its investment criteria (see section ). Once MIG is restructured into two different entities, the MIG priority will be lost Securityholding Immediately after the implementation of the Restructure Proposal, Macquarie will have the same relevant interest in Intoll as it had in MIG securities immediately prior to the implementation. The aggregate market price for Intoll Securities and MQA Securities after implementation of the Restructure Proposal may exceed the current MIG Security price. If this occurs, Macquarie would bene t in the same capacity as other MIG Securityholders Board Following the implementation of the Restructure Proposal, Macquarie will no longer have any special rights to appoint directors to the Intoll Boards. The transitional arrangements for the Boards of Intoll are detailed in section Impact of the Restructure Proposal on Macquarie s relationship with Macquarie Atlas Roads Management of Macquarie Atlas Roads Following the implementation of the Restructure Proposal, MQA will be managed by the MQA Manager, a wholly owned subsidiary of Macquarie. Currently MIG has priority over toll road investment opportunities provided to the Macquarie Capital specialist funds business that meet its investment criteria (see section ). Once MIG is restructured into two different entities, the MIG priority will be lost. A priority right in respect of new opportunities would not offer any signi cant bene t to MQA. MQA s strategy will be to deliver growth in the value of the initial MQA Portfolio. Priorities will include active management of project operations to improve earnings, ef cient capital management and the re nancing of project debt as suitable opportunities emerge over the medium term.

118 114 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 8: Macquarie Group interests continued Management Fees The differences between the aggregate amount of fees payable to Macquarie under the current arrangements and the fees proposed to be paid in connection with its management of MQA following the implementation of the Restructure Proposal are as follows: Base Fee differences MIG vs MQA Currently Proposed Difference Rate 1.25% of fund Market Value 1 2.0% of fund Market Value 1 Maximum potential increase on this tier of market capitalisation of A$7.5m per annum. 1 Method of calculating Market Value of Fund Volume weighted average market capitalisation over last 10 ASX trading days of each quarter plus fund level borrowings and rm commitments for future investments less cash or cash equivalents (Net Investment Value) 1 Assuming a market capitalisation of between zero and A$1 billion. Volume weighted average market capitalisation over the last 10 trading days of each quarter. The potential difference in fees that this change represents is unknown as the level of borrowings, rm commitments and cash in MQA will vary over time. Performance Fee differences MIG vs MQA There are no differences in relation to the calculation and payment methodology of the performance fee of MQA in comparison to the current MIG arrangements. There is a requirement for MIG and MQA to make up any underperformance de cit before future performance fees can be paid. MIG currently has an accumulated underperformance de cit equivalent of A$2.12 per stapled security which in market capitalisation terms represents approximately A$4.8 billion. This underperformance de cit will not be carried forward to MQA Security holding Immediately after implementation of the Restructure Proposal, Macquarie will have the same relevant interest in MQA (in percentage terms) as it had in MIG Securities immediately prior to implementation of the Restructure Proposal Board On implementation of the Restructure Proposal, the MQA Directors will invite Macquarie to nominate a director to the MQA Australia Board. Macquarie intends to nominate John Roberts. The transitional arrangements for the Boards of MQA are detailed in section 5.5.1

119 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Impact of the Restructure Proposal on the payment of management fees Macquarie will continue to receive management fees as described in section above until completion of the Restructure Proposal. If completion of the Restructure does not occur at the end of a calendar quarter, Macquarie will receive a pro rata amount equal to any management fee which would be payable to Macquarie if the existing management agreements were terminated on that day. The payment of this additional amount is designed to put the parties in the same position as if management fees had continued to be paid up to implementation of the Restructure Proposal. Post-completion of the Restructure, Macquarie will no longer receive any management fees in relation to Intoll. It will receive management fees in relation to MQA as describe in section above. 8.6 Other arrangements with Macquarie Group Banking services MIG currently uses MBL for transactional banking and for depository services. These services are provided at arm s length, on normal commercial terms and in accordance MIG s related party policy. Intoll has not made any decision as to whether they will continue these arrangements in the future. For the year ended 30 June 2009, MBL received approximately $29,694 in fees from MIG. For the year ended 30 June 2009, MIG received A$993,224 in interest from MBL Foreign exchange From time to time, MIG utilises foreign exchange services provided by Macquarie Group entities. These services are provided at arm s length, on normal commercial terms and in accordance MIG s related party policy Other Macquarie currently has a right of rst refusal as nancial adviser under certain conditions in accordance with select MQA assets partnership agreements which is expected to stay on foot. In addition, from time to time, there are agreements between Macquarie and asset level entities for the secondment of employees. Consistent with MIG s current arrangements, all related party transactions or services must be on arms length terms and approved by the MQA independent directors only. Other than set out in this section 8, there are no arrangements between MIG, Intoll, MQA and Macquarie Group as at the date of this Explanatory Memorandum. Any other arrangements between Intoll and Macquarie in the future will be assessed by Intoll on a case-by-case basis.

120 116 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 8: Macquarie Group interests continued 8.7 Summary of ongoing arrangements with Macquarie Group The table below summarises the arrangements between MIG and Macquarie Group, the impact of the Restructure Proposal on those arrangements and which arrangements will continue. Payment to Macquarie due to the Restructure Proposal Management fees Transitional services Current position Not applicable Quarterly base fee of 1.25% of MIG Net Investment Value and entitlement to performance fee subject to MIG achieving certain target returns Not applicable Impact of Restructure Proposal Impact of Restructure Proposal Intoll MQA If the Restructure Proposal is implemented, Macquarie will be paid an amount estimated to be approximately A$103.9 million as compensation in connection with the implementation of the Restructure Proposal comprising: A$50 million for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG (see section 8.2 for further details). 1% of the post Restructure Proposal market capitalisation of Intoll for nancial advisory services in connection with the Restructure Proposal. Macquarie s nancial advisory role excludes advice on the arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other hand) (see section 8.2). This fee is estimated to be approximately A$28.3 million (assuming a post implementation 30 day VWAP trading price for Intoll of $1.25 per Intoll Security). a payment of approximately A$25.6 million for the shares in MIIML. This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal. Pre Completion: Management Pre Completion: Management base fees payable up until base fees payable up until completion. completion. Post Completion: Cease on completion. Macquarie will provide Intoll with transitional services support for a period of 12 months post completion of the Restructure Proposal. Macquarie s obligation to provide transitional services or to reimburse Incremental Costs ceases if there is a Change of Control Event in relation to Intoll. Post Completion: Base fee of 2% of Atlas Road s Market Value up to A$1 billion, plus 1.25% per annum of Market Value of MQA between A$1 billion and A$3 billion, plus 1% per annum of Market Value of MQA in excess of A$3 billion. Performance fee calculation methodology is unchanged and is subject to MQA outperforming its benchmark MIG s current performance fee de cit will not be carried forward to MQA. Not applicable

121 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 117 Security holding Transactional banking Board appointment rights Priority over toll road opportunities Current position Principal Holding in MIG of 14.0% Relevant interest of approximately 17.6% Ongoing Rights as a holder of A Special Share (and has rights under the MIGIL Advisory Deed) to appoint up to 50% of the MIGIL Board. Rights as holder of B Special Share which entitles it to appoint director(s) constituting up to 25% of the MIGIL board while the entities are stapled. Macquarie appoints all of the directors of MIIML, a Macquarie subsidiary. MIG has priority over toll road investment opportunities provided to the Macquarie Capital specialist funds business that meet its investment criteria Impact of Restructure Proposal Intoll Immediately after the implementation of the Restructure Proposal, Macquarie will have the same relevant interest in Intoll Securities as it had in MIG Securities immediately prior to implementation. No decision has been made as to whether these arrangements will continue in the future Macquarie will no longer have any special rights to appoint directors to the Intoll Boards. Going forward, the new directors of Intoll, who join as part of the transition process will do so on a casual basis and as such will stand for election as the rst Intoll annual general meeting scheduled for October Beyond this date, at each annual general meeting, at least one third of the directors of Intoll Board will stand for reelection. No priority. Impact of Restructure Proposal MQA Macquarie will receive its pro rata portion of the 1:5 in-specie distribution (subject to rounding) of MQA Securities. Immediately after the implementation of the Restructure Proposal, Macquarie will have the same relevant interest in MQA Securities in percentage terms as it had in MIG Securities immediately prior to the implementation. No change. Macquarie will invited to appoint a director to the MQA Australia Board as a casual vacancy. Macquarie intends to nominate John Roberts. Going forward, the new directors of MQA who join as part of the transition process will be do so on a casual basis and as such will stand for re-election at the rst MQA Annual General Meeting which must be held by the end of May Beyond this date, at each Annual General Meeting at least one director will stand for re-election and each director will be subject to re-election on a 3 year rotational basis. No priority. 1. Based on Macquarie s relevant interest in MIG Securities as at 11 December These holdings may change between that date and implementation of the Restructure Proposal.

122 118 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 8: Macquarie Group interests continued 8.8 Summary of fees payable to Macquarie under existing management and advisory arrangements Fees under the MIT(I) and MIT(II) Constitutions Base Fee Payable quarterly. Base fee = 1.25% per annum of the market value of the funds; and 1% per annum of market value of the funds in excess of $3 billion. Market value of the funds is the volume weighted average market capitalisation over last 10 ASX trading days of each quarter plus fund level borrowings and rm commitments for future investments less cash or cash equivalents. Base fees payable may be reinvested in MIG securities if MIIML s non-executive directors approve and at a price being the volume weighted average trading price over the last 10 ASX trading days before the fee becomes payable. Performance Fee Payable annually at June 30 if earned. Performance Fee is to be divided into three equal instalment amounts. Payable in the event that MIG s accumulation index outperforms the S&P/ASX 300 Industrials Accumulation Index in any nancial year having made up for underperformance in previous nancial years. Performance fee = 15% of the dollar amount of out performance and is in three equal instalments. The second and third year instalments are only paid if MIG continues to outperform the index on a cumulative period over the two and three year period. Any underperformance de cit from prior periods must be made up before future performance fees can be earned. If MIIML is replaced as the responsible entity of either MIT(I) or MIT(II), any relevant future second and third performance fee instalments will be crystallised and paid on termination. Performance fees payable may be reinvested in MIG securities if MIIML s non-executive directors approve and at a price being the volume weighted average trading price over the last 10 ASX trading days before the fee becomes payable Fees under MIGIL Advisory Deed Base Fee Payable quarterly. Base Fee = 1.25% per annum of market value of the funds up to $3 billion; or 1% per annum of market value of the funds in excess of $3 billion. Market value of the funds is the volume weighted average market capitalisation over last 10 ASX trading days of each quarter plus fund level borrowings and rm commitments for future investments less cash or cash equivalents. Base fees payable may be reinvested in MIG securities if MIIML s non-executive directors approve and at a price being the volume weighted average trading price over the last 10 ASX trading days before the fee becomes payable. Performance Fee Payable annually at June 30 if earned. Performance Fee is to be divided into three equal instalment amounts. Payable in the event that MIG s accumulation index outperforms the S&P/ASX 300 Industrials Accumulation Index in any nancial year having made up for underperformance in previous nancial years. Performance fee = 15% of the dollar amount of out performance and is in three equal instalments. The second and third year instalments are only paid if MIG continues to outperform the index on a cumulative period over the two and three year period.

123 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 119 Any underperformance de cit from prior periods must be made up before future performance fees can be earned. If the advisory agreement with MCFEL is terminated, any future second and third performance fee instalments will be crystallised and paid on termination. Performance fees payable may be reinvested in MIG securities if MIIML s non-executive directors approve and at a price being the volume weighted average trading price over the last 10 ASX trading days before the fee becomes payable Other services provided by Macquarie Group companies Additional market based fees are payable for other services such as nancial advisory, underwriting, broking and hedging provided on a transactional basis by Macquarie Group companies, and approved under MIG s related party policy. 8.9 Summary of termination rights under existing management and advisory arrangements Termination rights under the MIT(I) and MIT(II) Constitutions MIIML may be removed as responsible entity without cause if approved by a MIG Securityholder resolution. The resolution must be passed by at least 50% of votes cast at meeting by Securityholders entitled to vote. MIIML and its associates (including Macquarie) may vote their securities on the resolution. In the case of the trusts, ASIC or a court may replace the responsible entity where there are solvency issues or members are likely to suffer a loss because the responsible entity has breached the Corporations Act. Pursuant to the Corporations Act the responsible entity of the trusts can retire if it rst convenes a unitholders meeting to explain its reason for retirement and to enable unitholders to vote on a resolution to choose a new responsible entity. If MIIML is removed as responsible entity of the trusts any future second and third performance fee instalments will be crystallised and paid on termination together with base fees accrued to the date of termination. There are no other termination fees payable Termination rights under MIGIL Advisory Deed The directors of MIGIL may terminate the appointment of MCFEL as advisor if a resolution is passed by more than 50% of votes cast at a meeting by MIG Securityholders entitled to vote. MCFEL, as advisor, can also be removed for cause being where it is in liquidation, ceases to carry on a business, ceases to hold any authorisation necessary to lawfully perform its obligations or a manager, administrator or other similar of cial (other than a receiver) is appointed to MCFEL or any of its assets. MCFEL can only be removed as advisor on a vote if the responsible entity of the trusts is also removed. Macquarie s rights to appoint directors fall away if it is removed as advisor. MCFEL, as advisor, may resign by giving written notice. Base fees and performance fees accrued to the date of termination are payable.

124 120 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 9: Tax information for Securityholders Chicago Skyway, United States

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132 130 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 10: Securityholder approvals 10.1 General General Meetings The Directors of MIIML and MIGIL have convened General Meetings to be held at Heritage Ballroom, Westin Hotel, No. 1 Martin Place, Sydney on 22 January 2010 at 11am (Sydney time) Purpose of the General Meetings The purpose of the General Meetings is to consider and, if thought t, pass the Resolutions. An explanation of the Resolutions is set out below. Section 10.2 rstly considers the Required Resolutions. Section 10.3 examines Resolutions being considered only at the meeting of MIT(I), section 10.4 examines the Resolutions being considered only at the meeting of MIT(II) and sections 10.5 and 10.6 examines Resolutions being considered only at the meeting of MIGIL Entitlement to attend and vote at the General Meetings MIIML (as responsible entity of MIT(I) and MIT(II)) and MIGIL have determined under Regulation of the Corporations Act that all registered holders of MIG Securities as at 7.00pm Sydney time on 20 January 2010 are eligible to vote Voting and required majority All Required Resolutions will be passed if at least 50% of the votes cast on the Required Resolutions are voted in favour of the Required Resolutions. Resolution 2 in each of the MIT(I) and MIT(II) Notices of Meeting and Resolution 2 in the MIGIL Notice of Meeting will be passed if at least 75% of the votes cast on the resolution are voted in favour of the resolution. Macquarie is not entitled to vote on the Additional Resolutions relating to MIT(I) and MIT(II), although Macquarie is entitled to vote on the Additional Resolution of MIGIL. Associates of Macquarie will not vote on these resolutions to the extent they are precluded from doing so by the Corporations Act or their votes would be required to be disregarded under the Listing Rules Resolution 1 for each of MIT(I), MIT(II) and MIGIL Required Resolutions Required Resolutions Resolution 1 for the meetings of each of MIT(I), MIT(II) and MIGIL are the Required Resolutions. Resolution 1 for the meetings of each of MIT(I), MIT(II) and MIGIL authorises the responsible entity of each of MIT(I) and MIT(II) and MIGIL to implement the Restructure Proposal. Resolution 1 is an ordinary resolution which requires at least 50% of the votes cast on the resolution (either in person or by proxy) to be in favour. The voting restrictions in respect of Resolution 1 are set out in the Notices of Meetings. In summary, any votes cast by Macquarie and its associates on the Required Resolutions of MIT(I) and MIT(II) will be disregarded. Macquarie does not intend to vote on the Required Resolutions of MIGIL. The approval of Resolution 1 is sought for all purposes including, in the case of MIT(I) and MIT(II), section 208 (as modi ed by section 601LC) of the Corporations Act MIT(I) and MIT(II) Related party bene t Chapter 2E of the Corporations Act, as modi ed by Part 5C.7, regulates the provision of nancial bene ts out of scheme property to related parties by responsible entities of registered schemes. In particular, section 208 (as modi ed by section 601LC) of the Corporations Act prohibits a responsible entity of a registered scheme or its related parties from giving a nancial bene t out of scheme property to a related party without member approval, unless it occurs pursuant to an exception under the Corporations Act. A responsible entity will be permitted to give a nancial bene t to a related party if: it obtains the approval of its members in the way set out in sections 217 to 227 of the Corporations Act; and it gives the bene t within 15 months after the approval.

133 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 131 Since MIIML, as responsible entity of MIT(I) and MIT(II), is currently owned by Macquarie, Macquarie is a related party of MIIML under the Corporations Act. Since MIIML, as responsible entity of MIT(I) and MIT(II) (together with MIGIL) is to provide bene ts to Macquarie under the Restructure Proposal, MIG Securityholder approval is being sought under Chapter 2E. The related party to whom the Required Resolutions would permit nancial bene ts to be given is Macquarie. The nature of the nancial bene ts to be provided by MIG to Macquarie (being the payments to Macquarie) in respect of the Restructure Proposal are set out in section Under the Restructure Proposal, Macquarie will be paid an amount estimated to be approximately A$103.9 million as compensation in connection with the implementation of the Restructure Proposal comprising: A$50 million for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG; an advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll for nancial advisory services in connection with the Restructure Proposal. Macquarie s nancial advisory role excludes advice on the arrangements between Macquarie Group (on the one hand) and MIG, Intoll and MQA (on the other hand). This advisory fee is estimated to be approximately A$28.3 million (assuming a post implementation 30 day VWAP trading price for Intoll of A$1.25 per Intoll Security); and a payment of approximately A$25.6 million for the shares in MIIML. This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal. The recommendation of each Independent Director in relation to the Required Resolutions is set out in section 3.7. The interests of each MIG director in the outcome of the Required Resolutions are set out in section The opportunity cost and bene t foregone of paying Macquarie A$50 million plus an amount equal to the net assets of MIIML on completion of the sale of MIIML for agreeing to and facilitating the Restructure Proposal and a 1% advisory fee is the cost or bene t foregone of spending this cash in other ways or returning it to MIG Securityholders through, for example, a buyback program. The reasons for the Restructure Proposal and the bene ts that the MIG Independent Directors believe will accrue if the Restructure Proposal proceeds are set out in section The taxation consequences of the Restructure Proposal are set out in section 9. Other than as set out in this document (including in the Independent Expert s Report), there is no other information known to MIG or any of its directors that is reasonably required by MIG Securityholders in order to decide whether it is in the best interests of MIG Securityholders to pass the Required Resolutions.

134 132 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 10: Securityholder approvals continued 10.3 MIT(I) Resolution 2 Amendment of MIT(I) Constitution In addition to the Required Resolutions, Resolution 2 authorises the amendment of the MIT(I) Constitution. As the Restructure Proposal is not conditional on Resolution 2 being approved, the Restructure Proposal will be implemented if Resolution 1 for each of the MIT(I), MIT(II) and MIGIL meetings is approved regardless of whether this resolution is approved Overview of proposed amendments to the MIT(I) Constitution The proposed amendments are intended to update the MIT(I) Constitution and ensure it is consistent with the constitution of MIT(II) and the MIGIL Bye-laws. The proposed amendments include: reducing the fees payable to MIIML from base and performance fees (as discussed in section 3.4.6) to a fee determined on a costs plus basis; updating the stapling provisions and importing stapling provisions of the Stapling Deed into the MIT(I) Constitution; including provisions to allow future reorganisations of MIT(I) including stapling additional securities, unstapling and restapling securities, and other restructures such as top hat or exchange restructures including power to separately deal with foreign Intoll Securityholders under such a restructure; expanding the provisions relating to joint meetings, in particular, expressly providing for joint proxy forms; providing that MIIML s right of indemnity is not affected by an unrelated breach of trust; and amending the provisions relating to rights issues, placements and other issues to take account of changes to ASIC and ASX s requirements in relation to these types of capital raisings and to re ect best practice since these provisions were last amended. Further details of the proposed amendments are set out in the table in section below. This resolution is required under section 601GC(1) of the Corporations Act. Section 601GC(1) requires certain amendments to the MIT(I) Constitution to be approved by a special resolution of MIT(I) members. This special resolution requires at least 75% of the votes cast on the resolution (either in person or by proxy) to be in favour. The existing MIT(I) Constitution and the amended MIT(I) Constitution proposed to be adopted by this resolution are available for inspection at the registered of ce of Macquarie Infrastructure Investment Management Limited, Mezzanine Level, No. 1 Martin Place, Sydney, NSW 2000 between 9.00 am and 5.00 pm (Sydney time) on Business Days until the time of the Extraordinary General Meetings and is available on MIG s website at Copies will be made available upon request free of charge by calling MIG within Australia on or outside Australia on between 9.00 am and 5.00 pm (Sydney time) on Business Days.

135 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Summary of proposed amendments to the MIT(I) Constitution The following table summarises the proposed key amendments to the MIT(I) Constitution: Existing MIT(I) Constitution Amended MIT(I) Constitution Reducing the fees payable to MIIML to a cost plus basis Base fee Management fee Payable quarterly. The base fee = 1.25% per annum of market value of MIG up to $3 billion. 1% per annum of market value of MIG in excess of $3 billion. Market value of MIG is the volume weighted average market capitalisation over last 10 ASX trading days of each quarter plus fund level borrowings and rm commitments for future investments less cash or cash equivalents. Performance Fee Performance fee payable at 30 June in event that MIG accumulation index outperforms the S&P/ASX 300 Industrials Accumulation Index in any nancial year having made up for underperformance in previous years. Any underperformance de cit from prior periods must be made up before future performance fees can be earned. Performance fee = 15% of the dollar amount of out performance and is in three equal instalments. The second and third year instalments are only paid if MIG continues to outperform the index on a cumulative period over the two and three year period. If the responsible entity / adviser is terminated, any future second and third performance fee instalments will be crystallised and paid on termination. Other services provided by Macquarie Group companies Additional market based fees are payable for other services such as nancial advisory, underwriting, broking and hedging provided on a transactional basis by Macquarie Group companies, and approved under MIG s related party protocols. In addition to an entitlement to be reimbursed for expenses incurred in relation to the proper performance of its duties, MIIML is also entitled to be paid out of the assets of MIT(I) a management fee equal to 115% of MIIML s reasonable estimate of its costs (and those of its related bodies corporate) in providing its services for which it is not otherwise entitled to be reimbursed out of MIT(I) assets. This amendment re ects the fact that that MIIML will be indirectly owned by Intoll Securityholders and will only need its costs to be met. If this amendment is not approved, MIIML will waive its fees to the extent necessary to re ect the proposed reimbursement arrangement. Updates to stapling provisions and importing stapling provisions of the Stapling Deed into the MIT(I) Constitution The existing MIT(I) Constitution includes clause 27, which provides for MIIML to use every reasonable The new clause 27 will provide for stapling under the MIT(I) Constitution as follows: endeavour to procure that the MIT(I) units are stapled MIIML may determine the date when stapling to the MIT(II) units and the MIGIL shares and continue to be listed as one joint security on ASX. The MIT(I) Constitution also provides for the MIG Securities to commences (or is held to have commenced) and effect the stapling of MIT(I) Units to MIT(II) Units and MIGIL Shares in accordance with Schedule 1; be dealt with in a manner that is consistent with the clause 27 renders all relevant clauses of the MIT(I) provisions relating to stapling in the MIT(II) Constitution Constitution subject to the provisions in Schedule 1, and the MIGIL Bye-Laws. while stapling applies; and

136 134 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 10: Securityholder approvals continued Existing MIT(I) Constitution Amended MIT(I) Constitution Updates to stapling provisions and importing stapling provisions of the Stapling Deed into the MIT(I) Constitution (continued) In addition, the MIG(I) Constitution includes speci c provisions prescribing the consequences of stapling as MIIML may enter into a reorganisation proposal (discussed below). it applies to member rights and obligations in respect Schedule 1 becomes operative when the stapling of MIT(I) units (such as in relation to a buy-back of units date is determined by MIIML and sets out the stapling being undertaken in a manner that is consistent with provisions that apply to the Intoll Securities as follows: the other parts of the MIG Securities). These provisions are supplemented by the Stapling Deed, which governs the operation of the individual provisions relating to stapling that are contained in each of the existing MIT(I) and MIT(II) Constitutions and the MIGIL Bye-Laws. The proposed amendments update the stapling provisions in the MIT(1) Constitution by replacing clause 27 with a new stapling clause and by deleting any other provisions that deal with Stapling. The deleted provisions are updated as part of the new Schedule 1 to the MIT(1) Constitution. We set out in the next column a summary of the new Stapling provisions. (stapling) each component of an Intoll Security must be stapled to each other component of the Intoll Security on and from a stapling commencement date agreed by the Stapled Entities; (no issue) a Stapled Entity must not offer or issue a component of an Intoll Security, or any option or rights to such a component without a corresponding and simultaneous offer or issue being made in respect of each other component of the Intoll Security; (no transfer) a Stapled Entity must not register any transfer of a component of an Intoll Security without a corresponding and simultaneous transfer of each other component of the Intoll Security; (corporate action) a Stapled Entity must not cancel, buy-back or redeem a component of an Intoll Security without a corresponding and simultaneous corporate action being made in respect of each other component of the Intoll Security; (dividend reinvestment/capitalisation of pro ts) a Stapled Entity must not permit a reinvestment by investors in a component of an Intoll Security unless an identical number of securities which are then Stapled to that component are issued to the same investor; (new Attached Securities) a Stapled Entity may cause a security to be stapled to the Intoll Security (a New Attached Security ) provided certain conditions are satis ed (such as ASX approval is obtained to the stapling of the New Attached Security); (unstapling) a component or all of the Intoll Securities may be unstapled if ASX has indicated it will approve such unstapling, the unstapling has been approved by special resolution of the Intoll Securityholders and such unstapling is not contrary to the interests of Intoll Securityholders as a whole and is consistent with the then investment objectives of the Stapled Entities and any subsidiary of the Stapled Entities; (restapling) if a component of the Intoll Security becomes unstapled, the Stapled Entity of the unstapled component may subsequently determine that the stapling provisions should recommence in respect of that unstapled component;

137 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 135 Existing MIT(I) Constitution Amended MIT(I) Constitution Updates to stapling provisions and importing stapling provisions of the Stapling Deed into the MIT(I) Constitution (continued) (Stapling matters) by acquiring an Intoll Security, each Intoll Securityholder will be taken to have consented to each provision in the constituent documents, including without limitation: the stapling of the Intoll Securities; any reorganisation of the Intoll Securities; the disposal of any partly paid Intoll Security on which an instalment is due and payable but unpaid, or in respect of which, a call has been validly made but remains unpaid by the due date for payment; the disposal of any small holding of Intoll Securities that is less than a marketable parcel; the restrictions on Intoll Securities that are restricted securities, as that term is de ned in the Listing Rules; the stapling of New Attached Securities to the Intoll Securities; the Intoll Securityholder becoming a member of any new Stapled Entity and being bound by the constituent documents for any New Attached Security; the unstapling of one or more Intoll Securities; the restapling of an unstapled Intoll Security; and the disposal of the Intoll Securities of a Designated Foreign Holder, (each a Stapling Matter ) (partly paid Intoll Securities) Intoll Securities may be offered on terms that the application price is payable by one or more instalments, and relating to forfeiture and making and paying calls; (application price) the application price of any component of the Intoll Security; and (general meetings) a combined meeting of Intoll Securityholders may be convened. MIIML and the auditor and representatives of each Intoll Entity may attend and speak at general meetings. A Cooperation Deed will also be entered into (to replace the Stapling Deed) by the Intoll Stapled Entities, which provides for the cooperation and consultation between the Stapled Entities as well as provision of intra-group loans, guarantees and security for Intoll s borrowings and acquisitions. The proposed amendments are to update the stapling provisions to re ect current market practice for stapled groups as the existing stapling provisions are mostly the same as when MIG was rst established in It is not intended that these amendments will affect how the stapling arrangements work in substance. If these amendments are not approved, Intoll will still be able to operate effectively under the existing stapling arrangements

138 136 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 10: Securityholder approvals continued Existing MIT(I) Constitution Amended MIT(I) Constitution Provisions to allow reorganisations of MIT(I) including stapling additional securities, unstapling and restapling securities, and other restructures such as top hat or exchange restructures including power to separately deal with foreign Intoll Securityholders under such a restructure No equivalent provision MIIML may enter into, without reference to or approval from MIT(I) members: Realisation transaction a transaction which enables members to realise all or a substantial portion of their investment in MIIML; Consolidation or division proposal a proposal to consolidate, divide or convert units or options into a ratio determined by MIIML; Stapling proposal a proposal to cause the stapling of any other securities to MIT(I) Units (other than the stapling provisions); Top hat proposal a proposal that each member should exchange their MIT(I) Units for an equivalent value of units in a trust of which MIIML is also the trustee and of which the only assets will be all of the MIT(I) units on issue at that time; and Exchange proposal a proposal whereby a written offer to transfer or redeem some or all of their units is made to members or to speci c members in consideration of an issue or transfer of interests in another entity, a cash payment or a transfer of MIT(1) assets, each a Reorganisation Proposal. It is a term of each MIT(I) unit or option to acquire a MIT(I) unit that the relevant security may be subject to a Reorganisation Proposal and each member by subscribing for or taking a transfer of, or otherwise acquiring a relevant security is taken to have consented to these Reorganisation Proposals. These amendments would empower MIIML to implement certain reorganisation proposals without a speci c approval of MIT(I) Unitholders for that reorganisation as would currently be the case, or any other reorganisation which is approved by an ordinary resolution. MIIML would still be obliged to act in the best interests of MIT(I) Unitholders in undertaking any reorganisation. These amendments will give Intoll more exibility to undertake reorganisations without seeking Intoll Securityholder approval. Provisions relating to combined meetings The provisions of the Corporations Act governing A combined meeting of Intoll Securityholders may be proxies and voting for meetings of members of convened. Subject to the Corporations Act, the form registered managed investment schemes apply to of proxy used to appoint a proxy to vote on behalf of MIT(I). an Investor in respect of a MIT(I) unit may be the same form as they use to appoint a proxy in respect of the MIT(I) units and MIGIL shares which they hold. These amendments are to expressly provide for combined meetings and joint proxy forms as is usual for stapled groups.

139 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 137 Existing MIT(I) Constitution Inclusion of indemnity for unrelated breach of trust No equivalent provision Amended MIT(I) Constitution Where a liability is incurred pursuant to a proper exercise of MIIML s powers, MIIML is entitled to be indemni ed despite any loss suffered by MIT(I) as a consequence of any unrelated act or omission by MIIML. This is a protection for the responsible entity which is common for responsible entities. Amendments to rights issue provisions to account of changes to ASIC and ASX s requirements and to re ect best practice MIIML may offer MIT(I) units for subscription to members if MIIML complies with the Listing Rules and any applicable ASIC relief and subject to a contemporaneous and corresponding offer of MIT(II) units and MIGIL shares being made. MIIML, subject to any applicable ASIC relief, may offer MIT(I) units to members if: all members are offered units at the same application price on a pro rata basis (whether or not the right of entitlement is renounceable); the application price of the units is not less than 50% of the average market price of the units during the 10 ASX trading days immediately preceding the relevant date; and any offer must specify the period during which it may be accepted and any units offered for subscription which are not subscribed for within the period may be offered for subscription to any person. The amendments are to make the MIT(I) Constitution consistent with ASIC s requirements with respect to the terms of pro rata offers. Amendments to placement provisions to account of changes to ASIC and ASX s requirements and to re ect best practice While listed, MIIML may at any time issue units to any person at a price and on terms determined by MIIML provided it complies with the Listing Rules and any applicable ASIC relief and subject to a contemporaneous and corresponding offer of MIT(II) units and MIGIL shares being made. If member approval is required in respect of a placement, a special resolution of members is required. While listed, MIIML may at any time issue units to any person at the average market price of the units during the 10 ASX trading days immediately preceding the relevant date of issue or at a price and on terms determined by MIIML provided it complies with the Listing Rules and any applicable ASIC relief. The amendments are to allow such issues to be undertaken at the average market price or as permitted under ASX and ASIC s requirements from time to time MIT(II) resolution 2 Amendment of MIT(II) Constitution In addition to the Required Resolutions, Resolution 2 authorises the amendment of the MIT(II) Constitution. As the Restructure Proposal is not conditional on Resolution 2 being approved, the Restructure Proposal will be implemented if Resolution 1 for each of the MIT(I), MIT(II) and MIGIL meetings is approved regardless of whether this resolution is approved Overview of proposed amendments to the MIT(II) Constitution Identical amendments to those for MIT(I) are intended to be made to the MIT(II) Constitution so as to ensure it is consistent with the constitution of MIT(I) and the MIGIL bye-laws. Refer to the MIT(I) Constitution proposed amendments set out in section

140 138 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 10: Securityholder approvals continued This resolution is required under section 601GC(1) of the Corporations Act. Section 601GC(1) requires certain amendments to the MIT(II) Constitution to be approved by a special resolution of MIT(II) members. This special resolution requires at least 75% of the votes cast on the resolution (either in person or by proxy) to be in favour. The existing MIT(II) Constitution and the amended MIT(II) Constitution proposed to be adopted by this resolution are available for inspection at the registered of ce of Macquarie Infrastructure Investment Management Limited, Mezzanine Level, No. 1 Martin Place, Sydney, NSW 2000 between 9.00 am and 5.00 pm (Sydney time) on Business Days until the time of the Extraordinary General Meetings and is available on MIG s website at Copies will be made available upon request free of charge by calling MIG within Australia on or outside Australia on between 9.00 am and 5.00 pm (Sydney time) on Business Days Summary of proposed amendments to the MIT(II) Constitution The proposed amendments to the MIT(II) Constitution are identical to the amendments proposed to be made to the MIT(I) Constitution set out at section above MIGIL resolution 2 amendment of MIGIL Bye-laws and change of name for MIGIL In addition to the Required Resolutions, Resolution 2 authorises the amendment of the MIGIL Bye-Laws. As the Restructure Proposal is not conditional on Resolution 2 being approved, the Restructure Proposal will be implemented if Resolution 1 for each of the MIT(I), MIT(II) and MIGIL meetings is approved regardless of whether this resolution is approved Overview of proposed amendments to the MIGIL Bye-Laws The proposed amendments are intended to update the MIGIL Bye-laws and ensure they are consistent with the constitutions of MIT(I) and MIT(II). The proposed amendments relate to updating the stapling provisions and importing stapling provisions of the stapling deed into the MIGIL Bye-Laws. Further details of the proposed MIGIL Bye-laws amendments are set out in section below. This resolution is required under Bye-Law 92 of the MIGIL Bye-Laws which provides that an amendment to the MIGIL Bye-Laws requires a special resolution. This special resolution requires at least 75% of the votes cast on the resolution (either in person or by proxy) to be in favour. The existing MIGIL Bye-Laws and the amended MIGIL Bye-laws proposed to be adopted by this resolution are available for inspection at the registered of ce of Macquarie Infrastructure Investment Management Limited, Mezzanine Level, No. 1 Martin Place, Sydney, NSW 2000 between 9.00 am and 5.00 pm (Sydney time) on Business Days until the time of the Extraordinary General Meetings and is available on MIG s website at Copies will be made available upon request free of charge by calling MIG within Australia on or outside Australia on between 9.00 am and 5.00 pm (Sydney time) on Business Days Change of name for MIGIL MIGIL is seeking approval of MIGIL Shareholders to change its name from Macquarie Infrastructure Group International Limited to Intoll International Limited if the Restructure Proposal is implemented. Under section 10 of the Companies Act 1981 of Bermuda, a company may change its name by ordinary resolution of its members provided that the Bermuda Registrar of Companies has approved the proposed name. Under the Restructure Proposal, MIGIL is required to put a resolution to MIGIL Shareholders to change MIGIL s name to one which does not include Macquarie (together with a recommendation that it be passed) at each general meeting until passed. The Restructure Proposal will still proceed if the Required Resolutions are passed but this resolution is not passed.

141 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Summary of proposed amendments to the MIGIL Bye-Laws Existing MIGIL Bye-Laws The existing MIGIL Bye- Laws includes Bye-Law 11, which provides for the Directors to staple a MIGIL share to units in MIT(I) and MIT(II) to form Stapled Securities. The existing clause 11 also requires that prior to the date when MIGIL shares are unstapled, MIGIL shall not offer or issue MIGIL shares to a person, or register such issue, unless there is an issue at the same time of a MIT(I) and MIT(II) unit. In addition, the Directors and MIGIL shall not consolidate, sub-divide, forfeit, cancel, redeem or repurchase any MIGIL shares or otherwise re-organise the capital of MIGIL unless at the same time there is a corresponding consolidation, sub-division, cancellation, redemption or repurchase of MIT(I) and MIT(II) units or re-organisation of the capital of MIT(II) and MIT(II). The proposed amendments update the stapling provisions in the Bye-Laws by replacing clause 11 with a new Stapling clause and setting out the speci c provisions which apply when MIGIL shares are Stapled under a new Schedule 1 to the Bye-Laws. The Stapling Provisions in Schedule 1 bring the Bye-Laws into harmony with the Stapling Provisions under the MIT(I) and MIT(II) Constitutions. Amended MIGIL Bye-Laws The key proposed changes to the Bye-Laws to provide for Stapling are as follows: Power to Staple Securities: The Bye-Laws will be amended to provide that the Directors may cause the Stapling of any security (Attached Security) to the shares. The amendments to the Bye-Laws will enable the Directors, subject to the Corporations Act and the Listing Rules, to Staple additional securities to the shares in the future. Stapling provisions paramount: The amendments to the Bye-Laws will state that the Stapling provisions have effect notwithstanding any other provision of the Bye-Laws. Stapling arrangements: Under the Stapling provisions: (Stapling) each component of an Intoll Security must be stapled to each other component of the Intoll Security on and from a stapling commencement date agreed by the Stapled Entities; (No issue) a Stapled Entity must not offer or issue a component of a Intoll Security, or any option or rights to such a component without a corresponding and simultaneous offer or issue being made in respect of each other component of the Intoll Security; (No transfer) a Stapled Entity must not register any transfer of a component of an Intoll Security without a corresponding and simultaneous transfer of each other component of the Intoll Security; (Corporate action) a Stapled Entity must not cancel, buy-back or redeem a component of a Intoll Security without a corresponding and simultaneous corporate action being made in respect of each other component of the Intoll Security; (New Attached Securities) a Stapled Entity may cause a security to be stapled to the Intoll Security (a New Attached Security) provided certain conditions are satis ed (including obtaining ASX approval); (Unstapling of Intoll Securities) a component or all of the Intoll Securities may be unstapled if ASX has indicated that it will approve such unstapling, the unstapling has been approved by special resolution of the Intoll Securityholders and such unstapling is not contrary to the interests of Intoll Securityholders as a whole and is consistent with the then investment objectives of the Stapled Entities and any subsidiary of the Stapled Entities; (Restapling) if a component of the Intoll Security becomes unstapled, the Stapled Entity of the unstapled component may subsequently determine that the Stapling Provisions should recommence in respect of that unstapled component;

142 140 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 10: Securityholder approvals continued Existing MIGIL Bye-Laws Amended MIGIL Bye-Laws (Meetings) meetings of each Stapled Entity may be held in conjunction with the meetings of each other Stapled Entity; and (Interests of Intoll Securityholders) each Stapled Entity may, subject to the Corporations Act and the terms of any applicable ASIC relief, have regard to the interests of Intoll Securityholders as a whole and not only to the interests of holders of each component of the Intoll Security. Stapling matters: by acquiring an Intoll Security, each Intoll Securityholder will be taken to have consented to each provision in the Constituent Documents, including without limitation: the stapling of the Intoll Securities; any reorganisation of the Intoll Securities; the disposal of any partly paid Intoll Security on which an instalment is due and payable but unpaid, or in respect of which, a call has been validly made but remains unpaid by the due date for payment; the disposal of any small holding of Intoll Securities that is less than a marketable parcel; the restrictions on Intoll Securities that are restricted securities, as that term is de ned in the Listing Rules; the stapling of New Attached Securities to the Intoll Securities; the Intoll Securityholder becoming a member of any new Stapled Entity and being bound by the Constituent Documents for any New Attached Security; the unstapling of one or more Intoll Securities; the restapling of an unstapled Intoll Security; and the disposal of the Intoll Securities of a Designated Foreign Holder (see below), (each a Stapling Matter); and Application price: the application price of any component of the Intoll Security. A Cooperation Deed will also be entered into (to replace the Stapling Deed) by the Intoll Stapled Entities, which provides for the cooperation and consultation between the Stapled Entities as well as provision of intra-group loans, guarantees and security for Intoll s borrowings and acquisitions. The proposed amendments are to update the stapling provisions to re ect current market practice for stapled groups as the existing stapling provisions are mostly the same as when MIG was rst established in It is not intended that these amendments will affect how the stapling arrangements work in substance.

143 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP MIGIL resolution 3 Change of name of MIGIL In addition to the Required Resolutions and Resolution 2, Resolution 3 authorises the change of MIGIL s name to Intoll International Limited. As the Restructure Proposal is not conditional on Resolution 3 being approved, the Restructure Proposal will be implemented if Resolution 1 for each of the MIT(I), MIT(II) and MIGIL meetings is approved regardless of whether this resolution is approved. MIGIL is seeking approval of MIGIL Shareholders to change its name from Macquarie Infrastructure Group International Limited to Intoll International Limited if the Restructure Proposal is implemented. Under section 10 of the Companies Act 1981 of Bermuda, a company may change its name by ordinary resolution of its members provided that the Bermuda Registrar of Companies has approved the proposed name. Under the Restructure Proposal, MIGIL is required to put a resolution to MIGIL Shareholders to change MIGIL s name to one which does not include Macquarie (together with a recommendation that it be passed) at each general meeting until passed. The Restructure Proposal will still proceed if the Required Resolutions are passed but this resolution is not passed. This ordinary resolution requires more than 50% of the votes cast on the resolution (either in person or by proxy) to be in favour.

144 142 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 11: Additional information 11.1 Summary of Implementation Deed MIIML (in its personal capacity), MIIML (in its capacity as responsible entity of MIT(I) and MIT (II)), MIGIL, MQA Australia, MQA Bermuda and Macquarie have entered into a deed titled the Implementation Deed. The Implementation Deed requires each party to undertake various steps to implement the Restructure Proposal. This section 11.1 contains a brief overview of the key terms of the Implementation Deed. Parties Background Agreement to implement the Restructure Proposal Conditions Consideration MIIML (in its personal capacity), MIIML (in its capacity as responsible entity of MIT(I) and MIT(II)), MIGIL, MQA Australia, MQA Bermuda and Macquarie. The purpose of the Implementation Deed is to document the agreement between the parties to facilitate the implementation of and give effect to the Restructure Proposal, speci cally: the termination of existing management and advisory and intellectual property licensing arrangements; the approval of the Required Resolutions; to require Macquarie and Intoll to enter into the Intoll Transitional Services Agreement to provide transitional services and employees to Intoll; to require Macquarie and Intoll to enter into the Share Sale Agreement; and the payment to Macquarie or a related body corporate for Macquarie s role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG and MQA. Each party agrees to take all steps reasonably required to give effect to the Restructure Proposal including the steps required by the terms of the Implementation Deed and any other Transaction Document, and each party undertakes to procure that their respective subsidiaries comply with their obligations under any Transaction Document. The Restructure Proposal will not be implemented unless each of the following conditions precedent are satis ed or waived in accordance with the Implementation Deed: the approval of ASX to the continued of cial quotation of MIT(I) units, MIT(II) unit and MIGIL shares as part of an Intoll Security; the approval of ASX to the admission of MQA Australia, MQA Bermuda to the of cial list of ASX and for of cial quotation of AM Australia; ASIC and ASX having issued or provided such consents or approvals or have done such other acts which the parties agree are reasonably necessary or desirable to effect the Proposal; obtaining any other regulatory authority consent or approval or any other regulatory authority having done such other acts which the parties agree are reasonably necessary or desirable to affect the Restructure Proposal; and approval by Securityholders of each of the Required Resolutions applicable to each MIG entity by the requisite majority. In connection with the implementation of the Restructure Proposal, Macquarie or a related body corporate shall receive consideration of A$50 million plus an amount equal to the net assets of MIIML on completion of the sale of MIIML for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG and MQA Intoll and their respective subsidiaries including: the provision of transitional services under the Intoll Transitional Services Agreement; the reimbursement of Incremental Costs (including employee expenses) over a 12 month period; assisting in transitioning employees to a subsidiary of MIT(II); facilitating a structure for the Restructure Proposal which minimises the potential for preemptive rights and consent rights in asset level shareholder agreements being triggered; the transfer of all shares in MIIML under the Share Sale Agreement; the grant of the intellectual property licence to MIG under the Intoll Intellectual Property Licence; and all other services and assistance as provided under the Implementation Deed and the other transaction documents.

145 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 143 Boards of MIG Recommendations Competing Transaction Separation of Intoll and MQA fundamental principle The MIG Independent Directors will unanimously recommend the Restructure Proposal and will not change or withdraw a recommendation subject to the following quali cations: the Independent Expert opines that the Restructure Proposal is in the best interests of MIG Securityholders; the Independent Directors may change or withdraw their recommendation if they determine in good faith and acting reasonably, after receiving written advice from their external legal and independent nancial advisers, that maintaining the recommendation would constitute a breach of director s duciary duties or statutory obligations; or the Independent Directors may reconsider their recommendations if a Competing Transaction emerges and may change or withdraw their recommendation prior to the General Meetings should they form the view that a Competing Transaction is or has become a Superior Competing Transaction. De nitions Competing Transaction means a proposal by a third party (including by Macquarie and its related bodies corporate) in relation to a transaction or arrangement which, if completed, would be inconsistent with implementation of the Restructure Proposal. Superior Competing Transaction means a bona de proposal to effect a Competing Transaction received by MIG after the date of the Implementation Deed which the MIG Independent Directors have determined, in good faith, to be in their reasonable opinion after receipt of written advice from their external legal and nancial advisers: (a) reasonably capable of being completed, taking into account all aspects of the Competing Transaction and the person making it; and (b) more favourable to MIG Securityholders (as a whole) than the Proposal. MIG has agreed to certain provisions in relation to a potential competing transaction. Those provisions (in substantively the same form as in the Implementation Deed) are as follows: 1.1 Noti cation of Competing Transaction (a) Subject to 1.2 below, MIG must promptly notify Macquarie of any current or future Competing Transaction which the Independent Directors believe is reasonably likely to become a Superior Competing Transaction. (b) A notice given under 1.1(a) must, subject to any applicable con dentiality obligations, state key details of the proposal (including the proposed price and the identity of the person making the proposal). 1.2 Exceptions to noti cation provisions The obligations imposed by 1.1 upon the MIG Independent Directors do not apply if the MIG Independent Directors receive written advice from their external legal and independent nancial advisers that complying with those obligations would or would be likely to constitute a breach of a director s duciary or statutory obligations. Fundamental Principle The parties intend that following the implementation of the Restructure Proposal, as a fundamental principle of the Restructure Proposal, as between the Stapled Entities comprising Intoll on the one hand and the Stapled Entities comprising MQA on the other: (a) the Stapled Entities comprising MQA will: (i) have the entire economic bene t and risk of MQA and the MQA Portfolio as if MQA had owned and operated the MQA Portfolio at all times; and (ii) none of the economic bene t and risk of the Intoll and Intoll Portfolio; and (b) the Stapled Entities comprising Intoll will: (i) have the entire economic bene t and risk of the Intoll and Intoll Portfolio as if the Intoll had owned and operated the Intoll Portfolio at all times; and (ii) none of the economic bene t and risk of the MQA and MQA Portfolio.

146 144 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 11: Additional information continued Separation of Intoll and MQA fundamental principle (continued) Management fees Use of Macquarie name Warranties Disclosure Document Information Termination Rights Subject to the terms of the Implementation Deed and the other transaction documents, if at any time on or after implementation of the Restructure Proposal a liability or loss arises for, or is incurred directly or indirectly by, an Intoll group entity, and that liability or loss most fairly relates to the MQA Portfolio or an MQA group entity, the Stapled Entities comprising MQA must indemnify, and must procure that the MQA group entities indemnify, the Intoll or relevant Intoll group entity in respect of that liability or loss to the extent that it relates to the MQA Portfolio or MQA group entity (as applicable). Correspondingly, subject to the terms of Implementation Deed and the other transaction documents, if at any time on or after implementation of the Restructure Proposal, a liability or loss arises for, or is incurred directly or indirectly by, an MQA group entity, and that liability or loss most fairly relates to the Intoll Portfolio or an Intoll entity, the Stapled Entities comprising Intoll must indemnify, and must procure that the Intoll group entities indemnify, the MQA group or relevant MQA group entity in respect of that liability or loss to the extent that it relates to the Intoll Portfolio or Intoll group entity (as applicable). Dispute resolution The Implementation Deed also provides for a dispute resolution procedure arising out of any dispute, difference or claim as between MQA and Intoll arising out of or in connection with the indemnities or the subject matter of the indemnities described above under Fundamental Principle. All fees due to MCGL from MIIML under the MIIML Funds Management Resources Agreement at Completion are to be calculated and paid in accordance with the provisions of the FMRA Termination Deed. (These fees are payable by MIIML in its personal capacity. They are not a MIG expense). All fees due to MCFEL from MIGIL under the MIGIL Advisory Deed (as adjusted by the Implementation Deed) as at the Implementation Date are to be calculated and paid in accordance with the provisions of the MIGIL Advisory Deed Termination Deed and the Implementation Deed. MIG must stop using the Macquarie name and corporate logos and ensure that any entity in the Intoll group (other than MIGIL) that has Macquarie as part of its name changes its name to a name that does not include Macquarie. On and from the date that shareholders of MIGIL approve the change of its name to a name that does not include Macquarie, MIGIL must cease using the Macquarie name and corporate logos. The parties provide the usual mutual warranties to each other in relation to status, capacity, authority, power and solvency. MIG takes responsibility for all of the information in the Disclosure Documents other than the Macquarie information and the Independent Expert s Report. Macquarie takes responsibility for the information Macquarie is required to include in the Disclosure Documents. Termination rights under the Implementation Deed include the following: Any party A party may terminate the Implementation Deed on the happening of any of the following events prior to the Implementation Date: the Required Resolutions not being passed before 30 June 2010 or such other date as is agreed by the parties; receipt by MQA of conditional consent in writing of ASX to grant of cial quotation of MQA Securities on terms which the parties agree are unsatisfactory, or the failure to receive, on or before 30 June 2010 or such other date as is agreed by the parties, consent in writing of ASX to grant of cial quotation of MQA Securities; a regulatory authority or judicial entity or authority takes any action, refuses to take any action or makes any preliminary or nal order or a decree (or commences or threatens to do so) which prevents the implementation of the Restructure Proposal or any transaction contemplated by the Restructure Proposal;

147 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 145 Termination Rights (continued) Directors Releases Limitation of liability Cap on Macquarie s liability if the Independent Expert fails to conclude that the Restructure Proposal is in the best interests of view of non-interested MIG Securityholders; or if a majority of the MIG Independent Directors change or withdraw their recommendation to MIG Securityholders prior to the General Meetings in the circumstances set out above in Boards of MIG Recommendations. Macquarie or MIIML (in its personal capacity) Macquarie or MIIML (in its personal capacity) may terminate the Implementation Deed by notice in writing to the other parties on the happening of any of the following events prior to the Implementation Date: there is a breach by MIIML (its capacity as responsible entity of MIT(I) and MIT(II)), MIGIL, MQA Australia or MQA Bermuda of any warranty or obligation under the Implementation Deed or a the Share Sale Agreement which is material to the Restructure Proposal as a whole; a Change of Control Event occurs in respect of MIG; or any one or more of MIGIL, MIT(I), MIT(II), MQA Australia or MQA Bermuda becoming insolvent. MIIML (its capacity as responsible entity of MIT(I) and MIT(II)), MIGIL, MQA Australia or MQA Bermuda MIIML (its capacity as reasonable entity of MIT(I) and MIT(II)), MIGIL, MQA Australia or MQA Bermuda may terminate the Implementation Deed by notice in writing to the other parties on the happening of any of the following events prior to the Implementation Date: there is a breach by Macquarie or MIIML (in its personal capacity) of any warranty or obligation under the Implementation Deed or the Share Sale Agreement which is material to the Restructure Proposal as a whole; or any one or more of Macquarie or MIIML (in its personal capacity) becoming insolvent. Each of MIG and MQA releases the directors, of cers or employees of Macquarie or its related bodies corporate in connection with any breach of any representations, covenants or warranties of Macquarie or any of its Related Bodies Corporate or any disclosures in the Explanatory Memorandum or MQA Prospectus or pursuant to a Transaction Document containing any statement which is false or misleading provided that the director, of cer or employee has not acted fraudulently or dishonestly. Macquarie (for itself and on behalf of its Related Bodies Corporate) releases the directors, of cers or employees MIG and MQA in connection with any breach of any representations, covenants or warranties of MIG or MQA or any of their Related Bodies Corporate, or any disclosures in the Explanatory Memorandum or MQA Prospectus or pursuant to a Transaction Document containing any statement which is false or misleading provided that the director, of cer or employee has not acted fraudulently or dishonestly. MIIML (in its capacity as responsible entity of MIT(I) and MIT(II)) is not liable to pay or satisfy any of its obligations under the Implementation Deed except out of the assets of MIT(I) and MIT(II) out of which it is actually indemni ed in respect of any liability incurred by it as responsible entity of MIT(I) and MIT(II) respectively. Each other party may enforce its rights against MIIML arising from non-performance of any obligation of MIIML (in its capacity as responsible entity of MIT(I) and MIT(II)) under the Implementation Deed only to the extent of MIIML s actual indemnity out of the assets of MIT(I) and MIT(II) respectively. The liability of MIIML is however not limited in the manner set out above where there is a reduction in the extent of MIIML s entitlement to be indemni ed out of the assets of MIT(I) and MIT(II) as a result of any fraud, negligence or breach of trust. The maximum aggregate liability of Macquarie, its related bodies corporate and each of their respective directors, of cers, agents, consultants and advisers under the Implementation Deed and the other transaction documents (including the Share Sale Agreement) is limited to A$42 million plus the consideration payable for the acquisition of MIIML (estimated at $25.6 million) (subject to any lower limits in speci c transaction documents) and they assume no liability under the Implementation Deed or any other transaction document (other than the MQA Management Agreement) to any member of the MQA group. This liability cap does not apply to Incremental Costs (including ongoing employment costs of Intoll) which are subject to a seperate cap of A$8 million.

148 146 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 11: Additional information continued 11.2 Summary of MIIML Share Sale Agreement Parties Background Conditions Consideration Conduct of business prior to implementation Warranties Limitations on claims Tax indemnity Other indemnity Aggregate limit on liability Macquarie Capital International Holdings Pty Limited (MCIH), MCGL, Intoll Holdings Pty Limited (SubCo) and MIG The purpose of the Share Sale Agreement is to provide for MCIH s sale of all of the shares in MIIML to SubCo. The sale of the shares in MIIML to SubCo is conditional upon the sale and purchase of the shares in MIIML being required to occur in accordance with the Implementation Deed. The consideration for the sale of the MIIML shares to SubCo is equal to the net assets of MIIML at completion. Customary restrictions on the conduct of the business and other activities of MCIH and MIIML apply prior to implementation of the Restructure Proposal. SubCo provides warranties in relation to its authority to enter into the Share Sale Agreement, its solvency, and its knowledge of breach of warranties. MCIH provides customary warranties in relation to capacity, title to shares, compliance with law, nance statements, assets, contracts, employees, business, information, insurance and litigation. The Share Sale Agreement is subject to customary quali cations on warranties and liability expected in a transaction of this nature. MCIH indemni es MIG in relation to all matters pertaining to the payment, assessment, and reporting of the tax affairs of MIIML prior to the implementation of the Restructure Proposal. The Share Sale Agreement also contains the Macquarie Litigation Indemnity described in section The maximum aggregate amount that MCIH is required to pay in respect of claims under the Share Sale Agreement, other than pursuant to the Macquarie Litigation Indemnity, is equal to the consideration payable by the buyer (being the net assets of MIIML at completion estimated as A$25.6 million) less any amount which has been paid above A$42 million under the Macquarie Litigation Indemnity. The maximum amount that can be claimed under the Macquarie Litigation Indemnity is the amount referred to in Section Macquarie Guarantee The performance of MCIH s obligations under the Share Sale Agreement is guaranteed by Macquarie. MIG Guarantee The performance of SubCo s obligations under the Share Sale Agreement are guaranteed by MIG. Termination Rights The Share Sale Agreement automatically terminates if the Implementation Deed is terminated.

149 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Summary of Transitional Services Agreement The Transitional Services Agreement documents the terms upon which MCGL will provide transitional services to Intoll for up to 12 months after completion of the Restructure Proposal. This section 11.3 (Summary of Transitional Services Agreement) contains a brief overview of the key terms of the Transitional Services Agreement. Parties Background Services MIIML as responsible entity of MIT(I) and MIT(II), MIGIL and MCGL The purpose of the agreement is to document the agreement between the parties upon which MCGL will provide transitional services to Intoll for a 12 month period following completion of the Restructure Proposal to facilitate the ongoing conduct of the business of Intoll and to enable Intoll to operate independently and separately from MCGL as soon as practicable after completion of the Restructure Proposal. MCGL must provide the following services for up to 12 months after completion of the Restructure Proposal: Interim Support Services: including provision of interim premises on and from the date of completion of the Restructure Proposal until Intoll has established its own independent premises; assistance and support in respect of nancial reporting, accounting and tax for the Intoll and the Western Sydney Road Group (together, the Roads Group); compliance and risk management; company secretarial and legal services for the Roads Group entities in Australia; information technology; human resources; communication and marketing; business management; assistance with board selection for Intoll; asset management; and treasury activities; and Separation Services: including if requested by Intoll, in relation to sourcing and tting out new premises; establishing information technology; compliance and risk management; tax and accounting; and human resources, (the Services). Price and payment In consideration for providing the Services, MCGL will receive bene ts under the Implementation Deed. Intoll will pay MCGL for out of pocket expenses. Indemnity and liability MCGL must, if reasonably requested by Intoll, provide information to and liaise and cooperate with any third party contractors or advisors to MIG for the purposes ensuring the Services are provided. Intoll indemni es the Macquarie Group against liabilities and claims arising out of the provision of the Services, except where caused by the gross negligence, recklessness or wilful misconduct of the Macquarie Bank Group. Macquarie Group s liability to Intoll under the Transitional Services Agreement is capped at $4 million. MIIML is not liable to pay or satisfy any of its obligations under the Transitional Services Agreement except out of the assets of MIT(I) and MIT(II) out of which it is actually indemni ed in respect of any liability incurred by it as responsible entity of MIT(I) and MIT(II) respectively. The liability of MIIML is not limited where there is a reduction in the extent of MIIML s entitlement to be indemni ed out of the assets of MIT(I) and MIT(II) as a result of any fraud, negligence or breach of trust by MIIML. Termination rights Intoll may terminate the Transitional Services Agreement (either in whole or in relation to any Services) if MCGL commits a material breach that is incapable of being remedied or remains unremedied within 30 days, if an insolvency event occurs in relation to Macquarie or at any time on 30 days notice. MCGL may terminate the Transitional Services Agreement if Intoll commits a material breach that is incapable of being remedied or remains unremedied within 30 days or if an insolvency event occurs in relation to MIG. Macquarie s obligation to provide transitional services or to reimburse Incremental Costs ceases if there is a Change of Control Event in relation to Intoll.

150 148 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 11: Additional information continued 11.4 Summary of MQA Management Agreement The companies comprising Macquarie Atlas Roads will enter into separate management agreements (Management Agreements) to appoint Macquarie International Advisory Services Limited (a subsidiary of Macquarie) as manager (MQA Manager). Under the Management Agreements, MQA Manager will provide management services to MQA Australia and MQA Bermuda following completion of the Proposal. This section 11.4 (Summary of MQA Management Agreement) contains a brief overview of the key terms of the MQA Management Agreements. Parties Investment mandate Services Term Extension or renewal Termination MQA Australia and the MQA Manager for the MQA Australia Management Agreement MQA Bermuda and the MQA Manager for the MQA Bermuda Advisory Agreement The investment policy is to invest in infrastructure assets in OECD and OECD equivalent countries; and non-infrastructure assets where ancillary to a major infrastructure investment or acquisitions but with focus on toll road investments, both green eld and mature. The investment policy may be varied from time to time on reasonable notice to MQA Securityholders. The MQA Manager is responsible to MQA Australia and MQA Bermuda for: advising on any proposed investment or divestment; if the MQA Australia Board and MQA Bermuda Board approve an investment, acquire and manage the investment on behalf of MQA Australia and MQA Bermuda; MQA providing Macquarie executives as nominees of MQA Australia and MQA Bermuda to act as directors of subsidiary entities that hold investments, and where appropriate, making recommendations to the MQA Boards to appoint non-macquarie nominees to these boards; capital management and nancial management recommendations; recommending to the MQA Boards in respect of various matters (including but not limited to changes to the MQA Australia Constitution and MQA Bermuda Bye-Laws, any capital reductions, appointment and dismissal of staff and consultants, and the payment of dividends and interim dividends); general fund administration including company secretarial services subject to outsourcing company secretarial services in Bermuda to N.T. Butter eld and Son Ltd; asset valuations; assisting with nancial reporting and budgets; board reporting in connection with matters on which it provides advice; assisting with litigation management; provision of appropriately quali ed personnel to perform the CEO and CFO roles for MQA and Company Secretary role for MQA Australia; and investor communications and meetings. No xed term or the agreement continues until the MQA Manager is removed or resigns. There are no extension or renewal provisions in the MQA Australia Management Agreement and MQA Bermuda Advisory Agreement. The appointment of the MQA Manager will automatically terminate on a MQA Securityholder vote. The resolution must be passed by more than 50% of votes cast at a meeting by MQA Securityholders entitled to vote to terminate the MQA Australia Management Agreement and the MQA Bermuda Advisory Agreement. The MQA Manager and its associates (including Macquarie) may vote their securities on the resolution. The MQA Manager can also be removed for cause being where the MQA Manager is in liquidation, ceases to carry on business, lacks the appropriate licence or authorisation, or commits a material breach which cannot be remedied. The MQA Manager may resign by giving not less than 90 days written notice.

151 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 149 Termination (continued) Fees Where the agreement terminates, all directors, executives, employees, representatives, assignees and delegates of the MQA Manager and its associates (including Macquarie) will cease to work under the agreement at the date of termination or at any other time determined by Macquarie Atlas Roads Base fees and performance fees accrued to the date of termination are payable. Base fee Payable quarterly. Base fee = 2% per annum of the Market Value of Macquarie Atlas Roads The parties agree that the MQA Manager and MQA may agree from time to time to a base fee which is less than the amount determined above. At the commencement date for the Macquarie Atlas Roads Management Agreement, MQA Manager and MQA have agreed to a base fee calculated as follows: 2.00% per annum of the Market Value of Macquarie Atlas Roads at the end of each Calendar Quarter up to $A1 billion or less; plus 1.25% per annum of the Market Value of Macquarie Atlas Roads at the end of each Calendar Quarter in excess of $A1 billion but less than or equal to A$3 billion; plus 1.00% per annum of the Market Value of Macquarie Atlas Roads at the end of each Calendar Quarter in excess of $A3 billion. Market Value means the aggregate of the market value of the MQA Securities calculated on the basis of the average number of MQA Securities in issue during the last 10 Trading Days of the ASX in the relevant Calendar Quarter multiplied by the VWAP of all MQA Securities over those 10 Trading Days. The MQA Manager and its associates (including Macquarie) may, where the non-executive directors of MQA Australia and MQA Bermuda so determine, apply the base fee in subscription for MQA Securities. The price of the MQA Securities is the VWAP of the MQA Securities traded on ASX during the 10 trading days up to and including the quarter end date. Performance Fee A performance fee is payable at 30 June each year in the event that MQA Securities outperform the benchmark return (based on the S&P/ASX 300 Industrials Accumulation Index) in the nancial year having made up for underperformance in previous years. Any underperformance de cit from prior periods must be made up before future performance fees can be earned. Performance fee = 15% of the dollar amount of out performance and is payable in three equal annual instalments. The second and third instalments are only paid if Macquarie Atlas Roads continues to outperform the index on a cumulative period over the two and three year period. The performance fee to be calculated in respect of any given nancial year means: 1 subject to paragraph 3, 15% of the amount (if any) by which the Annual Return for the nancial year exceeds the Benchmark Return of the nancial year; or 2 nil if the Annual Return for the nancial year does not exceed the Benchmark Return for the nancial year; but 3 if the Annual Return in any prior nancial year is less than the Benchmark Return for that nancial year the de cit is to be carried forward on a cumulative basis until offset on a dollar for dollar basis against a surplus or surpluses of the Annual Return over the Benchmark Return in any succeeding nancial year or nancial years. The MQA Manager must allocate any de cit between MQA Australia and MQA Bermuda based on the net assets of the companies (adjusted for the net market value of its assets).

152 150 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 11: Additional information continued Fees (continued) Annual Return means: AR = A x B - C C Where AR = the Annual Return for the nancial year; A = in respect of each nancial year is the average number of MQA Securities on issue during the last ten ASX trading days in the previous nancial year multiplied by the VWAP of all MQA Securities traded on the ASX during that ten trading days period or in the case of the initial nancial year using the thirty trading days following Listing for the calculations; B = the average of the daily closing accumulation indices for the MQA Securities over the last ten trading days of the nancial year as calculated by a person reasonably approved or selected by the MQA Manager and reported by Bloomberg; C = the average of the daily closing accumulation indices for the MQA Securities over the last ten trading days of the previous nancial year as calculated by a person reasonably approved or selected by MQA Manager and reported by Bloomberg, or in the case of the initial nancial year over the thirty trading days following Listing. Benchmark Return means: BR = X x Y - Z Z Where: BR = the Benchmark Return for the nancial year; X = in respect of each nancial year is the average number of MQA Securities (as used in the determination of A for the purposes of determining the Annual Return for the nancial year) on issue during the last ten ASX trading days in the previous nancial year multiplied by the VWAP of all MQA Securities (as used in the determination of A for the purposes of determining the Annual Return for the nancial year) traded on the ASX during that ten trading days period or in the case of the initial nancial year using the thirty trading days following Listing for the calculations; Y = the average of the daily closing S&P/ASX 300 Industrials Accumulation Indices over the last ten trading days of the nancial year as reported by Bloomberg; Z = the average of the daily closing S&P/ASX 300 Industrials Accumulation Indices over the last ten trading days of the previous nancial year or in the case of the initial nancial year, the thirty trading days following Listing as reported by Bloomberg. If the MQA Manager s appointment is terminated, any future second and third performance fee instalments will be crystallised and paid on termination. The MQA Manager and its associates (including Macquarie) may, where the non-executive directors of MQA Australia and MQA Bermuda so determine, apply the performance fee in subscription for MQA Securities. The price of the MQA Securities is the VWAP of the MQA Securities traded on ASX during the 10 trading days of that nancial year. The same base fee and performance fee provisions apply for the MQA Bermuda Advisory Agreement. Apportionment of fees The MQA Manager acknowledges that in respect of the performance fees that are earned under the Management Agreements for the relevant period while Stapling applies the amount calculated under each of the Management Agreements is representative of the aggregate fees payable to the MQA Manager in respect of Macquarie Atlas Roads.Unless agreed in writing to the contrary by MQA Australia, MQA Bermuda and the MQA Manager, the allocation of the base fee and the performance fee between MQA Australia and MQA

153 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 151 Expenses Exclusivity Discretions Related party protocols Change of control provisions The MQA Manager is entitled to be reimbursed for expenses incurred in relation to the proper performance of its duties. Expense reimbursement does not include administration costs such as premises, staff and facilities or any costs, commissions, charges, fees, expenses and taxes arising as a result of any gross negligence, fraud, wilful misconduct or dishonesty by the MQA Manager or any of ce, employee, delegate, agent or contractor of the MQA Manager. The MQA Manager is not engaged by Macquarie Atlas Roads on an exclusive basis, and MQA Australia and MQA Bermuda can appoint additional managers or advisors. The MQA Manager may from time to time perform services for itself and other parties the same as or similar to services performed under the Management Agreements. The MQA Manager and its associates have no obligation to provide investment opportunities and MQA Australia and MQA Bermuda has no obligation to accept any investment opportunities. MQA Australia and MQA Bermuda will not have any priority in respect of investment opportunities sourced by the MQA Manager and its associates. The advisory mandate for MQA Australia and MQA Bermuda is non-discretionary. All signi cant investment/divestment and operational decisions are made by the MQA Australia Board and MQA Bermuda Board based on recommendations from the MQA Manager. The MQA Boards are not obliged to accept the recommendations of the MQA Manager. MQA has adopted a detailed related party protocol covering transactions with and services provided by Macquarie Group companies and Managed vehicles. All related party transactions or services must be on arm s length terms and approved by the MQA independent directors only. Asset acquisition or sale transactions with related parties for 5% or greater of fund value are supported by an independent valuation. Mandates for the provision of services to MQA or their controlled businesses are subject to third party independent review unless the independent directors determine otherwise on the basis of appropriate market information or practice. MQA independent directors have put in place a panel of reviewers (which does not include the MQA auditor) and the reviewer for a particular service or transaction is usually chosen by them on a rotational basis. Swap and foreign exchange transactions with Macquarie Group companies solely for hedging purposes are given standing approval if certain conditions are met. Signi cant volume securities transactions with a Macquarie Group broker require independent director approval. Fees paid or payable by MQA group entities for related party services will be disclosed in the MQA nancial statements. A party may not assign any of its rights and obligations under the Management Agreements without the prior written consent of the other party except to an associate in the case of the MQA Manager provided the MQA Manager has demonstrated to the reasonable satisfaction of MQA Australia and MQA Bermuda (as the case may be) that the relevant associate has or has access to all necessary expertise, experience and resources for it to perform the MQA Manager s obligations under the Management Agreements. The Management Agreements are not able to be terminated by either the MQA Manager or MQA Australia and MQA Bermuda (as the case may be) in the event of a change of control of MQA Australia or MQA Bermuda. However, as noted above under Termination, the agreement will terminate if MQA Securityholders so determine by 50% majority resolution. Base fees and performance fees accrued to the date of termination will be payable by MQA Australia and MQA Bermuda in those circumstances. MIG co-invests from time to time with other Macquarie companies or managed vehicles. Co-investment arrangements may include pre-emption and tag-along or drag-along rights in favour of each other including rights which are triggered on removal of the Macquarie manager typical of those agreed with third party co-investors. In addition, loan facilities for MIG stapled entities (which are currently undrawn) or MIG businesses may provide for acceleration of loan payments if MIG is no longer managed by a Macquarie company.

154 152 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 11: Additional information continued 11.5 IP Licence From implementation of the Restructure Proposal, Macquarie grants to MIG a perpetual, irrevocable, worldwide non-exclusive licence to use, amongst other speci ed licensed materials, all materials (including documents, operating manuals, software, nancial models, tax models and related data) in the worksite database of MIG in the information systems maintained by Macquarie including the MIG internal nancial model Summary of ASIC relief relating to the Restructure Proposal Relief for the purposes of implementing the Proposal ASIC has granted certain modi cations of, and exemptions from, the application of certain provisions of the Corporations Act, subject to the satisfaction of certain conditions, in relation to the following matters: Financial half-year: a modi cation of section 323D(5) of the Corporations Act to allow MQA Australia to end its rst nancial half-year on 30 June 2010, instead of within 7 days of the date which is 6 months from the date of its admission to the Of cial List of ASX as part of MQA; Application form: a modi cation of section 723(1) of the Corporations Act to allow for the issue and transfer of MQA Australia Shares and MQA Bermuda Shares in connection with implementation of the Proposal without the need for an application form; Application money held on trust: an exemption from compliance with section 722 of the Corporations Act that requires the issuers of the MQA Prospectus to hold any application moneys in trust until the issue or transfer of the MQA Securities; and Rounding of entitlement: an exemption from compliance with section 601FC(1)(d) of the Corporations Act so that MIIML is not required to treat all members of the same class equally in connection with any necessary rounding of MIT(II) unit holders entitlement to MQA Australia Shares and MQA Bermuda Shares under the Restructure Proposal Intoll ASIC has granted certain modi cations of, and exemptions from, the application of certain provisions of the Corporations Act as they apply to Intoll, subject to the satisfaction of certain conditions, in relation to the following matters: Issue price: a modi cation of section 601GA(1) (a) of the Corporations Act to allow MIIML to determine the issue or transfer price of Intoll Securities issued or transferred under a distribution reinvestment plan; Duties of responsible entity: a modi cation of sections 601FC(1)can, 601FC(1)(e), 601FD(1) (c), 601FD(1)(d), 601FD(1)(e), 601FE(1)(a), 601FE(1)(b) of the Corporations Act to allow MIIML and its of cers to not only have regard to the interests of members of MIT(I) and MIT(II) (as the case may be), but to the interests of holders of Intoll Securities as a whole; Related party transactions: a modi cation of the application of Part 5C.7 of the Corporations Act to allow MIIML, as the responsible entity of MIT(I) and MIT(II), to give nancial bene ts out of scheme property of MIT(I) and MIT(II) (as the case may be) to the other stapled entities in Intoll, or their controlled entities; and Prospectus: a modi cation of sections 708(13) and 1020F(1)(c) of the Corporations Act to allow the stapled entities in Intoll to make offers of the Intoll Securities pursuant to a distribution reinvestment plan for Intoll without the relevant issuers having to issue an additional disclosure document or PDS Macquarie Atlas Roads Ongoing ASIC relief as it applies to MQA is summarised in the MQA Prospectus. For more information as to this relief please see section 9.8 of the MQA Prospectus.

155 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Summary of ASX Waivers/ Con rmation relating to the Restructure Proposal Relief for the purposes of implementing the Proposal ASX has agreed in-principle to grant the following waivers and con rmations from the operation of the Listing Rules and con rmations and approvals under the Listing Rules in relation to the Restructure Proposal, including in relation to the application by MQA Australia and MQA Bermuda for Listing on ASX and Of cial Quotation of MQA Australia Shares and MQA Bermuda Shares: Appropriateness for Listing: Con rmation under Listing Rule 1.1 condition 1 that each of the structures of Intoll and MQA are appropriate for a listed entity; Pre implementation Transfers: Con rmation that asset transfers among Stapled Entities and their subsidiaries prior to the implementation of the Proposal do not require approval under Listing Rule 10.1; Nature and Scale of Activities: Con rmation that the Restructure Proposal does not require approval under Listing Rule 11.1, 11.2 or 11.4; Listing fees: A waiver of Listing Rules 2.6 and 16.4 to the extent necessary so that initial listing fees are payable only on the MQA Australia and MQA Bermuda Shares for which quotation is sought; Standard stapling waivers: Certain standard waivers applying to the Of cial Quotation of stapled securities, namely: a waiver of condition 7 of Listing Rule 1.1 to the extent necessary to ensure compliance, given that while the value of a parcel of MQA Stapled Securities is greater than or equal to $2,000, the component parcels of shares or units may individually have a value of less than $2,000; a waiver of condition 8 of Listing Rule 1.1 in respect of compliance with Listing Rule 1.3 on the basis that MQA as a whole will comply with the assets test even though the Stapled Entities may not individually satisfy the test; con rmation that the requirements of condition 2 of Listing Rule 2.1 are satis ed on the basis that the issue price of an MQA Stapled Security exceeds $0.20 in cash, even if the issue price attributable to each component share or unit does not exceed this amount; a waiver of Listing Rule 8.10 to the extent necessary to permit MQA Australia and MQA Bermuda to refuse to register a transfer of a share in the entity if not accompanied by a transfer of a share in the other entity; Requirement to provide a reviewed pro forma balance sheet: Con rmation that Listing Rule 1.3.5(c) applies to the issuers of this Explanatory Memorandum and the MQA Prospectus and con rmation that the provision of a separate balance sheet and review included in this Explanatory Memorandum and the MQA Prospectus is suf cient for the purposes of Listing Rule 1.3.5(c); Requirements to provide 3 years of nancial accounts: Con rmation that ASX considers the reviewed nancial statements as set out in section 6 ( Financial information for Securityholders ) of this Explanatory Memorandum and section 4 ( Financial Information ) of the MQA Prospectus (in relation to MQA) are suf cient for the purposes of Listing Rule 1.3.5; Consistency with Listing Rules: Con rmation that the amended MIT(I) Constitution, MIT(II) Constitution and MIGIL Bye-Laws and the MQA Australia Constitution and the MQA Bermuda Bye-Laws are consistent with the Listing Rules for the purposes of Listing Rule 1.1 Condition 2, and con rmation that the MQA Prospectus is consistent with the Listing Rules for the purposes of Listing Rule 1.1 Condition 3; Terms of securities are appropriate: Con rmation that the terms of the Intoll Securities and the MQA Stapled Securities are appropriate and equitable for the purposes of condition 1 of Listing rule 2.1 (which requires compliance with Chapter 6 of the Listing Rules);

156 154 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 11: Additional information continued Entitlements to securities in another entity: Con rmation that the requirements of Listing Rule 7.17 are not applicable or are satis ed by the Restructure Proposal to the extent necessary to allow the securities in MQA Australia and MQA Bermuda to be issued or transferred to MIG Securityholders; Escrow restrictions: Con rmation that escrow restrictions will not apply to the Intoll Securities and MQA Stapled Securities; and Equity securities: Con rmation that the Stapled Securities are equity securities for the purposes of the ASX Market Rules and the Listing Rules Intoll ASX has granted relief to MIG, which will apply as ongoing relief to Intoll: Standard stapling waivers: Certain standard waivers applying to the Of cial Quotation of Intoll Securities, namely: a waiver of condition 7 of Listing Rule 1.1 to the extent necessary to ensure compliance, given that while the value of a parcel of Intoll Securities is greater than or equal to $2,000, the component parcels of shares or units may individually have a value of less than $2,000; a waiver of condition 8 of Listing Rule 1.1 in respect of compliance with Listing Rule 1.3 on the basis that Intoll as a whole will comply with the assets test even though the Stapled Entities may not individually satisfy the test; con rmation that the requirements of condition 2 of Listing Rule 2.1 are satis ed on the basis that the issue price of an Intoll Security exceeds $0.20 in cash, even if the issue price attributable to each component share or unit does not exceed this amount; a waiver of Listing Rule 8.10 to the extent necessary to permit MIT(I), MIT(II) and MIGIL to refuse to register a transfer of a share or unit (as the case may be) in the entity if not accompanied by a transfer of a share or unit (as the case may be) in each other entity; a waiver of Listing Rule 10.1 to the extent necessary to permit asset between the Intoll entities; Voting: A waiver from Listing Rules 6.8 and 6.9 to the extent necessary to permit the B Special Shares to have voting rights to remove or appoint up to, but no more than 25% of the directors of MIGIL; and Continuous disclosure obligations: Con rmation that the Intoll Securities are treated as one security for the purposes of satisfying the disclosure obligations for each member of the Intoll Macquarie Atlas Roads Ongoing ASX relief as it applies to MQA is summarised in the MQA Prospectus. For more information as to this relief please see section 9.8 (ASX Relief) of the MQA Prospectus Disclosure of interests of directors and advisers Directors interests The directors intend to vote the MIG Securities they own or control in favour of all of the Resolutions, except where they are not permitted to cast a vote (under the voting exclusions contained in the notices of meeting). The number of MIG Securities held by the directors of MIIML and MIGIL either personally or bene cially as at 30 November 2009 are as follows: MIG Securities Director Number of MIG Securities held through associates Mark Johnson 811, ,731 Paul McClintock 122, ,428 David Mortimer 608, ,316 David Walsh 35,000 22,000 Robert Mulderig 200, ,000 Jeffrey Conyers - - Peter Dyer - - The holdings of all Intoll Securities and MQA Securities by the Directors of MIIML, MQA Australia and MQA Bermuda will be noti ed to the market on the implementation of the Restructure Proposal.

157 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 155 The directors of MIIML may also have an indirect interest in the outcome of the Required Resolutions through their holding of any MGL Group securities. The number of MGL Group securities held by the directors of MIIML either personally or bene cially as at 30 November 2009 are as follows: Number of MGL Director securities held Mark Johnson 298,803 Paul McClintock 5,856 David Mortimer 727 David Walsh 1, Payments and other bene ts to directors, secretaries or executive of cers No payment or other bene t will be made or given to any director, secretary or executive of cer of MIIML or MIGIL or any related body corporate as compensation for loss of, or as consideration for or in connection, his or her retirement from of ce as director, secretary or executive of cer of MIIML or MIGIL or any associate Effect of the Proposal on Directors interests The effect of the Restructure Proposal on the interests of the directors of MIIML and MIGIL are set out in section Costs of the Proposal and interests of experts The costs of the Restructure Proposal include legal, taxation, independent expert, ASX listing and stamp duty costs. If the Proposal proceeds these are budgeted to total $7 million. If the Restructure Proposal does not proceed the total costs will be $7 million. MIG will pay all costs associated with the Restructure Proposal, including any stamp duty. The costs payable to experts providing reports included in this Explanatory Memorandum are set out below: PricewaterhouseCoopers Securities Ltd PricewaterhouseCoopers Securities Ltd is entitled to receive professional fees of approximately $462,000 (including GST) in connection with the preparation of its Investigating Accountant s Report appearing in section 7 of this Explanatory Memorandum and its work in respect of the Restructure Proposal generally. Ernst & Young Transaction Advisory Services Ltd Ernst & Young Transaction Advisory Services Ernst & Young Transaction Advisory Services Limited is entitled to receive professional fees of approximately $247,000 (including GST) in connection with the preparation of its Independent Expert s Report appearing in Appendix A of this Explanatory Memorandum. Greenwoods & Freehills Greenwoods & Freehills is entitled to receive professional fees of approximately $302,500 (including GST) in connection with the preparation of its Taxation Opinion appearing in Section 9 of this Explanatory Memorandum and its work in respect of the Restructure Proposal generally Disclosure of TFNs to MQA Under the tax law, certain companies and trusts are entitled to ask their securityholders to disclose their tax le number (TFN) to the company or trust. An interest holder can choose to disclose or not to disclose their TFN. If a securityholder chooses not to disclose their TFN to the company or trust, the company or trust is generally required by the tax law to withhold tax, at the top marginal tax rate plus Medicare levy (being 46.5% as at the date of this Explanatory Memorandum) on any dividends or distributions paid to a resident securityholder. If the tax withheld by the company or trust is more than the securityholder would have paid in tax, the securityholder must wait until they lodge an income tax return before being entitled to a refund of any excess tax withheld from the payment. On the other hand, if a securityholder chooses to disclose their TFN, the company or trust does not have to withhold any tax from any dividends or distributions paid to the securityholder. MQA Securityholders will be requested to provide their TFN.

158 156 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 11: Additional information continued Availability of other information MIT(I) and MIT(II) are disclosing entities under the Corporations Act and are subject to regular reporting and disclosure obligations. MIG is also required to notify ASX of information about speci c events and matters as they arise for the purposes of ASX making that information available to the stock markets conducted by ASX. In particular, MIIML and MIGIL have obligations under the Listing Rules (subject to certain exceptions) to notify ASX immediately of any information of which it is or becomes aware which a reasonable person would expect to have a material effect on the price or value of MIG Securities. That information is available to the public from ASX or from ASIC. Copies of documents lodged with ASIC and ASX in relation to MIG may be obtained from ASIC or from ASX, or inspected at an ASIC of ce. MIG will provide a copy of the following documents, free of charge, to any MIG Securityholder who requests it before the Implementation Date and on MIG s website at the current MIT(I) Constitution and proposed amendments; the current MIT(II) Constitution and proposed amendments; the MIGIL Bye-Laws and proposed amendments; the MIGIL Advisory Deed; the MIG Share Stapling Deed; the Intoll Cooperation Deed; the MQA Australia Constitution; the MQA Bermuda Bye-Laws; the MQA Cooperation Deed; the Implementation Deed; and Share Sale Agreement. You may also obtain a copy of the following documents on request from MIIML, free of charge: MIT(I) and MIT(II) s annual nancial report most recently lodged with ASIC; any half-year nancial reports lodged with ASIC by MIT(I) and MIT(II) after lodgement of that annual report and before the date of this Explanatory Memorandum; and any continuous disclosure notices given by MIT(I) and MIT(II) after the date of lodgement of the annual report and before the date of this Explanatory Memorandum Supplementary Information MIG may issue a supplementary document to this Explanatory Memorandum if it becomes aware of any of the following between the date of lodgement of this Explanatory Memorandum and the date of the Meetings: a material statement in this Explanatory Memorandum is false or misleading; a material omission from this Explanatory Memorandum; a signi cant change affecting a matter in this Explanatory Memorandum; or a signi cant new matter has arisen and it would have been required to be included in this Explanatory Memorandum if known at the date of lodgement with ASIC. Depending on the nature of the timing of the changed circumstances and subject to obtaining any relevant approvals, MIG may circulate and publish any supplementary document by: placing an advertisement in a prominently placed newspaper which is circulated generally throughout Australia; posting the supplementary document on MIG s website or posting the supplementary document to all Securityholders Material changes since full year 2009 audited nancial statements The last annual nancial statements presented to MIG Securityholders at a general meeting and sent to MIG Securityholders were the audited nancial statements for the year ended 30 June 2009 as lodged with the ASX on 20 August So far as is known by MIG Directors, the only material changes to the nancial position of MIG since the date of those annual nancial statements are as set out in this Explanatory Memorandum. These include the announcement of the Restructure Proposal on 30 October Other material information Except as disclosed elsewhere in this document, the MIG entities are not aware of any other information that is: known to MIG; and not previously disclosed to MIG Securityholders.

159 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING 407 ETR, Canada MACQUARIE INFRASTRUCTURE GROUP 157

160 158 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 12: Glossary : Euros. 407 ETR Shareholders Agreement: the shareholders agreement between CDPQ, Cintra, Ferrovial, and SNC-Lavalin entered into on 12 April 1999, as further amended on 27 May 1999 and 31 May IC: 407 International Inc. A$: Australian dollars. AASBs: Australian Accounting Standards. Additional Resolutions: the resolutions concerning certain recommended changes to the MIT(I) Constitution, MIT(II) Constitution and the MIGIL Bye-Laws and the change of MIGIL s name. ADSCR: Average DSCR. AFS Licence: Australian nancial services licence. ASIC: Australian Securities and Investments Commission. ASX: ASX Limited (ACN ) or the market operated by it, as the context requires. ASX Corporate Governance Principles and Recommendations: the set of principles and recommendations published by the ASX which are intended to provide a reference point for companies about their corporate governance structures and practices. Principles has a corresponding meaning. ATO: Australian Tax Of ce. AUS CPI: the Australian Consumer Price Index (All groups weighted average of either capital cities) published quarterly by the Australian Bureau of Statistics. Business Day: a business day as de ned in the Listing Rules. C$: Canadian dollars. CDPQ: Capital D Amerique CDPQ Inc., an investment entity owned by the Caisse de dépôt et placement du Québec. Change of Control Event: a person (whether alone or together with its associates) other than a member of the Macquarie Group acquiring directly or indirectly: (a) an interest in MIG (or, from the Implementation Date, Intoll) when aggregated with the existing interest in MIG (or Intoll) (if any) of that person or its associates confers 50% or more of the voting or economic interest in MIG (or, from the Implementation Date, Intoll); (b) otherwise having the power to control the appointment or dismissal of the majority of the directors of any of the entities that comprise Intoll; or (c) otherwise having the power to control the nancial and operating policies of Intoll. Cintra: Cintra Concesiones de Infraestructuras Transporte, S.A. CGLA: Highway 407 Concession and Ground Lease Agreement dated 6 April 1999 between the Crown in right of Ontario, and 407 ETR Concession Company Limited. Cooperation Deed: the cooperation deed to be entered into by MIIML in its capacity as responsible entity of MIT(I), MIIML in its capacity as responsible entity of MIT(II), MIIML and MIGIL, which sets out the core rules governing dealings in Intoll Securities, the stapling of additional instruments to the Intoll Securities and the unstapling of the Intoll Securities. Constituent Documents: the constituent documents of a Stapled Entity and at the date of this Explanatory Memorandum includes the MIT(I) Constitution, the MIT(II) Constitution, the MIGIL Bye-Laws, the Cooperation Deed, the MQA Australia Constitution, the MQA Bermuda Bye- Laws and the MQA Cooperation Deed. Corporations Act: Corporations Act 2001 (Cwlth). Disclosure Documents: the Explanatory Memorandum and the MQA Prospectus. DSCR: debt service coverage ratio. EBITDA: earnings before interest, tax, depreciation and amortisation.

161 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 159 ETC: electronic tolling collection. Explanatory Memorandum: this document, including the appendices. Ferrovial: Grupo Ferrovial, S.A., a Spanish Construction company and Infrastructure developer. FIRPTA Rules: the rules under Foreign Investment Real Property Tax Act. FR CPI: the French consumer price index (excluding tobacco) for all households. General Meetings: the general meetings of MIT(I), MIT(II) and MIGIL convened for the purposes of considering and, if thought t, approving the Resolutions. GAAP: generally accepted accounting principles. Grant Samuel: Grant Samuel Corporate Finance Pty Limited (ABN ). Implementation Date: 2 February 2010 or such other date as is determined in accordance with the Implementation Deed. Implementation Deed: the implementation deed entered into between MIIML as responsible entity of MIT(I), MIIML as responsible entity of MIT (II), MIIML in its personal capacity, MIGIL, MQA Australia, MQA Bermuda, and Macquarie. Incremental Costs: any third party costs incurred by Intoll acting reasonably and in the ordinary course of business that would not have been paid or payable by Intoll if Intoll was managed by Macquarie. Independent Board Committees (IBCs): the independent board committees of MIIML and MIGIL which are comprised of the MIG Independent Directors. Independent Expert: Ernst & Young Transaction Advisory Services Limited (ABN ) (AFS Licence Number ). Independent Expert s Report: the report prepared by the Independent Expert set out in Appendix A to this Explanatory Memorandum. In-Specie Distribution: the distribution of MQA Australia Shares to MIT(II) Unitholders and the distribution of MQA Bermuda Shares to MIGIL Shareholders on the basis of one MQA Security for every MIG Security held on the Record Date (subject to rounding) as part of the Restructure Proposal. Intoll: following the implementation of the Restructure Proposal, MIIML (as responsible entity of MIT(I) and MIT(II)), MIGIL and any subsidiary of any such entity. Intoll Boards: the MIIML Board and MIGIL Board. Intoll Concession Agreements: the CGLA and the Westlink M7 Concession Agreement. Intoll Directors: the directors of MIIML and MIGIL. Intoll Portfolio: the assets of Intoll which will be interests in international toll road concessions, being 407 ETR and Westlink M7. Intoll Security: following the implementation of the Restructure Proposal, a stapled security comprising one unit in MIT(I), one unit in MIT(II) and one share in MIGIL. Intoll Securityholder: the registered holder of an Intoll Security. Intoll Transitional Services Agreement: the transitional services agreement to be entered into between MIIML as responsible entity of MIT(I), MIIML as responsible entity of MIT (II), MIGIL and Macquarie dated on the Implementation Date. Investigating Accountant: PricewaterhouseCoopers Securities Ltd (ABN (AFS Licence Number ). Investigating Accountant s Report: the report prepared by the Investigating Accountant set out in section 6.7 of the Explanatory Memorandum. IRR: Internal rate of return. Listing: MQA Australia or MQA Bermuda (as the context may require) being included on the Of cial List of ASX. Listed has a corresponding meaning.

162 160 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 12: Glossary continued Listing Rules: the ASX Listing Rules and any other rules of ASX which are applicable while the Stapled Entities are admitted to the of cial list of ASX, each as amended or replaced from time to time, except to the extent of any express written waiver by ASX. Macquarie: Macquarie Capital Group Limited (ABN ) and where the context requires, includes a reference to Macquarie Capital Group Limited acting through one or more of its wholly owned subsidiaries. Macquarie Group: MGL and/or its subsidiaries or, when referring to a time prior to 13 November 2007, MBL and/or its subsidiaries. Macquarie Information: the de nition of Principal Holding ; the information under the heading References to Macquarie s holding in MIG Securities of the Disclaimer and Important Notices section and all equivalent statements in this Explanatory Memorandum relating to the Principal Holding and the quantum and nature of Macquarie s holding, relevant interest and/or voting power in MIG Securities but in each case, excluding the total number of MIG Securities on issue (which has been prepared by MIG and relied on by MCGL in preparing the Macquarie Information). Further, each reference to a percentage of MIG Securities in which Macquarie has a relevant interest or over which Macquarie has voting power has been prepared in reliance on information provided by MIG that there are 2,261,732,048 MIG Securities on issue; the statements about Macquarie s intentions in relation to its Principal Holding; and the statements that Macquarie does not intend to vote their MIG securities on the Required Resolution of MIGIL. Macquarie Litigation Indemnity: the indemnity provided by Macquarie to MIIML (acting in its personal capacity) for any loss arising from the OTPP Claim described in section Market Capitalisation or Market Value: the aggregate of the market value of the MQA Securities calculated on the basis of the average number of MQA Securities in issue during the last 10 Trading Days of the ASX in the relevant Calendar Quarter multiplied by the VWAP of all MQA Securities over those 10 Trading Days. Master Trust Indenture or MTI: Master Trust Indenture between 407 International, Inc, 407 ETR Concession Company Limited and The Trust Company of Bank of Montreal, as trustee dated May 5, 1999, as amended. MBL: Macquarie Bank Limited (ABN ). MCFEL: Macquarie Capital Funds (Europe) Limited, a wholly owned subsidiary of Macquarie and currently the adviser to MIGIL. MCGL: Macquarie Capital Group Limited (ABN ). MEIF: Macquarie European Investment Fund MEIPL: Macquarie European Infrastructure Public Limited. MFHL: Macquarie Financial Holdings Limited (ABN ) MGL: Macquarie Group Limited (ABN ). MIG: Macquarie Infrastructure Group, comprised of MIIML (as responsible entity of MIT(I) and MIT(II)) and MIGIL. MIG Boards: the board of directors of MIGIL and MIIML. MIG Directors: the directors of each of MIGIL and MIIML MIG Independent Directors: the independent directors of the board of directors of each of MIIML (being Paul McClintock, David Mortimer and David Walsh) and MIGIL (being Robert Mulderig and Jeffrey Conyers), as the context requires. The independent of the MIG Independent Directors is determined in accordance with the Macquarie Fund Policy as described in Macquarie s Corporate Governance statement under Principle 2 which can be found on MIG s website com/mig. MIIML Funds Management Resources Agreement: the funds management resources agreement between MIIML and Macquarie Funds Management Holdings Pty Limited dated 1 October 2003, as amended. MIG Management: the current executive members of MIG s management team.

163 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 161 MIG Portfolio: the assets of MIG which are interests in toll road concessions, being M6 Toll, 407 ETR, APRR, Westlink M7, Dulles Greenway, Chicago Skyway, Indiana Toll Road, Warnow Tunnel and South Bay Expressway. MIG Security: a security in MIG, consisting of one unit in MIT(I), one unit in MIT(II) and one share in MIGIL stapled together, such that these securities can not be traded separately. MIG Securityholder: a holder of MIG Securities on the Record Date. MIGIL: Macquarie Infrastructure Group International Limited (ARBN ). MIGIL Advisory Deed: the advisory deed between MIGIL, MCFEL (formerly Macquarie Investment Management (UK) Limited) and Macquarie European Infrastructure plc Limited dated 12 January 2005, as amended. MIGIL Advisory Deed Termination Deed: the deed to terminate the MIGIL Advisory Deed to be entered into on the Implementation Date. MIGIL A Special Share: an A special share in MIGIL. MIGIL Bye-Laws: the bye-laws of MIGIL as amended from time to time. MIGIL B Special Share: a B special share in MIGIL. MIGIL IBC: the MIGIL independent board committee comprising of Robert Mulderig (Chairman), and Jeffrey Conyers (Independent Director). MIGIL Shares: shares in MIGIL. MIGIL Shareholder: the registered holder of a MIGIL share. MIIML: Macquarie Infrastructure Investment Management Limited (ABN ) (AFS Licence Number ) as responsible entity of each or both of MIT(I) and MIT(II) (as the case requires). MIIML Board: the board of directors of MIIML. MIIML Directors: the directors of MIIML. MIIML IBC: the MIIML independent board committee comprising of Paul McClintock (Chairman), David Mortimer (Independent Director) and David Walsh (Independent Director). MIP: Macquarie Infrastructure Partners MIT(I): Macquarie Infrastructure Trust (I) (ARSN ). MIT(I) Constitution: the constitution of MIT(I). MIT(I) Unit: a unit in MIT(I). MIT(II): Macquarie Infrastructure Trust (II) (ARSN ). MIT (II) Constitution: the constitution of MIT(II). MIT(II) Unit: a unit in MIT(II). MIT(II) Unitholder the registered holder of a MIT(II) Unit. MQA: following the implementation of the Restructure Proposal, MQA Australia and MQA Bermuda, and any subsidiary of any such entity. MQA Australia: Macquarie Atlas Roads Limited (ABN ). MQA Australia Board: the board of directors of MQA Australia. MQA Australia Constitution: the constitution of MQA Australia. MQA Australia Management Agreement: the management agreement between MQA Australia and the MQA Manager. MQA Australia Shares: ordinary shares in MQA Australia. MQA Bermuda: Macquarie Atlas Roads International Limited (ARBN Registration No ). MQA Bermuda Advisory Agreement: the advisory agreement between MQA Bermuda and the MQA Manager. MQA Bermuda Board: the board of directors of MQA Bermuda. MQA Bermuda Bye-Laws: the bye-laws of MQA Bermuda, as amended from time to time.

164 162 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Section 12: Glossary continued MQA Bermuda Shares: ordinary shares in MQA Bermuda. MQA Boards: the MQA Australia Board and MQA Bermuda Board. MQA Cooperation Deed: the cooperation deed between MQA Australia and MQA Bermuda as amended from time to time. MQA Manager: Macquarie International Advisory Services Limited (ABN ; AFS licence no ) in its capacity as manager of MQA Australia, and advisory to MQA Bermuda. MQA Management Agreements: the MQA Australia Management Agreement and the MQA Bermuda Advisory Agreement. MQA Portfolio: the assets of MQA which will be interests in international toll road concessions, being the MG Toll, APRR, the Chicago Skyway, the Indiana Toll Road and the Dulles Greenway. MQA Prospectus: the MQA Prospectus issued by MIIML, MIGIL, MQA Australia and MQA Bermuda in relation to MQA, accompanying this Explanatory Memorandum. MQA Security: following the implementation of the Restructure Proposal, a security comprising one share in MQA Australia and one share in MQA Bermuda. MQA Securityholder: the registered holder of an MQA Security. Net Investment Value: MIG s market capitalisation based on the VWAP of MIG Securities over the last 10 ASX trading days of each quarter plus fund level borrowings and rm commitments for future investments less cash or cash equivalents. Notices of Meeting: the notices of the General Meetings of MIT(I), MIT(II) and MIGIL scheduled to be held on or about 22 January 2010 in connection with the Restructure Proposal, set out in Appendix D to this Explanatory Memorandum. OECD: Organisation for Economic Cooperation and Development. Of cial List: has the meaning given to the term in the Listing Rules. Of cially Quoted: quoted on the Of cial List of ASX. OTPP: Ontario Teachers Pension Plan Board and Golden Apple Infrastructure Inc. OTPP Claim; the claims made in the proceedings brought by OTPP against MIIML and MIGIL described in section Portfolio Reorganisation: the reorganisation of the MIG Portfolio to form the Intoll Portfolio and the MQA Portfolio. Principal Holding: MIG Securities held by Macquarie Capital Group Limited ABN in respect of which Macquarie Capital Group Limited is able to control the exercise of voting rights attaching to those MIG Securities. Province: Provinces of British Columbia, Ontario, New Brunswick and Quebec. Restructure Proposal: the arrangement by which MIG will be reorganised into two separate ASX listed entities, Intoll and MQA as described in section 1 (Details of the Restructure Proposal). ReCNs: Reset Convertible Notes. ReCNs Deed Poll: the deed poll originally by MIIML as trustee of the Western Sydney Orbital Funding Trust, MIT(I) and MIT(II), and Macquarie European Infrastructure plc dated 14 February 2003 as amended. Record Date: 1 February 2010 or such other date as is determined in accordance with the Implementation Deed. Required Resolution: a Resolution required to give effect to the Restructure Proposal as determined in accordance with the Implementation Deed, being Resolution 1 for the meetings of each of MIT(I), MIT(II) and MIGIL. Resolutions: the resolutions proposed to be put to MIG Securityholders as set out in the Notices of Meeting. RTA: the Roads and Traf c Authority.

165 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 163 Share Sale Agreement: the share sale agreement between MCIH, MCGL, SubCo and MIG. SNC-Lavalin: SNC-Lavalin Inc., a Canadian engineering and construction company. Special Distribution: the proposed special distribution to MIG Securityholders registered as bene cial holders of MIG Securities on the Record Date as set out in section 1.5 of this Explanatory Memorandum. SRN: Shareholder Reference Number. Stapled: the linking together of securities so that one security may not be issued, transferred or otherwise dealt with without a corresponding and simultaneous issue, transfer or dealing of the other securities and which securities are quoted on ASX jointly as a stapled security or such other term as ASX permits. Stapling and Stapled Security are to be construed accordingly. Stapling Deed: the share stapling deed between MIIML as responsible entity of MIT(I) and MIT(II), MIGIL, MCFEL (formerly Macquarie Investment Management (UK) Limited), MCGL and others dated 12 January 2005 (as amended). Stapled Entity: at any time any Australian or overseas established company, trust, corporation or managed investment scheme whose securities are then Stapled and at the date of this Explanatory Memorandum means MIIML as responsible entity of MIT(I) and MIT(II) and MIGIL. Following the implementation of the Restructure Proposal means MIIML (as responsible entity of MIT(I) and MIT(II)) and MIGIL (in relation to Intoll) and MQA Australia and MQA Bermuda (in relation to MQA). SubCo: Intoll Holdings Pty Limited (ACN ). Tax Act: Income Tax Assessment Act 1936 (Cwlth) or Income Tax Assessment Act 1997 (Cwlth), as the context requires. Tax Opinions: tax opinions provided by Greenwoods & Freehills Pty Limited (ABN ). US$: United States of America dollars. US CPI: the Consumer Price Index U.S. City Averages for All Urban Consumers, All Items. US Securities Act: the United States Securities Act of 1933, as amended. VKT: vehicles kilometres travelled. VWAP: volume weighted average price.

166 Independent expert' 's report and financial services guide in relation to the Proposed Restructure of MIG 17 December 2009

167 PART 1 INDEPENDENT EXPERT S REPORT The Independent Directors Macquarie Infrastructure Group International Limited Rosebank Centre 11 Bermudiana Road Pembroke HM 08 Bermuda 17 December 2009 The Independent Directors Macquarie Infrastructure Investment Management Limited as responsible entity for Macquarie Infrastructure Trust I and Macquarie Infrastructure Trust II Level 11, No. 1 Martin Place Sydney NSW, 2000 Dear Independent Directors Independent expert s report in relation to the MIG Restructure Proposal Background Macquarie Infrastructure Group (MIG) is a major developer and operator of toll roads which currently has a portfolio of nine toll roads across six countries. MIG is listed on the Australian Securities Exchange (ASX) and as at 1 December 2009 had a market capitalisation of approximately $2.95 billion. MIG is currently managed through two entities, Macquarie Infrastructure Investment Management Limited (MIIML) and Macquarie Capital Funds (Europe) Limited (MCFEL) (together Macquarie). MIIML is the responsible entity of Macquarie Infrastructure Trust (I) (MIT(I)) and Macquarie Infrastructure Trust (II) (MIT(II)). MCFEL is the adviser to Macquarie Infrastructure Group International Limited (MIGIL) pursuant to the MIGIL Advisory Deed. On 30 October 2009, the boards of MIIML and MIGIL announced a proposal to restructure that, if implemented, will reallocate the underlying investments held by MIG to form two entities both of which will be listed on the ASX (the Restructure Proposal). The Independent Board Committees of MIGIL and MIIIML, as responsible entity of MIT (I) and MIT (II) (IBCs) have stated that the a key aim of the initiatives is to unlock value for MIG securityholders. This follows an extended period where the trading of MIG securities has occurred at a discount to net asset backing. The Restructure Proposal involves: The reorganisation of the MIG assets into the Intoll assets (407 ETR and Westlink M7) and the Macquarie Atlas Roads (MQA) assets (the remaining assets summarised in section 4). MIG will be separated into two ASX listed funds, Intoll and MQA, through a demerger. The demerger will be achieved via the in-specie distribution of MQA securities by MIG to MIG securityholders. MIG will be renamed Intoll. Intoll will be managed by its own management team. MQA will be managed by Macquarie. Ernst & Young Transaction Advisory Services Limited, ABN Australian Financial Services Licence No

168 Macquarie will receive two fees in relation to the implementation of the Restructure Proposal being: $50 million plus an amount equal to the net assets of MIIML for facilitating and assisting in the transition of MIG into the two separately listed funds including the acquisition of MIIML (with its net assets) An advisory fee of 1% of the post Restructure Proposal market capitalisation of Intoll for financial advisory services in connection with the execution and implementation of the Restructure Proposal If the Restructure Proposal is approved and implemented a special distribution of $0.10 per MIG security will be paid to MIG Security Holders. This report relates to the approval that will be sought from MIG securityholders for the Restructure Proposal. Purpose of report The approval by MIG securityholders for the Restructure Proposal including the benefits provided to Macquarie is being sought under Part 2E of the Corporations Act, 2001 (in relation to related party transactions) and the MQA management arrangements having regard to the principles set out in ASX Guidance Note 26 (management arrangements). We note that the neither Part 2E of the Corporations Act, 2001 nor ASX Guidance Note 26 require an independent expert s report to be provided to MIG securityholders. Notwithstanding, the IBCs of MIG have engaged us to prepare an independent expert s report to express an opinion as to whether or not the Restructure Proposal is in the best interests of MIG securityholders. Opinion In our opinion, the Restructure Proposal is in the best interests of MIG securityholders. We have arrived at this conclusion after analysis of all factors associated with the Restructure Proposal as discussed below and in section 5 of this report. Additionally in coming to this conclusion we have analysed alternatives to the Restructure Proposal considered by the IBCs as set out in section Our detailed conclusion is contained in section 5.6. Advantages, disadvantages and other considerations Advantages MIG securities currently trade at a significant discount to its net asset backing. This discount was 49% at 1 December There are a number of factors associated with the Restructure Proposal and referred to in section 5.2 of our report that have the potential to be favourably received by the market and to result in a net re-rating of the Intoll and MQA securities relative to MIG securities currently. This would mean that the securities in Intoll and MQA combined would be likely, either initially or over time, to trade at values nearer to their net asset backing than the current MIG securities. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young ii

169 These factors are: Separation of Intoll and MQA - The separation of MIG s existing portfolio into two portfolios, the more stable assets with lower debt levels being owned by Intoll and the higher risk assets due mainly to higher debt levels owned by MQA, is of potential benefit to MIG securityholders as they would now be able to make separate investment decisions in relation to their investments in Intoll and MQA. In addition, new investors (who may not have invested in MIG previously) may now be attracted to invest in either Intoll or MQA depending on their own investment profiles and risk attitudes. Greater independence of Intoll As provided in section 4.1.3, Intoll will, after the Restructure Proposal, have boards appointed by Intoll securityholders, with Macquarie s capacity to appoint directors being commensurate only with its security holding in Intoll. In our view Intoll becoming a standalone business may better align it with investor sentiment in the current market and has the potential to be positively received by the investor market and therefore be a potential benefit to MIG securityholders. In this context we note that key management positions at Intoll are proposed to be held by persons who have long experience with Intoll s assets. Reduced cost of management (excluding MQA Performance Fees) In most cases a demerger results in additional costs being incurred as the demerged entity has to set up its own corporate cost structure independent of its former parent. In the case of the Restructure Proposal, which is accompanied by changes to management arrangements, the overall cost of management (excluding potential Performance Fees which are discussed below) are expected to decrease. Intoll may make additional investments The Explanatory Memorandum indicates that Should a rerating of Intoll securities occur, Intoll should have a better opportunity to consider potential new investment opportunities. Increased opportunity for corporate activity With the existing management structure of MIG, the security holding of Macquarie and the inclusion of the highly leveraged assets a takeover of MIG in its current form would practically be difficult. With changes to the management structure of Intoll and the demerger of the assets with higher debt levels we consider that as a result of the Restructure Proposal, there is an increased likelihood of corporate activity involving Intoll. In relation to MQA, a takeover would be more difficult and would require the support and co-operation of Macquarie. Notwithstanding this, it is possible that certain parties could see a takeover of MQA as being attractive and potentially more achievable given the reduced size of MQA relative to the existing MIG. We consider this to be less likely in the near term. Reduced volatility of Intoll cost structure If the Restructure Proposal is approved and implemented Intoll will not pay management fees to Macquarie or any other party but will incur additional corporate costs to perform functions previously provided by Macquarie. As the management fees relating to MIG are based predominantly on the market capitalisation of MIG, the level of management fees have and can vary significantly from year to year. In contrast to the above position, the corporate costs for Intoll will be relatively fixed in nature and would generally only be expected to increase in line with general cost increases or if structural change within Intoll occurs. Therefore, prima facie, the Restructure Proposal will reduce the volatility of Intoll s cost structure relative to that previously existing for MIG. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young iii

170 Eliminate risk of paying Performance Fees for Intoll - As discussed in section of the Explanatory Memorandum As at 30 September 2009, the MIG underperformance deficit was the equivalent of A$2.12 per stapled security, which in market capitalisation terms represents approximately $4.8 billion. As a result of this accumulated underperformance, at least in the near term, the risk of a Performance Fee becoming payable by MIG is low. Notwithstanding this fact, with its standalone management structure there is no requirement for Intoll to pay any Performance Fees in the future. Possible disaggregation benefit for Intoll To the extent that institutional investors and debt financiers aggregate investments in Macquarie managed funds or assets for the purpose of assessing concentration risk, the Restructure Proposal should remove Intoll from this grouping and may increase their willingness to invest in, and to lend to, Intoll. The same advantage (if any), will not apply to MQA. In relation to any net re-rating of Intoll and MQA assets relative to the current MIG securities, we note that the toll road assets to be held by Intoll are the more stable assets with lower debt levels than the toll road assets to be owned by MQA. As discussed in section 5.4 it is not possible to predict with any degree of certainty how the market will view MQA securities and how it will be rated. It is possible that it could be rated more highly than or not as highly as the current MIG securities. In our view, in current market conditions the potential re-rating of Intoll is more likely than MQA. In fact, as discussed below, there is no certainty as to how MQA s securities will trade on the ASX. There is a reasonable risk that the securities will continue to trade at a significant discount to their net asset backing (possibly even greater than that which currently applies to MIG securities). Any improvement in the market rating for MQA may occur over a longer period as the various refinancing and other issues in that portfolio are addressed. It should be noted however that the MIG directors valuations, that form part of the net asset backing, in a number of cases reflect the value of a controlling or highly influential interest in the underlying asset. It is quite possible that the trading prices of Intoll and MQA (like MIG) would not reach those values in the absence of a control transaction occurring. Disadvantages We note the following disadvantages of the Proposed Restructure as set out in section 5.3. Each of these has the potential to have an adverse impact on the extent of any net re-rating of Intoll and MQA securities relative to MIG securities. Reduced weighting in stock market indices The market capitalisation of an entity listed on the ASX is an important factor affecting which stock market indices a security is included within, and the weighting that it has within that index. Index weightings are also affected by the level of trading of a stock and the free float market capitalisation. By separating MIG into Intoll and MQA, at least initially and subject to the extent of any re-rating, each of these entities will have a market capitalisation less than that of MIG. This means that these entities, and in particular MQA due to its smaller size, are likely to be included in fewer indices and have a lower weighting in such indices than MIG. Due to the investment criteria of some fund managers and other investors, a reduced weighting in, or absence from some stock market indices may result in lower levels of investment in Intoll and MQA than is currently undertaken in MIG. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young iv

171 Potential reduction in overall distributions The Explanatory Memorandum indicates that Intoll will have a distribution policy that aligns the distributions to the cash generated by the Intoll Portfolio. In contrast the Explanatory Memorandum indicates that for MQA Dividends are not anticipated in the near to medium term. Cash flows from the portfolio are expected to be retained in the near term to potentially assist with the future refinancing and/or restructuring of one or more projects in the portfolio. The above position may mean that total distributions from Intoll and MQA under their respective distribution policies may be less than MIG distributions would be in the absence of the Restructure Proposal due to the retention of funds within MQA. The potential reduction in distributions may not necessarily be a disadvantage to MIG securityholders in the longer term. Notwithstanding, MIG securityholders who have a preference for distributions may consider this factor to be a disadvantage. The Restructure Proposal involves transaction costs There are a number of costs incurred with the Restructure Proposal. These include: MIG expects that excluding the fees referred to below it will incur approximately $7 million of costs in relation to the implementation of the Restructure Proposal. A substantial majority of these costs will have been incurred prior to the date upon which MIG securityholders will vote on the Restructure Proposal. MIG has appointed Macquarie Capital Advisers as its financial adviser to provide advice and assistance in relation to the Restructure Proposal in return for the payment of a financial advisory fee of 1% of the market capitalisation of Intoll calculated as the VWAP over the first 30 days of trading. As noted in the Explanatory Memorandum, Macquarie s financial advisory role excludes advice on arrangements between Macquarie Group and MIG, Intoll and MQA. We note that it is consistent with normal commercial practice for a demerger of this nature for financial advisory fees to be payable to an adviser. The Restructure Proposal includes the payment of $50 million plus an amount equal to the net assets of MIIML to Macquarie. This is discussed in section 8.2 of the Explanatory Memorandum. As indicated in the Explanatory Memorandum the payment of $50 million plus an amount equal to the net assets of MIIML is stated to be for facilitating a range of outcomes in connection with the Restructure Proposal. This is stated to include the following: Assisting Intoll with establishing an independent operation, including assisting in the transfer of certain personnel, provision of premises, the reimbursement of incremental costs) (including all employment costs) and other services over a 12 month period. Facilitating a method of implementation for the Restructure Proposal which minimises the potential for triggering pre-emptive rights and consent rights in asset level agreements. Granting a licence to Macquarie s intellectual property rights to Intoll. Transferring MIIML, the responsible entity of MIT(I) and MIT(II) to Intoll. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young v

172 In relation to the payment of the $50 million plus an amount equal to the net assets of MIIML fees payable to Macquarie we note the following key points: We are advised that the net assets of MIIML are expected to be approximately $25.6 million, predominantly cash deposits. MIIML has not operated other than as the responsible entity of MIT(I) and MIT(II). The $50 million includes the reimbursement of incremental costs incurred by Intoll (see above) over the first 12 months after the implementation of the Restructure Proposal. The Explanatory Memorandum estimates that these costs will be approximately $7.8 million. This is of direct benefit to Intoll. The assistance of Macquarie will significantly aid in the implementation of the Restructure Proposal. The transition of staff historically involved in managing MIG and the licensing of relevant Macquarie intellectual property will all assist to ensure an orderly transition of Intoll to standalone management, the separation of the two toll road asset portfolios and the establishment of MQA as a separate listed entity. Macquarie s co-operation enables the Restructure Proposal to be implemented in a way that avoids pre-emptive rights over assets being triggered and other consent rights in asset level agreements (for example financing arrangements). This is also of advantage to MIG securityholders. Macquarie will cease to manage Intoll with this being effected by the transfer of MIIML to Intoll and the ending of the MIGIL Advisory Deed and the MIG Funds Management Resources Agreement with Macquarie. Financial position of Macquarie Atlas Roads The assets of MQA will primarily be the toll road assets listed in section and approximately $293 million of cash. MQA will have no debt at the fund level. The investments in the MQA toll road portfolio generally have high levels of debt and as noted in section of the MQA Prospectus There is a significant risk that one or more investments in the MQA Portfolio may be unable to comply with the terms of their loans or may be unable to arrange refinancing when loans fall due, or that the terms of refinancing are less favourable than the current terms. It is also indicated in the Prospectus that the debt at each of the assets is non recourse to MQA and is not secured over anything but the project to which it relates. In the event that some of MQA s assets are not able to refinance their debt there are risks that: An individual asset or assets may be subject to some form of insolvency or administration. MQA s interests in those assets could be diluted, possibly on unfavourable terms. MQA could be forced to divest those assets under distressed circumstances. While these risks also exist for MIG in the absence of the Restructure Proposal, they are greater for MQA. This reflects the fact that MQA, as a much smaller entity than MIG, will have less flexibility in managing those risks. Whereas MIG has the benefit of much larger scale, the likelihood of being able to raise capital, and the generation of cash flows from the two lower risk assets to be held by Intoll, MQA will have fewer resources and options for dealing with those risks. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young vi

173 Performance Fees for MQA If the Restructure Proposal is approved, MQA will continue to be managed by Macquarie and will be liable for payment of Performance Fees under certain performance hurdles. We have analysed a number of scenarios to assess the potential for payment of Performance Fees by MQA. These are presented in section While under some scenarios significant performance fees could be paid, we note that for this to occur significant outperformance would need to occur which would be to the benefit of MQA securityholders. We note that while significant outperformance can occur from time to time, it is unlikely to occur at a significant level on an ongoing sustained basis. As a result of previous underperformance and the associated accumulated underperformance, at least in the near term, the likelihood of a Performance Fee becoming payable by MIG is low. Therefore, any payment of MQA Performance Fees would be a disadvantage to MIG securityholders. Other factors Continued Macquarie management of MQA Prima facie, given current market sentiment does not generally support the externally managed fund model, continued Macquarie management of MQA may appear to be a disadvantage of the Restructure Proposal. However, in our discussions with the IBCs, we were advised that they had formed the view that Macquarie s continued management of MQA was the most appropriate course of action in the circumstances, particularly with regard to the operational and financial (debt refinancing) challenges that require significant uninterrupted focus and expertise to address. The IBCs have formed the view that active management of these assets is required and that Macquarie with its significant expertise and history with respect to each of these assets is best placed to manage those assets. Profile of Macquarie Atlas Roads To varying degrees, MQA s assets have significant levels of debt, are less mature than the Intoll assets and their performance has been quite significantly adversely affected in the current economic downturn. In addition MQA, notwithstanding the rationale discussed above, will be an externally managed fund which in recent times has not been well received in the current investor market. As a consequence of the above factors there is no certainty as to how MQA s securities will trade on the ASX. There is a reasonable risk that the securities will continue to trade at a significant discount to their net asset backing (possibly even greater than that which currently applies to MIG securities). It may be that a reasonable period of time may be required for any value to be extracted from the MQA asset portfolio and in many cases this will depend upon financial performance leading up to the next major refinancing date for each asset and the terms that can be negotiated for refinancing at that time. As MIG securityholders already have interests in these assets we do not consider this to be a disadvantage of the Restructure Proposal. We believe, however, that securityholders should be aware of this issue. Impact of the Restructure Proposal on control and dilution We note that in a number of other transactions involving the restructure of management arrangements, securities have been issued as consideration for the acquisition or cancellation of management rights. In this case, the move to standalone management arrangements for Intoll will not affect the voting power which Macquarie or any other securityholder exerts over Intoll or MQA and will not result in the dilution of securityholders interests. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young vii

174 Taxation in relation to the Restructure Proposal MIG securityholders should refer to the section Tax Information for Securityholders contained in section 9 of the Explanatory Memorandum. We recommend that securityholders consider this material carefully. The information provided in the Explanatory Memorandum discusses: The implication of the in-specie distribution of the entities that comprise MQA. The Explanatory Memorandum discusses the potential application of demerger relief provisions and we encourage MIG securityholders to carefully consider this material. The implications of the proposed special distribution by MIG of $0.10 per MIG security. The Explanatory Memorandum indicates that The distribution will be treated as an unfranked dividend paid by MIT(II) (as MIT(II) will be treated as a company for Australian tax purposes). The Explanatory Memorandum discussed the consequences of this for Australian resident and non-resident securityholders who will either be assessable on their receipt of the dividend or subject to dividend withholding tax in Australia. The Explanatory Memorandum also indicates that a MIG entity will make a capital gain of approximately $5 million on the sale of interests in Chicago Skyway and Dulles Greenway to one of the entities that will comprise MQA. Tax may be payable by MIG securityholders on this gain, the amount of which will be affected by various matters discussed in point 5 of section 9 of the Explanatory Memorandum. An individual MIG securityholder s actual tax position will be dependent upon their own facts and circumstances. As such MIG securityholders should seek their own independent tax advice in relation to the Restructure Proposal. Taxation in relation to future distributions The components of Intoll s distributions can vary from year to year and is dependent upon how the funds forming part of the distributions have been derived. Such components may include franked distributions, capital gains, tax deferred distributions and foreign distributions. This is the same position as has applied to MIG distributions historically. We are not aware of any aspect of the Restructure Proposal that would adversely affect the form of future Intoll distributions compared to distributions that might be made by MIG in the absence of the Restructure Proposal. As noted above, MQA is not expected to pay distributions in the near to medium term. Overall Assessment In our opinion, the Restructure Proposal is in the best interests of MIG securityholders. In forming our conclusion we have had regard to all of the factors associated with the Restructure Proposal as discussed in section 5 of this report and to the alternatives considered by the IBCs as set out in section We note that the primary advantage and the main purpose of the Restructure Proposal is to encourage a net re-rating of Intoll and MQA securities relative to the existing MIG securities. Many of the advantages referred to above would be expected to contribute to such a re-rating. A net re-rating would mean that the securities in Intoll and MQA combined would either initially or over time trade at values nearer to their net asset backing than do the current MIG securities. While in this report we discuss a number of factors which we consider should contribute to a net re-rating of Intoll and MQA securities, we note that there is no certainty that this will occur. This is particularly so for MQA securities where it is possible that they may not be rated as highly as MIG at present. The ultimate value of these securities is likely to be determined and realised over a longer period as the issues facing the MQA assets are addressed. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young viii

175 We note that Intoll and MQA will collectively hold the same toll road assets as MIG after the implementation of the Restructure Proposal. We have no reason to believe that the underlying value of those assets in the market would change as a result of the Restructure Proposal. The most significant disadvantage of the Restructure Proposal relates to transaction costs that will be incurred (principally being the payments to Macquarie that will occur if the Restructure Proposal is approved and implemented) and the potential that MQA may pay Performance Fees if the specified performance hurdles are met. We have considered the relative significance of the advantages and disadvantages in forming our conclusion. In this regard we note that: In section we set out a comparison of MIG s existing cost of management, as incurred for the year ended 30 June 2009, to the cost of management estimated in the Explanatory Memorandum for Intoll and MQA on an annualised basis. This comparison reflects MIG s existing management arrangements on the one hand and Intoll s standalone management structure and MQA s ongoing management by Macquarie on the other. Consequently it takes into account the fact that the Base Fee as a percentage of market capitalisation for MQA will be higher than that which currently applies for MIG (see section 5.5.1) This comparison indicates a potential reduction in the cost of management (excluding Performance Fees which are considered below) in the order of $9.2 million per annum. In section we discuss the potential that MQA may incur Performance Fees in the future if certain performance hurdles are met. As illustrated in that section there can be no certainty as to the amount of Performance Fees that could be incurred or the timing of the payment of Performance Fees. In any one period the amount of Performance Fees could be significant. However over the medium to longer term it would be difficult for any manager to materially outperform the relevant indices on a sustainable basis. While it is subjective we consider that it would be unlikely that on a sustainable basis the level of Performance Fees that could be incurred would exceed the cost of management savings of $9.2 million per annum as discussed above. In section we discuss the fees that will be payable to Macquarie if the Restructure Proposal is approved and implemented. We note that the total amount that will be incurred in this regard is uncertain as the financial advisory fee is based on the VWAP of Intoll over the first 30 trading days after listing on the ASX. For the purposes of this analysis however we assume that the total of the two fees could be $87 million which assumes that the Intoll securities increase to trade at their net asset backing. We note that there is no certainty that this could occur. We note that it is not possible to predict with any degree of certainty the extent to which a re-rating will occur. There are however a number of impacts of the Restructure Proposal which has lead us to form the view that some form of re-rating, either initially or over time is likely. We believe that in the short term a re-rating of the Intoll securities is more likely than for the MQA securities where the ultimate value of those securities is likely to be determined and realised over a longer period. As at 1 December 2009 the MIG security price of $1.31 represents a discount of approximately 49% relative to its net asset backing as at 30 June Only a very small net re-rating would be required to offset the $87 million of transaction costs payable to Macquarie referred to above. As an example, in the event that on average the Intoll and MQA security prices reflected only a marginally reduced discount to net asset backing of 47% the increase in market capitalisation resulting would more than offset the $87 million in transaction costs referred to. We note that $87 million represents less than $0.04 per MIG security. Consequently, in our view having regard to all of these factors we consider that on balance the advantages of the Restructure Proposal outweigh the disadvantages. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young ix

176 Other matters In preparing this independent expert s report we have considered relevant regulatory guides issued by the Australian Securities & Investments Commission (ASIC), with particular reference to Regulatory Guide 111 Content of expert reports and Regulatory Guide 112 Independence of experts. The independent expert s report constitutes general financial product advice only and has been prepared without taking into consideration the individual circumstances of MIG securityholders. The decision as to whether to vote in favour or against the Restructure Proposal is a matter for individual MIG securityholders. MIG securityholders should have regard to the Explanatory Memorandum and Macquarie Atlas Roads Prospectus prepared by the directors and management of MIG in relation to the Restructure Proposal. MIG securityholders should also consider the taxation implications of the Restructure Proposal. The Explanatory Memorandum contains general information in relation to the taxation implications of the Restructure Proposal. MIG securityholders who are in doubt as to the action they should take in relation to the Restructure Proposal should consult their own professional advisers. We have prepared a Financial Services Guide in accordance with the Corporations Act, The Financial Services Guide is included as Part 2 to this report. We consent to the issue of this report in the form and context in which it is included in the Explanatory Memorandum to be sent to MIG security holders. This report reflects circumstances and conditions as at the date of this report. This letter must be read in conjunction with the full independent expert s report. Yours sincerely Ernst & Young Transaction Advisory Services Limited Stuart Bright Director and Representative Ishwar Madhyastha Director and Representative Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young x

177 Contents 1. Details of the Restructure Proposal Scope of the report Purpose of this report ASIC guidance Limitations and reliance on information MIG securityholders decision MIG overview Assets Management Arrangements MIG financial analysis Capital structure and ownership Security price performance Distribution history Impact of the Restructure Proposal Intoll Macquarie Atlas Roads Other fees payable to Macquarie Pro forma financials Assessment of the Restructure Proposal Rationale for the Restructure Proposal Advantages Disadvantages Possible market re-rating Other factors Conclusion Appendix A Qualifications and declarations Appendix B Sources of information Appendix C Glossary Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 0

178 1. Details of the Restructure Proposal On 30 October 2009, the boards of MIGIL and MIIML announced a proposal to restructure MIG and reallocate the underlying investments held by MIG to form two entities both of which will be listed on the ASX (the Restructure Proposal). The IBCs of MIGIL and MIIML, as responsible entity of MIT (I) and MIT (II) have stated that a key aim of the initiatives is to unlock value for MIG securityholders. This follows an extended period where the trading of MIG securities has occurred at a discount to net asset backing. If the Restructure Proposal proceeds, MIG will distribute surplus cash by way of a special distribution of 10 cents per MIG stapled security. Currently MIGIL, a Bermudan mutual fund company, is part of a stapled structure, which consists of MIGIL, and two Australian trusts, MIT (I) and MIT (II). These entities are collectively referred to as MIG. MIIML, a subsidiary of Macquarie, acts as responsible entity of MIT (I) and MIT (II). MCFEL is the adviser to MIGIL. The current group structure of MIG is shown in diagrammatic form in section 3.4. The Restructure Proposal will involve the following: The reorganisation of the MIG assets into the Intoll assets (407 ETR and Westlink M7) and the MQA assets (the remaining assets summarised in section 4.2.1). MIG will be separated into two ASX listed groups, Intoll and MQA, through the Demerger. The Demerger will be achieved via the in-specie distribution of MQA securities by MIG to MIG securityholders. MIG will be renamed Intoll. Intoll will be managed by its own management team whereas MQA will be managed by Macquarie. This will be effected as follows: Intoll will acquire MIIML from a Macquarie subsidiary. MIIML is the responsible entity of MIT(I) and MIT(II). MIIML will end its resource arrangements with Macquarie. Intoll will acquire a perpetual intellectual property licence from Macquarie (in respect of MIG related materials which are owned by Macquarie including the MIG internal financial models). The MIGIL Advisory Deed will be terminated and the A Special Share in MIGIL held by MCFEL will be redeemed. Macquarie will provide transitional support services to Intoll up to 31 December 2010 including information technology, compliance and risk management assistance, human resources support and accounting and taxation compliance services. New management arrangements between Macquarie and MQA will be implemented. These arrangements will be similar to those currently existing between MIG and Macquarie. However there are differences including the Base Fee being increased from 1.25% to 2% of market capitalisation up to and including $1 billion, and the Performance Fee hurdle to be reset to reflect the market price of MQA upon listing on the ASX. These and other changes are discussed in section of this report. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 1

179 Macquarie will receive two fees in relation to the implementation of the Restructure Proposal: Macquarie will receive a payment of $50 million plus an amount equal to the net assets of MIIML for, among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG. Macquarie will be paid an advisory fee of 1% of the post Restructure market capitalisation of Intoll for financial advisory services in connection with the execution and implementation of the Restructure Proposal. The Restructure Proposal is subject to a number of conditions, including: MIG securityholder approval: MIG securityholders approving the Restructure Proposal including the benefits provided to Macquarie for the purposes of Part 2E of the Corporations Act. (A number of other resolutions will be considered at the time of the General Meetings to approve the Restructure Proposal but the Restructure Proposal is not dependent on the outcome of those resolutions, see section 10 of the Explanatory Memorandum). The Implementation Deed not having been terminated: The Implementation Deed can be terminated for various reasons as set out in the Explanatory Memorandum, including if the majority of the IBCs change their recommendation on fiduciary grounds (including as a result of a superior competing transaction). ASIC relief and ASX waivers: it is a requirement to obtain certain ASIC relief and ASX waivers. Our report relates to the Restructure Proposal only and is being provided to MIG securityholders to assist them in considering how to vote in relation to resolutions that will be required to be passed at a meeting in order for the Restructure Proposal to be implemented. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 2

180 2. Scope of the report 2.1 Purpose of this report As noted above, the demerger will be implemented by way of an in-specie distribution of stapled securities in MQA. As provided in the Explanatory Memorandum the Restructure Proposal will be implemented from the passing of Resolution 1 as set out in section of the Explanatory Memorandum and provided below. Resolution 1 for the meetings of each of MIT(I), MIT(II) and MIGIL are the Required Resolutions. Resolution 1 for the meetings of each of MIT(I), MIT(II) and MIGIL authorises the responsible entity of each of MIT(I) and MIT(II) and MIGIL to implement the Restructure Proposal. The approval of MIG securityholders for the Restructure Proposal including the benefits provided to Macquarie is being sought under Part 2E of the Corporations Act, 2001 (in relation to related party transactions) and the MQA management arrangements having regard to the principles set out in ASX Guidance Note 26 (management arrangements). We note that neither Part 2E of the Corporations Act, 2001 nor ASX Guidance Note 26 requires an independent expert s report to be provided to MIG securityholders. Notwithstanding, the IBCs of MIG have engaged us to prepare an independent expert s report to express an opinion as to whether or not the Restructure Proposal is in the best interests of MIG securityholders. This independent expert s report is to be included within the Explanatory Memorandum in respect of the Restructure Proposal which is expected to be sent to MIG securityholders in late December Other associated resolutions will be considered at the meeting to consider the Restructure Proposal (see section 10 of the Explanatory Memorandum), however, the outcome of the Restructure Proposal is not dependent on the passing of those ancillary resolutions. The resolution required to approve the Restructure Proposal is an ordinary resolution and Macquarie and its associates are not permitted to vote on this resolution. All amounts in the independent expert s report are expressed in Australian dollars ($) unless otherwise stated. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 3

181 2.2 ASIC guidance ASIC Regulatory Guide 111 Content of expert reports (RG111) provides guidance in relation to the preparation of independent expert s reports and the form of analysis to adopt in different circumstances. As the major effect of the Restructure Proposal is to implement a demerger (separation of MIG into MQA and Intoll) we have considered RG (Demergers and demutualisations) in particular which provides guidance in relation to demergers. RG states that: The expert should provide an opinion as to whether the advantages of the transaction outweigh the disadvantages. RG further states: If the demerger or demutualisation involves a scheme of arrangement and the expert concludes that the advantages of the transaction outweigh the disadvantages, the expert should say that the scheme is in the best interests of the members. While the Restructure Proposal does not involve a scheme of arrangement we feel that it is appropriate to adopt this approach. 2.3 Limitations and reliance on information In reaching our conclusions, we have considered and relied upon information provided by MIG and information that has been placed on the public record. We note that certain information relied on constitutes internal management information that is not on the public record. In the preparation of this report we have relied upon and considered information believed after due inquiry to be reliable and accurate. We consider reliance on this information to be reasonable in the circumstances. Our sources of information are set out in appendix B to this independent expert s report. We have no reason to believe that any material facts have been withheld from us. We note, however, that we have not audited the information provided to us and we do not warrant that our enquiries have disclosed all the matters that an audit or a more extensive examination might have disclosed. Our opinion is based on economic, market and other conditions prevailing at the date of this report. This report should be read in conjunction with the declarations outlined in the qualifications and declarations in appendix A. Our report relates to the Restructure Proposal only and is being provided to MIG securityholders to assist them in considering how to vote in relation to resolutions that will be required to be passed at a meeting in order for the Restructure Proposal to be implemented. 2.4 MIG securityholders decision This report constitutes general financial product advice only and has been prepared without taking into consideration the individual circumstances of MIG securityholders. The decision as to whether or not to approve the Restructure Proposal is a matter for individual MIG securityholders. MIG securityholders should consider the advice in the context of their own circumstances and preferences. MIG securityholders who are in doubt as to the action they should take in relation to the Restructure Proposal should consult their own financial adviser. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 4

182 3. MIG overview MIG listed on the ASX on 16 December 1996 as the Infrastructure Trust of Australia Group. MIG has held investments in 31 toll roads globally and has divested 22 toll road investments since its formation. As at the date of this report, MIG has interests in nine toll roads a summary of which is provided below. Key events in MIG s history include: 2001 MIG acquired an indirect ownership of 24.82% in 407 International Inc., the concession owner for Highway 407 through the acquisition of a 40% interest in Cintra, a Spanish toll road operator MIG acquired an additional direct and indirect fully diluted 18.45% interest in 407 ETR MIG, along with Grupo Ferrovial, listed Cintra through an initial public offer on the Spanish Stock Exchange. As part of the transaction, a direct 13.87% shareholding of 407 ETR was transferred to MIG, leaving MIG with a 30% direct interest in 407 ETR post the initial public offer. Between 2002 and 2005, MIG continued to increase its interest in toll roads acquiring stakes in Lusoponte, San Diego Expressway Limited, Chicago Skyway, M6 Toll, Dulles Greenway and Westlink M7. July MIG disposed of its investments in the Eastern Distributor, M5 Motorway and M4 Motorway through a demerger and listing of the Sydney Roads Group. This is discussed further in section Assets MIG currently holds the following assets: Portfolio MIG's 30-Jun-09 Enterprise Concession Asset weighting interest Valuation Net debt* value* Gearing ends Country 407 ETR 64.5% 30.0% 3,284 1,324 4, % 2098 CAN Westlink M7 7.0% 25.0% % 2037 AUS APRR 8.8% 20.4% 448 4,048 4, % 2032 FRA M6 Toll 8.1% 100.0% 412 2,457 2, % 2054 UK Indiana Toll Road 1.9% 25.0% 98 1,164 1, % 2081 US Dulles Greenway 6.7% 50%** % 2056 US Chicago Skyway 2.9% 22.5% % 2104 US South Bay Expressway - % 50.0% % 2042 US Warnow Tunnel 0.0% 70.0% % 2053 GER Total 100.0% 5,093 10,757 15, % Source: MIG Management Information Report (30 June 2009) * Proportionate interest ** Estimated economic interest Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 5

183 A summary of the debt (100%) and maturity profile of each asset is shown in the table below. Further discussion of each of these debt profiles is provided under each individual asset. Asset FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY ETR CAD - 1, ,616.4 M6 Toll GBP , APRR EUR , , Westlink M7 AUD Dulles Greenway USD Indiana Toll Road USD , Chicago Skyway USD South Bay USD Expressway Warnow Tunnel EUR Source: 30 June 2009 inv estor presentation Note: Table shows 100% of debt of each asset shown. Figures reflect debt outstanding at 30 June 2009 and do not reflect any future accretion A detailed description of the above assets, including information relating to their performance, financial position and key risks is provided in the Explanatory Memorandum and the MQA Prospectus. Readers should review this material for a more detailed understanding of the assets. The following provides a brief summary of the assets ETR 407 ETR is a 108 kilometre, multi-lane all-electronic toll highway in Toronto, Canada that runs alongside some of the fastest growing areas in the Greater Toronto area. 407 ETR was designed to relieve congestion on Highway 401, one of the busiest highways in North America. MIG has a direct interest of 30% in 407 ETR. Traffic in 2009, as measured by Vehicle Kilometres Travelled (VKT) decreased 3.0% against the prior corresponding period (PCP). This was due to the continuing impact of slowing economic activity across North America contributing to a reduction in total trips and average trip length. Total revenue increased by 1.4% in FY09 against PCP due to increased toll charges more than offsetting the decrease in overall traffic. The 407 ETR is one of the more conservatively geared toll roads in MIG s portfolio. It has CA $1,175 million of debt maturing in FY11, a total of CA $752 million maturing between FY12 and FY17 and CA $2,616.4 million maturing in FY19 and beyond Westlink M7 Westlink M7 is a 40 kilometre toll road in the west of Sydney, Australia, which links the M2 Motorway in the north, the M4 Motorway, and the M5 Motorway in the south. It forms a major part of Sydney s 110 kilometre orbital network, linking major employment, industrial and residential areas of western Sydney. The Sydney orbital network also acts as an outer bypass for traffic through Sydney as well as a primary link to inter- and intra-state highways. MIG currently holds a 25% effective interest in the Westlink M7 via a 50% interest in the Western Sydney Roads Group (WSRG). Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 6

184 Average daily tolled VKT increased 5.1% in FY09 compared to PCP with operating revenue for the same period increasing 7.8%. The increase in revenue has been driven by increases in distances travelled as well as an average toll price increase of 4.6% for the period. Westlink is also one of the more conservatively geared toll road assets. The debt profile for the Westlink M7 includes $500 million maturing in FY11, $500 million in FY13 and the remaining $250 million maturing in FY APRR The APRR motorway network is located in the heart of Western Europe and serves major business centres, including the Paris Lyon corridor that links France's two largest metropolitan areas, as well as Northern Europe, Switzerland and Southern Europe. The network also serves as a gateway to Central and Eastern Europe. Under the concession agreements, APRR is entitled to construct a total of 2,279 kilometres of toll roads and currently has 2,234 kilometres of toll roads in operation with a further 44 kilometres to be constructed and opened by MIG has an effective interest of 20.37% in APRR via the holding company Eiffarie. For the FY09 period traffic, measured by VKT, declined by 2.9% compared to the PCP. Light vehicle traffic decreased by 1%, notwithstanding the benefit from strong levels of holiday traffic in the last quarter. Heavy goods vehicle traffic for the same period declined by 12%, reflecting the weak general economic environment in Europe. Consolidated revenues decreased by 1.3% in FY09 compared to PCP. APRR generates 1.2 billion of EBITDA annually. Eiffarie s (the holding company for MIG s interest in the APRR) debt consists of a seven year 3,860 million term facility (as at June 2007). This facility is partially repaid from a cash sweep (the compulsory retention of a proportion of operating cash flows). It is envisaged that this facility will be refinanced in FY12, prior to its maturity in February APRR has approximately 5.5 billion of debt provided by Caisse Nationale des Autoroutes (CNA). APRR s outstanding CNA debt is predominantly fixed rate and will be materially amortised by The APRR Group has additionally arranged a 1.8 billion revolving credit facility and a 500 million seven year bank facility to refinance 100% of the CNA maturating debt and a portion of capital works in the early years of operation. S&P currently rate the APRR debt as BBB M6 Toll The M6 Toll is a 42 kilometre six-lane toll road that bypasses a congested stretch of the M6 Motorway near Birmingham, in the United Kingdom. The M6 Toll has three lanes in each direction, and has nine entry and exit points. The southern end of the M6 Toll commences at the junction of the M42 and M6, two of the busiest motorways in the UK. The northern end of the M6 Toll merges with the M6 just south of Cannock, allowing motorists to avoid congestion on the M6 around Birmingham. MIG has a 100% interest in the M6 Toll. In FY09 traffic volumes fell by 9.9% compared with the PCP although toll increases on 1 January 2009 limited decreases to revenue for the year to 1.8%. Traffic on the M6 Toll continues to be affected by slow economic conditions across the UK. The debt facility of 1,030 million is due to mature in FY16. A cash sweep of 40% is due to commence in FY12 escalating to 100% by FY15. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 7

185 3.1.5 Indiana Toll Road The Indiana Toll Road (ITR) is a 253 kilometre, limited access, divided highway in Indiana, US. The road spans northern Indiana, from its border with Ohio to the Illinois state line near Chicago, feeding directly into two toll roads at the state lines the Chicago Skyway in the west and the Ohio Turnpike in the east. MIG holds a 25% interest in the Indiana Toll Road. Average daily traffic on the Indiana Toll Road for FY09 decreased 3.8% on the ticket system and 14.9% at the barrier compared to PCP. Weakened economic conditions and the toll increases for heavy vehicles implemented in April 2009 have negatively impacted traffic volumes. Light vehicle traffic has shown early signs of improvement in the second half of the year, while heavy vehicle traffic continues to be impacted by the economic downturn. Revenue for FY09 increased by 1.2% as toll increases have offset lower traffic volumes. Three tranches of bank debt were used to fund the ITR acquisition; a US $3.2 billion acquisition facility, a US $150 million liquidity facility to fund early period interest payments and a US $665 million capital expenditure facility to fund significant expected capital expenditures to June Both the liquidity facility and capital expenditure facility were not being utilised as at 30 June The ITR also has a 20 year accreting swap in place. As the ITR did not achieve the 12 month revenue test in December 2008 or June 2009, the fifth and sixth instalments of a revenue stabilisation reserve were applied to service the debt Dulles Greenway The Dulles Greenway is a 22 kilometre toll road located in northern Virginia, west of Washington D.C. It runs from Dulles International Airport through Loudoun County to Leesburg. Loudoun County has been one of the fastest growing counties in the United States, with significant housing and economic development in the corridor. Currently six lanes wide (at the Main Line Toll Plaza), the road has the potential to be expanded up to 12 lanes. MIG holds a 50% economic interest in Dulles Greenway. Average daily traffic on the Dulles Greenway for the year to 30 June 2009 has decreased 5.1% compared to PCP. Traffic has been impacted by the new toll schedule implemented on 1 January Softening economic conditions, both locally and nationally, also continue to negatively impact traffic performance. Traffic performance has shown improvement towards the end of the year, with June monthly traffic volumes only 2.3% below PCP. Revenue has increased by 3.6% compared to PCP following the scheduled toll increase mentioned above. The existing debt profile consists of five tranches of senior debt, including two from a 1999 refinancing and three from a 2005 refinancing. The Dulles Greenway did not meet its distribution test at December 2008 and is consequently in distribution lock-up under its senior debt indentures until at least December US$614 million of debt will mature in FY19 and beyond Chicago Skyway The Chicago Skyway is a 12.5 kilometre, six lane median-divided toll road south of Chicago that links the ITR, from the Illinois-Indiana state line, over the Calumet River into a junction with the Dan Ryan Expressway (I94) in the City of Chicago. The road contains 8.0 kilometres of elevated roadway pavement supported on embankment. The remaining 4.5 kilometres consists of various types of elevated bridge structures including overpasses, the Calumet River Bridge and viaduct sections. MIG holds a 22.5% interest in the Chicago Skyway. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 8

186 Average daily traffic for FY09 fell 1.9% compared to PCP and was impacted by the slowdown in regional and national economic activity in the US, and improvements to competing alternatives. Revenue for FY09 increased 11.5% against PCP primarily due to a 20% increase in light vehicle tolls and an approximate 50% increase in heavy vehicle tolls in January Given the location of Chicago Skyway in a major freight corridor, the impact of the global financial crisis has had an increased effect on reduction of traffic volumes of commercial vehicles. Under the refinancing in August 2005, Chicago Skyway has two tranches of bonds totalling US$1.40 billion of which US$465 million is payable in FY17, US$350 million is payable in FY18 and US$676 million is payable from 2019 to South Bay Expressway South Bay Expressway, formerly known as SR 125 South, is a 13.9 kilometre, four-lane toll road that runs north from adjacent to the Mexican border to just south of Route 54 in Bonita. The road opened to traffic on 19 November 2007 and provides an alternative route east of the increasingly congested State Route 805 and Interstate 5 in the San Diego region of California. MIG holds a 50% interest in the South Bay Expressway. Full tolls were implemented for all vehicles from 14 January 2008, and as such, there is no directly comparable PCP. Traffic volumes have continued to be impacted by a slowdown in general economic activity, a weak regional housing market and declining Mexican border crossings. Revenue for FY09 of US$21.4 million was lower than anticipated due to lower than expected traffic, as well as a reduced ability to process violations and unmatched trips for most of There are no debt coverage tests until 31 December 2010; however it is expected that certain loan covenants may be breached at or after this time. The debt of US$506.6 million is due to mature beyond FY19. As at 30 June 2009 MIG had placed no value on this investment Warnow Tunnel Warnow Tunnel is a 4 kilometre toll road located in the city of Rostock in north-eastern Germany. At the time of investment, Rostock was the largest of seven Baltic ports and the fourth largest German port. The Warnow Tunnel opened to traffic in September The road includes a 0.8 kilometre tunnel under the Warnow River. This river divides the city, with most residential areas located on the western side and most of the industrial areas on the eastern side. MIG has a 70% equity interest in the development. Since opening, Warnow Tunnel traffic has been significantly below MIG s investment case. Due to this performance, the value of MIG s investment had been reduced to $1.3 million as at 30 June Revenues for FY09 increased by 7.3% against PCP due to average daily traffic increasing by 1.9% against the same period and toll price increases implemented from May The debt profile of Warnow Tunnel indicates limited repayments between FY10 and FY18 with the majority of debt due to mature beyond FY19. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 9

187 3.2 Management Arrangements Macquarie currently provides management services to MIG through two entities, MIIML and MCFEL. MIIML is the responsible entity of MIT(I) and MIT(II). MCFEL is the manager and advisor for MIGIL pursuant to the MIGIL Asset Advisory Agreement. MIIML and MCFEL provide management services to MIG and collectively have responsibility for the day to day operations of MIG Current fee structures MIIML and MCFEL are entitled to management fees consisting of quarterly Base Fees and annual Performance Fees payable in the event that certain returns are achieved. The calculations of Base and Performance Fees are outlined below. In addition, MIG s current management arrangements provide for additional fees for other services such as underwriting, broking and hedging provided on a transactional basis by Macquarie entities if approved under MIG s related party protocols Base Fee Calculated as 1.25% per annum of the Net Investment Value (NIV) up to $3 billion and 1% per annum of the NIV in excess of $3 billion. NIV is calculated as the VWAP over the last 10 ASX trading days to 30 June each year plus fund level borrowings and firm commitments for future investments less cash or cash equivalents Performance Fee Payable at 30 June if earned. Payable in the event that the MIG Accumulation Index outperforms the S&P/ASX 300 Industrials Accumulation Index in any financial year having made up for underperformance in previous years. Calculated as 15% of the dollar amount of out performance and paid in three equal instalments. The second and third year instalments are only paid if MIG continues to outperform the index on a cumulative basis over the two and three year period. Any underperformance deficit from prior periods must be made up before future Performance Fees can be earned Termination of agreement The respective trusts and company comprising MIG may terminate the appointment of MIIML and/or MCFEL, without cause, by securityholder vote. MCFEL can only be removed on a vote if MIIML is removed as responsible entity of the trusts. For both trust and company, the resolution must be passed by at least 50% of votes cast at a meeting by securityholders entitled to vote. Managers and associates may vote their securities on the resolution. MIIML and MCFEL can also be removed where MIIML or MCFEL is in liquidation, ceases to carry on business or lacks the appropriate licence or authorisation. If MIIML/MCFEL are terminated, any second and third performance annual fee instalments outstanding will be crystallised and paid on termination, together with Base Fees accrued to the date of termination. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 10

188 3.2.3 Historical management fees The table below summarises management fees over the last five financial years. We note that no Performance Fees have been paid since FY05, reflecting underperformance of MIG in the period from 1 July 2005 to the present on a cumulative basis. We refer to section 3.5 which discusses historical security price movements. As a result of this period of cumulative underperformance, MIG has generated a performance deficit which must be made up before future Performance Fees can be earned. As of 30 September 2009, this performance deficit was approximately $4.8 billion. This deficit translates to a Performance Fee security threshold price of approximately $3.43. This threshold security price (as at 30 September 2009) is significantly above MIG s current price of $1.31 as at 1 December MIG financial analysis This section presents MIG s historical statements of financial performance and position as extracted from its annual reports. Readers should refer to section 4 below where pro forma MIG historical and pro forma historical information for Intoll and MQA are presented Financial performance Currency: $ 000 FY07 FY08 FY09 Revenue from continuing activities 314, , ,003 Revaluation (loss)/gain and other income from continuing activities 2,425,700 1,152,653 (2,336,584) Finance costs (254,172) (150,984) (186,846) Responsible entity and adviser Base Fee (81,963) (67,029) (36,880) Other operating expenses (293,757) (141,855) (134,460) (Loss)/profit from continuing activities before tax 2,110, ,477 (2,521,767) Income tax benefit/(expense) 133,908 (82,286) 123,320 (Loss)/profit from continuing activities after tax 2,244, ,191 (2,398,447) Source: MIG Annual Reports In relation to the above, we note the following: MIG consolidates M6 Toll and holds other toll road assets at fair value. Statements of financial performance and position include M6 Toll results and balances line by line. Revenue from continuing activities decreased in FY09 by $30.7 million (15.1%). This was primarily due to decreases in interest income ($33.4 million) and toll revenue from the consolidated M6 Toll ($6.2 million). In the same period, other revenue increased by $9.0 million. The FY09 reported revaluation loss of $2,336.6 million is primarily due to a decrease in the valuation of MIG s portfolio of non-controlled toll road assets (decreased by $2,398.6 million excluding foreign exchange gains). This revaluation was a result of lower forecast traffic volumes, higher assumed asset level financing costs, macroeconomic factors and increases in discount rates applied by management. The non-controlled asset revaluations that occurred in FY09 are summarised in the table below. We note that other movements include investments, divestments, returns from investments and foreign exchange impacts. These other movements are not included in the revaluation (loss)/gain and other income from continuing activities. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 11

189 FY09 finance costs increased by $35.9 million largely due to a one-off finance charge of $36.7 million relating to an increase in the carrying value of a non-recourse loan held by Macquarie Motorways Group Limited. The reduction in FY09 responsible entity and adviser Base Fees of $30.1 million was due to a significant decrease in the market capitalisation of MIG in FY Financial position Currency: $ 000 June 2009 Cash and cash equivalents 955,519 Other current assets 11,561 Current assets 967,080 Investments in financial assets 5,128,436 Property, plant and equipment 1,107,165 Other non-current assets 100,127 Non-current assets 6,335,728 Total assets 7,302,808 Distribution payable (226,173) Other current liabilities (109,664) Current liabilities (335,837) Interest bearing financial liabilities (2,512,049) Other non-current liabilities (295,129) Non-current liabilities (2,807,178) Total liabilities (3,143,015) Net assets 4,159,793 Source: MIG annual reports We note from the 30 June 2009 statement of financial position that: MIG s investments in financial assets is $5,128.4 million and is comprised of $4,475.4 million in interests in unlisted securities, companies, partnerships and trusts and $653.1 million in interests in interest bearing financial assets. This excludes the M6 Toll, which is consolidated. These investments all represent interests in toll roads via a variety of different structures. A list of these assets and their recorded value as at 30 June 2009 is provided in section 3.1. Assets are held at fair value through profit or loss and are re-valued by management at each reporting date using discounted cash flow analysis. In addition to financial assets, MIG had property plant and equipment of $1,107.2 million comprising primarily of its interest in M6 Toll (consolidated) of $1,034.3 million, which did not change significantly from FY08. Interest bearing financial liabilities are comprised primarily of non-recourse loans totalling $2,077.0 million. These loans represent Macquarie Motorways Group Limited s debt facilities relating to the M6 Toll and, although consolidated due to the 100% interest in the M6 Toll, is non-recourse to the Group. As at 30 June 2009, the Directors valuation of this loan was $1,623.3 million. The reduction compared to the carrying amount is attributable to a re-valuation based on higher credit margins observed on similar rated debt in recent transactions. In FY09, the carrying value of the non-recourse loan was increased to reflect these higher margins. Only $136.6 million of this loan is repayable in less than five years. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 12

190 3.4 Capital structure and ownership MIG, a triple stapled structure, was established to develop, operate and own a diversified portfolio of toll road infrastructure assets in Australia and internationally. The stapled structure of MIG comprises three entities: Macquarie Infrastructure Trust (I) Macquarie Infrastructure Trust (II) Macquarie Infrastructure Group International Limited (MIGIL). Each stapled security issued by MIG consists of one unit in MIT(I), one unit in MIT(II), and one ordinary share in MIGIL. Units in MIT(I) and MIT(II), and ordinary shares in MIGIL are stapled and are not able to be traded independently. MIIML is the responsible entity of MIT (I) and MIT (II). MIIML is a wholly owned subsidiary of Macquarie. MCFEL is the adviser of MIGIL and MCFEL is also a wholly owned subsidiary of Macquarie. This is shown in the following group structure of MIG: Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 13

191 As at 1 December 2009 MIG s capital comprised 2,261,732 stapled securities. MIG s top ten securityholders of the ordinary fully paid securities, as at 19 November 2009, are set out in the table below: Shareholder Total number of shares held (000s) % of issued capital HSBC Custody Nominees (Australia) 494, % Limited National Nominees Limited 336, % Macquarie Capital Group Limited 317, % J P Morgan Nominees Australia 259, % Limited Citicorp Nominees Pty Limited 139, % ANZ Nominees Limited 55, % AMP Life Limited 42, % HSBC Custody Nominees (Australia) 27, % Limited - GSCO ECA HSBC Custody Nominees (Australia) 24, % Limited - A/C 2 Cogent Nominees Pty Limited 22, % Total shares held by top ten 1,720, % shareholders Other shareholders 541, % Total fully paid shares on issue 2,261, % Source: Management information, MIG FY09 accounts 3.5 Security price performance MIG s security price has shown a 23.4% decrease during the 2009 calendar year from $1.71 on 1 January 2009 to $1.31 on 1 December MIG and most of its competitors, and global equity markets generally, experienced substantial declines in security prices during the 2008 calendar year. MIG s security price decreased from $3.03 on 1 January 2008 to $1.71 on 31 December MIG s security price traded at a low of $0.95 on 27 February 2009, closing at $1.03. The following diagram illustrates MIG s security price for the period 1 January 2008 to 1 December 2009 with key company and industry announcements indicated. Share price Interim distribution Final results announced FY08 AGM held Interim distribution Final results announced Strategic review announced Ontario TPP block trade Restructure announced Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct ,000, ,000, ,000, ,000, ,000, ,000, ,000,000 50,000,000 0 Volume MIG volume MIG price Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 14

192 In relation to this chart, we note that the MIG security price was impacted by the following MIG announcements: Security Security Security Date Volume traded ASX Company announcements price (open) price (Close) price movement 14-Feb-08 14,984,072 MIG securities go ex-dividend (2.2%) 21-Feb-08 9,948,038 MIG announced its financial results for the six months ended % 31 December Aug-08 14,250,345 Notice of full year results, including confirmation of final distribution of (1.1% ) $0.10 per security. 21-Aug-08 42,527,173 MIG announced its financial results for FY (7.8%) 22-Oct-08 15,095,931 MIG held its FY08 AGM (5.0%) 1-Dec-08 4,430,086 MIG announced that it had accepted a binding offer for 100% of its % interest in the Westlink M7 toll road. 16-Dec-08 10,296,490 MIG announced a portfolio valuation update whereby the net asset (0.6% ) backing per security had decreased from A$3.84 at June 2008 to $3.02 at December 2008 due to macro and recessionary factors. Distribution of $0.10 per security announced. 10-Feb-09 9,206,961 Confirmed distribution of $0.10, payable on 13 February (4.2%) 19-Feb-09 10,913,699 MIG announced its financial results for the six months ended % 31 December Feb-09 17,203,480 MIG completed the sale of its 50% interest in Westlink Group to the % WSRG for $805 million, to retain an effective 25% interest in the Westlink M7 toll road. 16-Jul-09 9,103,340 MIG reported that the portfolio preliminary calculation as at % 30 June 2009 is likely to show a devaluation of toll road assets given the impact of the ongoing dislocation in global economic and market conditions. 20-Aug-09 28,074,824 MIG announced an update on review of strategic options including (6.2% ) splitting the current portfolio into two separate, listed vehicles in order to bridge the gap between the security price and the underlying value of the assets. 18-Sep-09 16,641,596 MIG announced its financial results for FY (2.7%) 23-Oct ,849,034 Ontario Teachers' Pension Plan Board sold 160,436,680 securites in MIG on 28 October 2009 in a block trade % 28-Oct-09 26,452,754 MIG announced its September 2009 quarter revenue, commenting that (1.1% ) weighted average traffic increased across the portfolio by 1.6%, reflecting improving traffic trends since the low point earlier in the calendar year. 30-Oct-09 31,729,687 MIG announced the Restructure Proposal, which if approved by MIG security holders, would restructure the portfolio into two separate listed entities and allocate the assets according to their maturity and risk profile (0.3% ) Source: Factiv a, Bloomberg, ASX Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 15

193 3.5.1 MIG security price movements versus ASX indices The graph below indicates MIG s security price performance compared to some of the relevant market indices between 1 January 2008 and 1 December % (0.0%) MIG S&P/ASX All Ordinaries Price movement (10.0%) (20.0%) (30.0%) (40.0%) (50.0%) (60.0%) S&P/ASX 300 Industrials (70.0%) As noted in the graph above, using a base of 1 January 2008, MIG traded above the ASX 300 Industrial Accumulation index from 1 January 2008 until 12 November Since 16 February 2009 MIG has underperformed and is 26.6% below the ASX 300 Industrial Accumulation index as at 1 December MIG security price movements versus net asset backing The graph below highlights the fact that the market security price (10 day VWAP post the announcement of half year and annual results including Directors asset valuations) has consistently traded below the net asset backing of MIG securities since 30 June The net asset backing incorporates valuations of investments in the MIG portfolio plus other assets and liabilities of MIG (principally cash). Share price and NAB ($) Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Net asset backing per security (before deferred tax liabilities) 10 day VWAP MIG share price (based on release date) The graph above indicates that the largest discount of 67.1% was observed in respect of the valuations announced as at 31 December The smallest discount of 1.9% occurred in respect of the valuations announced as at 31 December We note that after the Sydney Roads demerger in July 2006 the discount decreased from 23.3% based on the valuations as at 30 June 2006 to 1.9% based on the valuations as at 31 December Based on the 30 June 2009 valuations the discount was 47.4%. As at 1 December 2009 the discount relative to the 30 June 2009 net asset backing of $2.54 was 49%. 1 Using a base for the indexes of 1 January 2008 Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 16

194 70.0% 60.0% 50.0% Discount 40.0% 30.0% 20.0% 10.0% -% Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun Distribution history MIG has distributed an interim and final distribution to MIG securityholders every year since listing on 16 December 1996 and up to 30 June The distributions since 30 June 2004 are provided below. Balance date Dividend type Cents per share Currency Franked Record date Pay date 30-Jun-05 Final AU$ - % 30-Jun Aug Dec-05 Interim AU$ 18.90% 30-Dec Feb Jun-06 Final AU$ - % 30-Jun Aug Dec-06 Interim AU$ - % 29-Dec Feb Jun-07 Final AU$ - % 29-Jun Aug Dec-07 Interim AU$ - % 31-Dec Feb Jun-08 Final AU$ - % 30-Jun Aug Dec-08 Interim AU$ - % 31-Dec Feb Jun-09 Final AU$ 8.67% 30-Jun Aug-09 Source: MIG w ebsite, Bloomberg MIG has announced that its August 2009 distribution will be the last to be paid under its former policy whereby operating cash flow was supplemented by surplus cash to pay distributions. MIG s ongoing distribution policy will reflect payments more in line with cash flow. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 17

195 4. Impact of the Restructure Proposal As outlined in section 3.4, securityholders currently hold stapled securities in MIG. These securities are listed on the ASX and MIG is managed by Macquarie. An overview of MIG including its various investments is provided in section 3.1. The Restructure Proposal is summarised in section 1. In brief, if the Restructure Proposal is approved and implemented, MIG securityholders will hold securities in both Intoll (the current MIG to be renamed post the Restructure Proposal) and MQA, both of which will be separately listed on the ASX. Intoll will be internally managed and MQA will be managed by Macquarie. In addition, MIG securityholders will receive a special unfranked distribution from MIT II of $0.10 per MIG security and various transaction costs will be incurred including the fees payable to Macquarie as discussed below. 4.1 Intoll The key attributes of Intoll will be: Intoll is, in effect, the current MIG structure after the completion of all other elements of the Restructure Proposal Intoll will continue to be listed on the ASX Intoll will be managed by its own Boards and management team with no external management Assets Intoll will hold the following two investments. These assets are perceived to be the assets within the MIG portfolio with stable capital structures, mature cash flows, better performance in the current environment and with more stable financing arrangements. Portfolio Intoll 30-Jun-09 Enterprise Concession Asset weighting interest Valuation Net debt* value* Gearing ends Country 407 ETR 90.2% 30.0% 3,284 1,324 4, % 2098 CAN Westlink M7 9.8% 25.0% % 2037 AUS Total 100.0% 3,643 1,621 5, % Source: MIG Management Information Report (30 June 2009) * Proportionate interest The Explanatory Memorandum also indicates that Intoll will have cash reserves of approximately $80 million upon the implementation of the Restructure Proposal Strategy As detailed in the Explanatory Memorandum, the strategy for Intoll will be to invest in and develop quality assets that are accretive to the portfolio over the long term. Returns to securityholders are expected to be in the form of both capital growth and distributions. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 18

196 4.1.3 Governance Intoll will be managed by its directors and management team. As such, Intoll will no longer pay management fees, but will instead incur the costs of staff and services that were previously provided externally. Intoll s management team will include: John Hughes currently CEO of MIG, will be appointed the CEO of Intoll Luke Oxenham currently Head of Investor Relations at MIG, will be appointed CFO MCFEL currently has the right to appoint up to 50% of the MIGIL directors as a result of holding the MIGIL A Special Share. MIIML (as responsible entity of MIT(II)) currently has the right to appoint up to 25% of the directors of MIGIL as a result of holding the MIGIL B Special Share. Macquarie currently has the right to appoint all of the MIIML directors as MIIML is a Macquarie entity, however we note Macquarie has undertaken to appoint these directors in accordance with a vote of MIG securityholders until Notwithstanding the rights of Macquarie summarised above, the board of MIIML currently has four directors, three of whom are independent directors from Macquarie. The only nonindependent director is Mark Johnson, the Chairman. MIGIL has four directors, two of whom are independent of Macquarie. Macquarie has given an undertaking until December 2011 to exercise these rights in accordance with a vote of MIG securityholders. As a result of the Restructure Proposal, Intoll (through MIT (II)) will acquire MIIML and the MIGIL Advisory Deed with MCFEL will be terminated. As a result, the rights of Macquarie to appoint directors to MIIML and MIGIL described above will cease. Macquarie will only be able to influence the appointment of directors to the Intoll boards through its relevant interest in Intoll. In addition, as stated in section of the Explanatory Memorandum, following the implementation of the Restructure Proposal, the boards of Intoll will undergo a period of transition and refreshment. The transition arrangements are designed to ensure continuity from MIG to the two separate ASX listed vehicles, whilst also ensuring a refreshment of talent and compliance with the ASX guidance note on independence of directors. 4.2 Macquarie Atlas Roads The key attributes of Macquarie Atlas Roads will be: MQA will be comprised of a new Australian company and a new Bermudan company, securities in which will be stapled together and traded on the ASX as MQA. MIG securityholders will receive their MQA securities as an in-specie distribution from MIG. MQA will be listed on the ASX MQA will be managed by Macquarie Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 19

197 4.2.1 Assets MQA will hold the investments summarised in the table below. All of the assets are located outside of Australia, and to varying degrees have higher debt levels, are less mature and have been more adversely affected in the current economic downturn than the Intoll assets. Portfolio MQA 30-Jun-09 Enterprise Concession Asset weighting interest Valuation Net debt* value* Gearing ends Country APRR 30.9% 20.4% 448 4,048 4, % 2032 FRA M6 Toll 28.4% 100.0% 412 2,457 2, % 2054 UK Indiana Toll Road 6.8% 25.0% 98 1,164 1, % 2081 US Dulles Greenway 23.6% 50% ** % 2056 US Chicago Skyway 10.2% 22.5% % 2104 US South Bay Expressway - % 50.0% % 2042 US Warnow Tunnel 0.1% 70.0% % 2053 GER Total 100.0% 1,450 9,136 10, % Source: MIG Management Information Report (30 June 2009) * Proportionate interest ** Estimated economic interest The Explanatory Memorandum also indicates that MQA will have cash reserves of approximately $293 million upon the implementation of the Restructure Proposal Strategy As detailed in the Explanatory Memorandum, the strategy for MQA will be to deliver growth in the value of its existing portfolio. In particular it is noted that this will include active management of project operations to improve earnings, efficient capital management and the refinancing of project debt as suitable opportunities emerge over the medium term Management arrangements If the Restructure Proposal is approved, MQA will retain Macquarie as its adviser (Adviser) pursuant to the MQA Advisory Deed (Advisory Deed). The services to be provided by the Adviser are provided in section of the MQA Prospectus and are summarised as follows: Advising on any proposed investment or divestment If the MQA Australia Board and MQA Bermuda approve an investment, acquire and manage the investment on behalf of MQA Australia and MQA Bermuda MQA providing Macquarie executives as nominees of MQA Australia and MQA Bermuda to act as directors of subsidiary entities that hold investments, and where appropriate, making recommendations to the MQA Boards to appoint non-macquarie nominees to these boards Capital management and financial management recommendations Recommending to the MQA Boards in respect of various matters (including but not limited to changes to the MQA Australia Constitution and MQA Bermuda Bye-Laws, any capital reductions, appointment and dismissal of staff and consultants, and the payment of dividends and interim dividends) General fund administration including company secretarial services subject to outsourcing company secretarial services in Bermuda to N.T. Butterfield and Son Ltd Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 20

198 Asset valuations Assisting with financial reporting and budgets Board reporting in connection with matters on which it provides advice Assisting with litigation management Investor communications and meetings Provision of suitably qualified personnel to perform the CEO, and CFO roles for MQA and the company secretary role for MQA Australia The fees payable to Macquarie pursuant to the Advisory Deed will comprise Base Fees and Performance Fees. The determination of these fees are provided in section of the MQA Prospectus and in summary are: Base Fee Macquarie will be entitled to a base management fee from MQA, as follows: 2.00% of market capitalisation, up to and including $1 billion. This is higher than the 1.25% of NIV under present MIG arrangements 1.25% of market capitalisation for a market capitalisation of greater than $1 billion but less than or equal to $3 billion 1.00% of any excess market capitalisation over $3 billion Market capitalisation of MQA at the end of a quarter means the aggregate of the market value of the MQA Securities calculated on the basis of the average number of MQA Securities on issue during the last 10 trading days of the ASX in the relevant quarter multiplied by the VWAP of all MQA Securities over those 10 trading days. Performance Fee Macquarie will be entitled to a performance fee, as follows: Performance Fee calculated on the basis of 15% of any outperformance of the Macquarie Atlas Roads Accumulation Index, over the benchmark ASX 300 Industrials Accumulation Index Initial MQA Accumulation Index benchmark established based on the 30 day VWAP of MQA post completion of the Restructure Proposal Any Performance Fee will be paid in 3 annual instalments, with the payment of the two deferred amounts being conditional upon MQA outperforming the benchmark index over the two and three year periods, respectively This mechanism is substantially the same as that applied to MIG under the existing arrangements. This is a new agreement between Macquarie and MQA. No existing performance fee deficit in regard to the management arrangements between Macquarie and MIG (to be terminated) is to be carried across to MQA following the implementation of the Restructure Proposal. Any future performance deficits generated by MQA will need to be recovered prior to the payment of any fees. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 21

199 Macquarie may elect to reinvest fees in MQA securities, subject to the approval of MQA s independent directors. The reinvestment price will be based on a 10 day VWAP of MQA s securities. MQA will initially have a management team which includes members of the current MIG management team. Its management team will include: Peter Trent a senior executive of MIG will be appointed CEO of MQA Mary Nicholson currently the CFO of MIG will be appointed CFO of MQA Governance As noted in section of the Prospectus, the Board of MQA Australia will include the following directors: Mark Johnson as Chairman and non-executive director David Mortimer as an Independent director David Walsh as an Independent director John Roberts as Macquarie s Nominee Although there will initially be a Macquarie nominee on the board of MQA Australia, the MQA Australia Constitution does not provide for Macquarie to have any special director appointment rights other than by its votes able to be cast as a securityholder of MQA. The Board of MQA Bermuda will include the following directors: Robert Mulderig as Chairman and Independent director Jeffrey Conyers as an Independent director Peter Dyer as a non-executive director Mark Johnson - as a non-executive director appointed by Macquarie As the holder of the MQA Bermuda A Special Share, MQA Australia will have the right to appoint one director to the Board of MQA Bermuda. 4.3 Other fees payable to Macquarie MIG has agreed to pay Macquarie $50 million plus an amount equal to the net assets of MIIML and an advisory fee of 1.0% of the market capitalisation of Intoll (based on the VWAP of Intoll securities for the first 30 days of ASX trading post the implementation of the Restructure Proposal). These fees are considered in section below. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 22

200 4.4 Pro forma financials Financial performance The pro forma historical financial performance for MIG, MQA and Intoll for the year ended 30 June 2009 is presented below. This information is based on the following assumptions: MIG pro forma information assumes the Restructure Proposal was not implemented Intoll and MQA information assumes the Restructure Proposal was implemented on 1 July 2008 Currency: $ million MIG MQA Intoll Toll revenue Revaluation (loss)/gain and other income from continuing activities (2,383.8) - (199.1) Share of profit/(losses) of associates - (275.2) - Interest income Other income 34.9 (4.0) - Total revenue and other income from continuing activities (2,190.3) (144.4) (195.5) Finance costs (183.3) (183.3) - Asset operating expenses (109.9) (109.9) - Corporate operating expenses (28.2) (6.5) (14.1) Restructure proposal transaction costs (7.0) - (7.0) Management fee (36.9) (16.3) - Restructure proposal fee - - (50.0) Reimbursement of corporate operating expenses 7.8 Completion fee - - (28.3) Total operating expenses from continuing activities (365.3) (316.0) (91.6) Loss from continuing activities before tax (2,555.6) (460.4) (287.1) Income tax benefit/(expense) (0.2) (6.4) (Loss)/profit from continuing activities after tax (2,432.3) (460.6) (293.5) Source: Ex planatory Memorandum Post the Restructure MQA will account for its investments in financial assets as equity accounted investments which requires that the share of associates profit/(loss) after tax be recorded in the income statement. As detailed in section of the Explanatory Memorandum toll road concessionaries typically report accounting losses during their early stages of development and the pro forma results for MQA reflect $275.2 million of losses, being MQA s share of the results of its equity accounted investments. MIG previously accounted for these investments as investments in financial assets at fair value through the income statement and reported changes in the fair value of MQA s investments in its income statement. The use of fair value accounting can produce volatility in the income statement because increases and decreases in asset values are recorded as profits or losses. In the year ended 30 June 2009 MIG recognised $2.2 billion relating to losses on revaluations of MQA s associate investments. As MQA will no longer account for its associates as investments in financial assets at fair value through the income statement these changes have been excluded from the pro forma MQA results and have been replaced by the equity accounted results. As detailed in section of the Explanatory Memorandum MQA will be required to perform a notional purchase price allocation which will likely increase the quantum of Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 23

201 accounting losses reflected in the income statement, but does not impact on the cashflows of MQA. At the date of this document the purchase price allocation has not yet been undertaken. Refer to section of the Explanatory Memorandum for further details. Pro forma interest income for Intoll and MQA reflects the following: Pro forma opening cash positions for Intoll and MQA of $80 million and $293 million respectively An assumed average interest rate of 4.5% for the year ended 30 June 2009 based on the allocated cash balances to Intoll and MQA. An adjustment has been made to MQA and Intoll s other income to exclude foreign exchange gains/(losses) on cash balances denominated in foreign currencies on the basis that they are non recurring. An adjustment has been made to Intoll s corporate operating expenses to reflect the costs which will be incurred as a standalone listed entity. Management costs of $14.1 million have been estimated which include staff related expenses associated with the standalone management of Intoll. Certain costs incurred by Intoll during its first 12 months will be recoverable from Macquarie. Refer to Section 8 of the Explanatory Memorandum for further details. Costs of $7.8 million have been estimated to be recoverable from Macquarie. MIG will incur transaction costs of approximately $7 million if the Restructure Proposal is not implemented. These costs relate to legal, accounting and advisory expenses which will be expensed in the income statement for the year ending 30 June 2010, but have been reflected as a pro forma adjustment. Management Fee adjustments relate to the following: Intoll will no longer pay a management fee post the Restructure Proposal. MQA after implementation of the Restructure Proposal will be managed by Macquarie based on a new management agreement. An adjustment has been made to reflect the estimated base management fees that would have been payable if this agreement had been in place from 1 July Refer to section 3 of the Explanatory Memorandum for further details, including sensitivities to the management fees payable. In calculating this amount the following assumptions have been made: The same discount applied to the net asset backing of MQA as was the average discount to the net asset backing of MIG for the 10 months ended 31 October 2009, resulting in an assumed market capitalisation of $814.2 million. The fee is calculated for a full 12 month period. No performance fee is assumed to be payable. The Facilitation and Co-Operation payment is the amount payable to Macquarie for facilitating the Restructure Proposal. As detailed in section 3 of the Explanatory Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 24

202 Memorandum, the allocation of this amount to its respective components is not yet complete but it is likely that the majority would be recorded in the income statement. A one-off Advisory Fee is payable by Intoll to Macquarie of 1.00% of the post Restructure Market Capitalisation of Intoll. An estimate of this fee has been made based on the following: Intoll 30 day VWAP of $1.25 Market capitalisation of $2.83 billion Refer to Section 3 for further details and sensitivities if the Intoll 30 day VWAP is not $1.25. Intoll will record a gain on the in specie distribution of the securities in MQA to MIG securityholders. This gain will be recorded in the statutory income statement of Intoll for the year ending 30 June 2010, but has not been reflected in the Intoll pro forma income statement for the year ended 30 June 2009 on the basis that it is non recurring. An estimation of this gain based on the 30 June 2009 fair values is $1.7 billion. This gain will be recalculated based on the fair values at the date the Restructure Proposal is implemented. The pro forma tax expense for MQA and Intoll excludes the recognition of deferred tax assets in relation to tax losses Financial position The pro forma financial position of MIG, MQA and Intoll as at 30 June 2009 is presented below. This information is based on the following assumptions: MIG pro forma information assumes the Restructure Proposal was not implemented Intoll and MQA information assumes the Restructure Proposal was implemented on 30 June 2009 Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 25

203 Currency: $ million MIG MQA Intoll Cash and cash equivalents Receivables and other assets Current assets Investments in financial assets 5, ,642.7 Investments in associates - 1, Property, plant and equipment 1, , Tolling concessions Non-current assets 6, , ,642.7 Total assets 7, , ,726.1 Distribution payable Payables (39.5) (30.2) (9.3) Derivative financial instruments (63.8) (63.8) - Current tax liabilities (6.3) (0.5) (5.8) Current liabilities (109.6) (94.5) (15.1) Payables (184.5) (184.5) - Interest bearing financial instruments (2,512.1) (2,512.1) - Derivative financial instruments (4.9) (4.9) - Deferred tax liabilities (105.7) (105.7) - Non-current liabilities (2,807.2) (2,807.2) - Total liabilities (2,916.8) (2,901.7) (15.1) Net assets 4, ,711.0 Source: Ex planatory Memorandum In relation to the above, we note that: The MIG pro forma statement of financial position differs from the statutory statement of financial position provided in section due to the removal from cash and distribution payable of the $226.2 million distribution paid in August The overall cash balance of MQA and Intoll is significantly less than the pro forma cash balance of MIG. Adjustments applied to the cash balance are shown in the table below. Cash and cash Currency: $ million equivalents MIG pro forma Interim distribution February 2010 (45.2) Restructure Proposal Transaction costs (7.0) Total Restructure proposal Special distribution (226.2) Faciliation and Co-Operation Payment refer section 3 of Explanatory Memorandum for further (50.0) details Advisory fee refer section 3 of Explanatory Memorandum for further details (28.3) MIG proforma adjusted for Restructure proposal Cash allocation MQA Intoll 80.0 Total Source: Ex planatory Memorandum Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 26

204 5. Assessment of the Restructure Proposal 5.1 Rationale for the Restructure Proposal In section we discuss the fact that MIG s security price has traded at substantially below its net asset backing for an extended period and that the extent of this discount has increased in recent times. At 1 December 2009 MIG s security price of $1.31 was 49% below its 30 June 2009 net asset backing per security of $2.54. Our review of analyst reports and media coverage, together with discussions with MIG management and members of the IBCs indicate that there are three key factors contributing to this position. These are: Investors are cautious in relation to entities that have high levels of debt. Toll roads, including many of MIG s assets have historically been funded with levels of debt that, while acceptable at that time, are considered to be high in today s banking environment. MIG s toll road assets vary significantly in terms of their stability and risk profile. MIG s portfolio includes assets ranging from the 407 ETR and Westlink M7 which are toll roads with lower leverage and revenue and have been fairly resilient to the recent economic downturn, to roads which are generally more highly leveraged and which have been more affected in the current economic downturn. Investors appetite for the externally managed investment fund model is currently low even though it has historically been more accepted by the market. In the current environment, the above issues combined, appear to be adversely impacting the perceived investment quality of MIG. The advantages and disadvantages of the Restructure Proposal as discussed below should be read in the above context. 5.2 Advantages We note that the primary advantage and the main purpose of the Restructure Proposal is to encourage a net re-rating of Intoll and MQA securities relative to the existing MIG securities. Many of the advantages referred to below would be expected to contribute to such a re-rating. A net re-rating would mean that the securities in Intoll and MQA combined would either initially or over time trade at values nearer to their net asset backing than the current MIG securities. It should be noted however that the MIG directors valuations, that form part of the net asset backing, in a number of cases reflect the value of a controlling or highly influential interest in the underlying asset. It is quite possible that the trading prices of Intoll and MQA (like MIG) would not reach those values in the absence of a control transaction occurring. Further discussion in relation to the potential net re-rating is provided in section 5.4. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 27

205 The advantages are: Separation of Intoll and MQA The separation of MIG into two portfolios, one owned by Intoll and one owned by MQA is of potential benefit to MIG securityholders for the following key reasons: Securityholders, on implementation of the Restructure Proposal, will hold securities in both Intoll and MQA. They will retain the same exposure to MIG s underlying assets as they presently have although not in the same entity. Although initially they will have the same interest in the current MIG portfolio, securityholders will be able to make investment decisions in relation to their investments in Intoll and MQA independently and in line with their individual risk profiles and investment attitudes. New investors may be attracted to invest in either Intoll or MQA depending on their own investment profiles and risk attitudes. For example: There may be investors who were deterred from investing in MIG due to either; or a combination of; the existence of the higher risk profile assets in the portfolio and MIG s structure as an externally managed fund. These investors, which may include lower risk profile investors or those that prefer dividend yields may be more inclined to invest in Intoll with its standalone management structure and lower risk profile than the current MIG. There may be higher risk/growth oriented investors who would be attracted by the opportunity of investing in MQA. These factors have the potential to cause changes in the investor base and to allow for the underlying value of the assets of both Intoll and MQA to be more appropriately valued by the market resulting in a better rating for the security price of one or both of these vehicles than has recently applied for MIG securities Greater independence of Intoll At present Macquarie entities have a relevant interest in MIG of 16.89%. Macquarie also holds management arrangements pursuant to which it provides a range of services including reporting, asset management and valuation, investment evaluation, risk monitoring and investor relations. Key management decisions, such as investment decisions, are made by the boards of directors of MIGIL and MIIML as responsible entity of MIT (I) and MIT (II). Subsequent to the implementation of the Restructure Proposal, unless its security holding is increased or decreased in the interim, Macquarie will initially continue to have the same 16.89% relevant interest in both Intoll and MQA. After the transitional period, Macquarie will cease to provide management services to Intoll and all aspects of Intoll s operations will be managed by the Intoll board and its employees. Intoll will not pay management fees to Macquarie. This will mean that all strategic and financial decisions will be made by Intoll, solely with regard to factors affecting Intoll and without regard to other factors affecting the MQA assets, Macquarie or any other manager. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 28

206 MIG (then the Infrastructure Trust of Australia) was one of the first externally managed infrastructure funds in Australia. Over time the externally managed fund model, which historically operated with fairly high levels of leverage, became generally accepted in the investment community with a number of entities sponsoring the establishment of many such funds. Over time and especially with the global financial crisis leading to a number of corporate failures involving some of the sponsors of these entities, and an aversion to high debt levels, this model has become less favoured by the investment community. This and other factors have resulted in the internalisation or proposed internalisation of management in cases such as Macquarie Leisure Trust, Macquarie Airports, Macquarie Media Group, Viridis Clean Energy Group, Allco Equity Partners and Babcock and Brown sponsored funds including Babcock & Brown Wind, Babcock & Brown Communities and Babcock & Brown Capital. Recently some investors, media and financial commentators have been critical of the externally managed fund model and have cited potential misalignment of interests between the manager and securityholders. The Restructure Proposal, including Macquarie ceasing to be the manager for MIG/Intoll, removes the potential for such misalignment resulting from these differing interests, whether they be real or perceived. As provided in section 4.1.3, Intoll will, after the Restructure Proposal, have boards appointed by Intoll securityholders, with Macquarie s capacity to appoint directors being commensurate only with its security holding in Intoll. In our view, Intoll operating as a standalone entity has the potential to be positively received by the investor market and therefore be a potential benefit to MIG securityholders. In this context we note that key management positions at Intoll are proposed to be held by persons who have long experience with the Intoll assets. In relation to MQA, Macquarie will continue to hold management arrangements and hence will continue to be closely associated with Macquarie. This is discussed further in section below Reduced cost of management (excluding MQA Performance Fees) In most cases a demerger results in additional costs being incurred as the demerged entity has to set up its own corporate cost structure independent of its former parent. In the case of the Restructure Proposal, which is accompanied by changes to management arrangements, the overall costs of management (excluding potential Performance Fees which are discussed below) are expected to decrease. The table below presents the total management costs for MIG for FY09 pre the Restructure Proposal and anticipated costs for each new entity (Intoll and MQA) based on the estimated annual cost structures as set out in the Explanatory Memorandum. MIG Intoll MQA Combined Currency: $ million Restructure estimate estimate annual cost Management Costs Base Management Fee Fund Related Costs Borrowing costs Total costs Source: MIG Ex planatory Memorandum Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 29

207 In relation to the table above we note: Management and fund related costs have been estimated by MIG using advice from external consultants and using MIG s own experience in managing the fund and its assets. The base fee for managing MQA is dependent on the market capitalisation of MQA securities post the implementation of the Restructure Proposal. MIG has estimated the base fees in the table above assuming that the portfolio valuation of MQA of $1,450 million plus the cash that will be in MQA of $293 million would trade at a discount of 52.1% 2 following the implementation of the Restructure Proposal. This is similar to the discount applying to MIG as at 1 December 2009 of 49%. Borrowing costs for Intoll have been based on the expectation that the current MIG stand-by facility of $150 million will be renegotiated down to a new facility limit of $50 million (however this is yet to be obtained), and assumes a 1.00% availability fee. MQA will not have any loan facility of any nature. As the base fee for managing MQA is dependent upon its future market capitalisation, we have also considered other scenarios with respect to this market capitalisation and its impact on the cost of management. In this regard we note that for the reduction in the cost of management to be eliminated, the discount to net asset backing for MQA would need to reduce to approximately 18%. This is lower than the 49% that currently applies to MIG Intoll may make additional investments Recently, with MIG s security price trading well below its net asset backing it has been very difficult for MIG to make additional investments. Raising equity in this environment would be dilutive to current securityholders. Investing cash reserves when its underlying assets are not fully valued by the market would also not be perceived to be in the interests of securityholders. Part of the rationale of the Restructure Proposal is to try to bridge the gap between security trading prices and underlying asset values. In the event that this occurs then Intoll may be in a position to raise either debt or equity capital and pursue additional investments. We note that the Explanatory Memorandum indicates that over the medium term the Intoll strategy will be to maximise the cash generation of the assets within the portfolio for the benefit of Intoll securityholders and to look to optimise the potential for organic growth opportunities. The Explanatory Memorandum indicates that Should a re-rating of Intoll securities occur, Intoll should have a better opportunity to consider potential new investment opportunities. The criteria that will be applied to new investments are set out in section 4.3 of the Explanatory Memorandum % is the average discount to net asset backing at which MIG has traded for the period 2 January 2009 to 30 October 2009 (being the date of announcement of the Restructure Proposal) Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 30

208 5.2.5 Increased opportunity for corporate activity While the level of transactional activity has decreased in recent years there continues to be corporate activity involving infrastructure assets such as toll roads. A current example is the proposed takeover offer for Transurban by the Canada Pension Plan and Investment Board and the Ontario Teachers Pension Plan. We also note that on 14 December 2006, a takeover offer was made for Sydney Roads Group by Transurban, with the takeover being completed approximately 9 months after Sydney Roads Group was demerged from MIG. With the existing management of MIG, the security holding of Macquarie and the inclusion of the highly leveraged assets, a takeover of MIG in its current form would practically be difficult and would require the support of Macquarie. In considering any form of corporate activity, for example a takeover transaction, Macquarie may currently be concerned not only with the value of its investment but the impact of any such transaction on the future management fees that it would otherwise receive. Subsequent to the Restructure Proposal, in relation to Intoll, Macquarie s sole interest would be in relation to the impact of the transaction on the value of its Intoll securities. These considerations would be expected to be consistent with those of other Intoll securityholders. In relation to MQA, a takeover would be more difficult and would continue to require the support and co-operation of Macquarie. Notwithstanding this, it is possible that certain parties could see a takeover of MQA as being attractive and potentially more achievable given the reduced size of MQA relative to the existing MIG. We consider this to be less likely in the near term Reduced volatility of Intoll cost structure If the Restructure Proposal is approved and implemented then: Intoll will not pay management fees to Macquarie or any other party Intoll will incur additional corporate costs to perform functions previously provided by Macquarie As the management fees relating to MIG are currently based predominantly on its market capitalisation, adjusted to reflect borrowings and cash held at the fund level, the level of management fees has and can vary significantly from year to year as can be seen in section In contrast to the above position, the corporate costs for Intoll referred to in section are relatively predictable and constant in nature and would generally only be expected to increase in line with general cost increases or if structural change occurs within Intoll. Therefore prima facie the Restructure Proposal will reduce the volatility of Intoll s cost structure relative to that previously existing for MIG. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 31

209 5.2.7 Eliminate risk of paying Performance Fees for Intoll At present, as a result of Macquarie s management rights, MIG, subject to certain conditions, must pay Performance Fees to Macquarie in the future. As discussed in section of the Explanatory Memorandum As at 30 September 2009, the MIG underperformance deficit was the equivalent of A$2.12 per stapled security, which in market capitalisation terms represents approximately $4.8 billion. As a result of this accumulated underperformance, at least in the near term, the risk of a Performance Fee becoming payable by MIG is low. Notwithstanding this fact, with its standalone management structure, there is no requirement for Intoll to pay any Performance Fees in the future. As noted elsewhere in this report, MQA will be managed by Macquarie and therefore will be liable to pay Performance Fees. This is discussed further in section Possible disaggregation benefit for Intoll To the extent that institutional investors and debt financiers aggregate investments in Macquarie managed funds or assets for the purpose of assessing concentration risk, the Restructure Proposal should remove Intoll from this grouping and may increase their willingness to invest in, and lend to Intoll. The same advantage, if any, would not apply to MQA. 5.3 Disadvantages Reduced weighting in stock market indices The market capitalisation of an entity listed on the ASX is an important factor affecting which stock market indices a security is included within, and the weighting that it has within that index. Index weightings are also affected by the level of trading of a stock and the free float market capitalisation. As at 1 December 2009, MIG was included in a number of major indices including the S&P/ASX50, S&P/ASX100, S&P/ASX200, S&P/ASX300 and S&P/ASX All Ordinaries. By separating MIG into Intoll and MQA at least initially and subject to the extent of any re-rating, both Intoll and MQA will have a market capitalisation less than that of MIG. This means that these entities, and in particular MQA due to its smaller size, are likely to be included in fewer indices and have a lower weighting in such indices than MIG. Due to uncertainty around the level of trading that will occur in relation to Intoll and, in particular, MQA securities and the free float market capitalisation following the Restructure Proposal, it is difficult to predict the index participation of the two stocks following the Demerger. In the event that Intoll and MQA are included in fewer indices or have a reduced weighting in relevant indices, there is the potential that this may at least in part offset the potential for a re-rating of these securities relative to MIG and due to the reasons noted in section 5.4. Part of the rationale of the Restructure Proposal is to improve the market capitalisation of these entities relative to their net asset backing. To the extent that this occurs either initially or over time this will reduce the impact of the reduced representation or weighting in various indices. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 32

210 We note that predicting the market capitalisation of either Intoll or MQA after the implementation of the Restructure Proposal is very subjective. However the following table shows the current ranking of MIG and the theoretical rankings of Intoll and MQA after the Restructure Proposal on the assumption that the relationship between market capitalisation and net asset backing remains constant. The table indicates that both Intoll and MQA will remain inside the top 150 ASX companies by market capitalisation. Company Market Capitalisation ($m) ASX Rank Transurban 7, MAp Airports 4, Macquarie Infrastructure Group (no restructure) 2, Intoll Group 1, ConnectEast Group 1, Australian Infrastructure Fund 1, Macquarie Atlas Roads Source: MIG Management, Bloomberg Note: the forecast market capitalisation assumes a similar discount to net asset backing as is seen in the MIG security as at 1 December Throughout this report we discuss the possibility that Intoll and MQA securities may be re-rated as a result of the Restructure Proposal. In our view a positive re-rating is more likely in the case of Intoll securities than MQA securities. We note that: A positive re-rating of Intoll securities has the potential to narrow the gap between Intoll s assumed market capitalisation in the above table and the current market capitalisation of MIG. Based on Intoll s pro forma net asset backing, Intoll securities would need to trade at a discount of approximately 20% to net asset backing for Intoll to reach a market capitalisation equal to that of MIG. This compares to the 49% discount to net asset backing at which MIG securities were trading on 1 December There is a risk that MQA securities could at least initially trade at a larger discount to net asset backing than MIG does at present for the reasons discussed in section Should this occur, its position in the above table would reduce and its representation and weighting in relevant indices may also reduce Potential reduction in overall distributions MIG has previously announced that subsequent to the payment of the August 2009 distribution, its future distribution policy will reflect payments more in line with cash flow, which broadly reflects distributions received from its investee companies less the cost of managing MIG. The Explanatory Memorandum indicates that Intoll will have a distribution policy that aligns the distributions to the cash generated by the Intoll Portfolio. In contrast the Explanatory Memorandum indicates that for MQA, Dividends are not anticipated in the near to medium term. Cash flows from the portfolio are expected to be retained in the near term to potentially assist with the future refinancing and/or restructuring of one or more projects in the portfolio. The above position may mean that total distributions from Intoll and MQA under their respective distribution policies may be less than MIG distributions would be in the absence of the Restructure Proposal due to the retention of funds within MQA. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 33

211 As the investments making up the Intoll portfolio account for approximately 72% of the existing MIG portfolio and are the more stable and relatively conservatively financed assets the potential reduction may not be particularly significant. In addition the funds retained by MQA will initially be invested in cash and later potentially in the existing toll road assets which should generate future returns for MQA securityholders. Consequently, the potential reduction in distributions may not necessarily be a disadvantage to MIG securityholders in the longer term. Notwithstanding, MIG securityholders who have a preference for cash distributions may consider this factor to be a disadvantage The Restructure Proposal involves transaction costs There are a number of costs associated with the Restructure Proposal. These include: MIG expects that excluding the fees referred to below it will incur approximately $7 million in relation to the implementation of the Restructure Proposal. A substantial majority of these costs will have been incurred prior to the date upon which MIG securityholders will vote on the Restructure Proposal. MIG has appointed Macquarie Capital Advisers as its financial adviser to provide advice and assistance in relation to the Restructure Proposal in return for the payment of a financial advisory fee of 1% of the market capitalisation of Intoll calculated as the VWAP over the first 30 days of trading. As noted in the Explanatory Memorandum, Macquarie s financial advisory role excludes advice on arrangements between Macquarie Group and MIG, Intoll and MQA. As this fee is based on the market capitalisation of Intoll after the implementation of the Restructure Proposal, the amount of the financial advisory fee is not certain at the present time. In the event that the discount to net asset value applying to MIG before the Restructure Proposal is the same as for Intoll post the Restructure Proposal, the financial advisory fee would be in the order of $19 million. In the event that Intoll securities traded at their net asset value over the first 30 days of trading the fee would be in the order of $37 million. The Explanatory Memorandum and the pro forma information contained therein assumes that this fee will be $28.3 million. We note that it is consistent with normal commercial practice in a demerger of this nature for financial advisory fees to be payable to an adviser. The Restructure Proposal includes the payment of $50 million plus an amount equal to the net assets of MIIML to Macquarie. This is discussed in section 8.2 of the Explanatory Memorandum. As indicated in the Explanatory Memorandum the payment of $50 million plus an amount equal to the net assets of MIIML is stated to be for facilitating a range of outcomes in connection with the Restructure Proposal. This is stated to include the following: Assisting Intoll with establishing an independent operation, including assisting in the transfer of certain personnel, provision of premises, the reimbursement of incremental costs) (including all employment costs) and other services over a 12 month period Facilitating a method of implementation for the Restructure Proposal which minimises the potential for triggering pre-emptive rights and consent rights in asset level agreements Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 34

212 Granting a licence to Macquarie s intellectual property rights to Intoll Transferring MIIML, the responsible entity of MIT(I) and MIT(II) to Intoll In relation to the payment of the $50 million plus an amount equal to the net assets of MIIML to Macquarie we note the following key points: We are advised that the net assets of MIIML are expected to be approximately $25.6 million, predominantly cash deposits. MIIML has not operated other than as the responsible entity of MIT(I) and MIT(II). The $50 million includes the reimbursement of incremental costs incurred by Intoll (see above) over the first 12 months after the implementation of the Restructure Proposal. The Explanatory Memorandum estimates that these costs will be approximately $7.8 million. This is of direct benefit to Intoll. The assistance of Macquarie will significantly aid in the implementation of the Restructure Proposal. The transitioning of staff, the continued involvement of those historically involved in managing MIG and the licensing of relevant Macquarie intellectual property will all assist to ensure an orderly transition of Intoll to standalone management and the separation of the two toll road asset portfolios and the establishment of MQA as a separate listed entity. Macquarie s co-operation enables the Restructure Proposal to be implemented in a way that avoids pre-emptive rights over assets being triggered and other consent rights in asset level agreements (for example financing arrangements) is also of advantage to MIG securityholders. Macquarie will cease to manage Intoll as a result of the transfer of MIIML to Intoll and the ending of the MIGIL Advisory Deed and the MIG Funds Management Resources Agreement with Macquarie. We note that in other transactions involving the internalisation of management arrangements, including those undertaken by Macquarie, specific consideration has been paid for the termination of management arrangements. In the current situation we understand that no specific consideration has been attributed to be compensation for the termination of those arrangements. Notwithstanding, Macquarie, by agreeing to do all things necessary to implement the Restructure Proposal including ceasing to manage Intoll, has in effect agreed to cease management of the substantial majority (approximately 72% by asset value) of the current MIG asset portfolio. In these circumstances it is not uncommon for a compensation payment to the manager to be negotiated. As it is difficult to quantify the monetary value of many of the contributions that Macquarie is making to facilitate the implementation of the Restructure Proposal we have had regard to the extent to which the payment to Macquarie may be supported by other transactions involving the termination of management arrangements. In section we set out the historical management fees of MIG. In the table below we allocate the Base Fee based on the pro-rata value of assets between that notionally attributable to the Intoll assets and other MIG assets at the time. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 35

213 A summary of the fees prepared on this basis is set out as follows: Year ended June Base Management Fees ($000) Intoll assets as % of MIG Portfolio Allocation of Base Management Fee ($000) ,485, % 32,554, ,825, % 28,823, ,472, % 24,803,124 Average 61,261,137 28,727,153 Source: MIG Annual Reports, EY Analy sis The $50 million (i.e. excluding any value of the other contributions that Macquarie is making to the implementation of the Restructure Proposal)) represents a multiple of approximately 2 times Base Fees attributable to the Intoll assets for 2009 and approximately 1.7 times the average fees attributable for the three years ended 30 June This would increase to between 2.4 times and 2.9 times if one offset against the Base Management Fees $7.5 million being the impact of the increase in the Base Fees payable in respect of the MQA assets. As can be seen in the table below, as anticipated based on the discussion above, these represent multiples at the lower end (but within) the range of multiples observed in the recent transactions: Revenue multiple (historical) We have also compared the $50 million (i.e. again excluding any value of the other contributions that Macquarie is making to the implementation of the Restructure Proposal) to the estimated net cost savings that the acquirer of the management rights is expected to realise based on published independent expert s reports in relation to these transactions. In relation to the Restructure Proposal we note that the $50 million represents a multiple of 5.4 times the cost of management savings discussed in section Revenue multiple (forecast) $ million Listed fund Consideration Revenue (historical) Revenue (forecast) Nov-09 Macquarie Media Group 40.5 n/a 10.0 n/a 4.0 Sep-09 Macquarie Airports Jul-09 Viridis Clean Energy Group n/a 1.2 n/a Jun-09 Macquarie Leisure Trust Group n/a 5.5 n/a Apr-09 Babcock & Brown Japan Property n/a 1.2 n/a Trust Mar-09 Babcock & Brown Capital Limited Dec-08 Babcock & Brown Wind Partners n/a 1.4 n/a Jun-07 Macquarie ProLogis Trust Source: Independent ex pert reports and company announcements We note that again, the $50 million implies a multiple that is at the lower end of (but within) a range of multiples observed in a number of the other transactions. We note that while the Babcock and Brown transaction is somewhat relevant due to its recent nature this internalisation occurred in a distressed environment. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 36

214 Cost saving (historic) Cost saving (forecast) Listed fund Consideration Multiple (historical) Multiple (forecast) Nov-09 Macquarie Media Group 40.5 n/a 5.5 n/a 7.4 Sep-09 MAp Airports Jul-09 Viridis Clean Energy Group n/a 2.3 n/a Jun-09 Macquarie Leisure Trust Group n/a 15.5 n/a Dec-08 Babcock & Brown Wind Partners n/a 2.0 n/a Jun-07 Macquarie ProLogis Trust n/a 4.0 n/a 11.0 Source: Independent ex pert reports and company announcements We note however the current transaction, while it does involve Macquarie in effect ceasing to manage the Intoll assets, is only one part of the Restructure Proposal the major component of which is a demerger. A demerger: Is consistent with MIG s stated strategy to invest in and develop quality assets that are accretive to the portfolio over the long term" 3 and its history of generally investing in early stage toll road projects or toll roads where there are clear opportunities to enhance performance through active management. Has been done in the past with the demerger of Sydney Roads Group and the sale of other assets including Transurban, Cintra, Yorkshire Link, Hills Motorway and Lusoponte. As the 407 ETR and Westlink M7 are now both mature toll road assets (and also noting that MIG has already sold 50% of its initial Westlink M7 interest) there can be no certainty as to how long MIG in the absence of the Restructure Proposal may have held the 407 ETR and Westlink M7 assets that Macquarie will cease managing as a result of the Restructure Proposal. This together with the fact that the discount to net asset backing meant that some form of transaction or capital initiative was likely, in our view supports the fact that any payment in relation to MIG would be at the lower end of a range observed in precedent transactions Financial position of Macquarie Atlas Roads A summary of the financial position of MQA is set out in section of this report and in section of the Explanatory Memorandum. The assets of MQA will primarily be the toll road assets listed in section and approximately $293 million cash. MQA will have no debt at the fund level. It can be seen in section that the investments in the MQA toll road portfolio generally have high levels of debt and as noted in section of the MQA Prospectus There is a significant risk that one or more investments in the MQA Portfolio may be unable to comply with the terms of their loans or may be unable to arrange refinancing when loans fall due, or that the terms of refinancing are less favourable than the current terms. It is also indicated in the Prospectus that the debt at each of the assets is non recourse to MQA and is not secured over anything but the project to which it relates. 3 Source: MIG Analyst Package 2008 Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 37

215 The MQA Prospectus states that MQA is expected to have sufficient working capital to carry out its stated objectives and is forecast to be able to meet its obligations as and when they fall due for the foreseeable future. As the debt of each of the MQA assets is non recourse to MQA, the $293 million in cash held by MQA will be available to MQA to meet its working capital requirements. While part of these funds could be invested into MQA s existing assets if MQA chose to do so, these funds are not significant in the context of the amount of debt that may need to be refinanced by MQA s assets. It is uncertain at this time how MQA securities will be rated and therefore the extent to which MQA may have the ability to raise new capital. In the event that some of MQA s assets are not able to refinance their debt there are risks that: An individual asset or assets may be subject to some form of insolvency or administration MQA s interests in those assets could be diluted, possibly on unfavourable terms MQA could be forced to divest those assets under distressed circumstances While these risks also exist for MIG in the absence of the Restructure Proposal, they are greater for MQA. This reflects the fact that MQA as a much smaller entity than MIG will have less flexibility in managing those risks. Whereas MIG has the benefit of much larger scale, the likelihood of being able to raise capital, and the generation of cash flows from the two lower risk assets to be held by Intoll, MQA will have fewer resources and options for dealing with those risks Performance Fees for MQA If the Restructure Proposal is approved, MQA will remain managed by Macquarie and will be liable for payment of Performance Fees under certain performance hurdles. The basis for the calculation of Performance Fees is discussed in section The key drivers for the level of Performance Fees payable are: The opening benchmark price for MQA being the 30 day VWAP of the security post completion of the Restructure Proposal. The performance of the benchmark S&P/ASX300 Industrials Accumulation Index over time. The relative performance of the MQA security price against the benchmark S&P/ASX300 Industrials Accumulation Index over time. For the purposes of our analysis, we have considered a number of scenarios to assess the potential impact of the above three key drivers on the potential level of Performance Fees payable by MQA. In our analysis, we have made the following assumptions around these key drivers: We have considered opening benchmark prices based on a range of discounts to net asset backing between 40% and 70% (currently approximately 49% for MIG) MQA s relative performance against the benchmark in a range of 0% to 10% Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 38

216 A constant performance of 6% has been assumed in all scenarios for the S&P/ASX300 Industrials Accumulation Index A summary of the first year Performance Fee that would be derived under the various assumptions is presented in the table below. As discussed in section the fee would be payable in three equal instalments over three years subject to the relevant performance hurdle continuing to be met at the time each of the payments is to be made. Opening share price ($)* Currency: $ million $1.16 $1.54 $1.93 $2.31 Performance fees 0% Above benchmark % Above benchmark % Above benchmark Closing share price range* $ $1.34 $ $1.79 $ $2.24 $ $2.68 Performance fee per security (high) $0.02 $0.02 $0.03 $0.03 * Opening share prices based on a range of discount to NAV betw een 40% and 70% Source: EY analy sis As shown in the table above, the scenario that provides for the largest Performance Fee payable to Macquarie is where the opening benchmark MQA VWAP is $2.31 (40% discount to net asset value) and the MQA securities outperform the S&P/ASX300 Industrials Accumulation Index by 10% in the first year. In this instance a Performance Fee of approximately $15.7 million would be payable to Macquarie over three years in $5.23 million instalments, assuming maintaining of outperformance in years 2 and 3. It should be noted however that the $15.7 million payment to Macquarie only represents approximately $0.035 per MQA security, and under this scenario, the security price of a MQA security would have risen by $0.37. In all other scenarios, the forecast Performance Fee is lower than $15.7 million, and results in Performance Fees per MQA security of less than $0.035 per security in the first year. There can be no certainty as to what the initial trading price of MQA will be and it is possible that it could be above or below the assumptions set out above. The above analysis should not be interpreted as representing a valuation of MQA securities and we offer no opinion or assurance in that regard. We also note that should the initial 30 day VWAP be lower than that outlined above and the outperformance higher than that noted above then higher (potentially materially) Performance Fees could arise. It should be further noted that for Performance Fees to be paid in subsequent years, further outperformance of the S&P/ASX300 Industrials Accumulation Index would be required. 5.4 Possible market re-rating As discussed throughout this report, the primary advantage and the main purpose of the Restructure Proposal is to encourage a net re-rating of Intoll and MQA securities relative to the existing MIG securities. We note that the toll road assets to be held by Intoll are the more stable assets with lower debt levels than the toll road assets to be owned by MQA. As discussed in section it is not possible to accurately predict how the market will view MQA securities and how it will be rated. It is possible that it could be rated more highly or not as high as the current MIG securities. Accordingly, in our view, in current market conditions the potential positive re-rating of Intoll is more likely than MQA. Any improvement in the market rating for MQA Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 39

217 may occur over a longer period as the various refinancing and other issues in that portfolio are addressed. It is possible that MQA s securities may trade at prices that imply a greater discount to net asset backing than is currently the case for MIG securities. The potential for a benefit from re-rating from a transaction of this nature can be illustrated by an examination of the demerger by MIG of Sydney Roads Group in 2006 and the current proposed takeover of Transurban by Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan. While there can be no assurance that the Restructure Proposal will produce the same or similar results we note the following key points in relation to these transactions: In relation to Sydney Roads Group: On 19 June 2006 it was announced that the demerger of Sydney Roads Group would occur pursuant to which certain mature assets would be transferred into a new vehicle which would be listed on the ASX. As part of the transaction, each MIG securityholder received one Sydney Roads Group share for every three MIG securities held. In the one month prior to this announcement, MIG securities traded at a VWAP of $3.09 being a discount of 26.6% compared to the net asset backing of MIG at the time. On 19 June 2006, the ASX/S&P 300 industrials index was On 31 July 2006, Sydney Roads Group shares listed on the ASX. In the one month after the listing of Sydney Roads Group, Sydney Roads Group securities traded at a VWAP of $1.04 and MIG securities traded at a VWAP of $2.78. This implied a value for MIG securityholders of $3.13 being one MIG security plus one Sydney Roads Group share for every three MIG securities held. The ASX/S&P 300 industrials index was on this date and hence the increase from $3.09 to $3.13 is broadly similar to the market movement over that period. Prior to the announcement of the proposed Sydney Roads Group demerger on 27 March 2006, MIG securities traded at a discount to net asset backing of 24%. By 31 December 2006, this discount had decreased to approximately 2% (relating to the assets retained by MIG only). In the month following the demerger of Sydney Roads Group, the VWAP of $1.04 represented a 15% discount to net asset backing. From the date of Sydney Roads Group's listing (31 March 2006) to the announcement of a takeover offer by Transurban, Sydney Roads Group securities traded at an average discount to net asset backing of 10%. In December 2006 Transurban announced a takeover for Sydney Roads Group at a price of $1.32 which was ultimately successful. This offer price represented a 7% premium on Sydney Roads Group's net asset backing as at 30 June Proposed Takeover for Transurban: On 27 October 2009, Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan announced an intention to make an offer to acquire 100% of Transurban securities. The proposed offer included both cash and scrip options, representing a price of $5.25 per Transurban Security. The price of $5.25 represents a 20.1% premium above the Transurban 10 day VWAP prior to the announcement of the offer. Transurban does not disclose a market valuation of its toll road investments. We note, however, that a number of brokers have issued reports including a valuation of Transurban s assets and Transurban s securities since the announcement of the Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 40

218 Proposed Takeover offer. Based on the average of the broker report valuations that we have obtained, the price of $5.25 represents a 5% discount to its estimated net asset backing. It should be noted that the proposed takeover for Transurban is a very different transaction to the Restructure Proposal as it involves a third party making an offer to acquire 100% of Transurban s securities. It is intended to demonstrate (like the takeover of Sydney Roads) that investors do bid for toll road companies and that they may pay a premium over ASX security trading prices to acquire those securities. This analysis does not imply that such an outcome could be achieved in respect of either Intoll or MQA in the absence of a takeover offer. The above analysis, inter alia, relates to ASX trading prices of toll road companies compared to their net asset backing. We believe that this is highly relevant as the purpose of the Proposed Restructure is to address the discount that MIG s security price has been exhibiting relevant to MIG s net asset backing. It is also relevant to consider demergers generally. Any such analysis is difficult as it is not possible to distinguish the impact of a demerger on a security price from other matters affecting the performance of a security. The following table examines the performance of the securities of demerged entities over 3 month, one year and two year periods after they were listed on the ASX compared to the all ordinaries index. Currency: $ million Date Total 3 Month Total 1 year Total 2 year CMH Crown 03-Dec % (15.5%) (10.4%) Toll Asciano 06-Jun-07 (3.0%) (40.6%) (27.2%) Tower Tower Australia 21-Nov % (20.4%) 11.7% MIG SRG 31-Jul % na na Symbion Mayne 21-Nov-05 (4.7%) 7.3% na AMP HHG 23-Dec % 20.9% 13.5% CSR Rinker 31-Mar % 16.2% 59.1% Alumina WMC resources 04-Dec % 27.0% 18.5% BHP BHP Steel 15-Jul % (3.2% ) 22.3% Source: ASX announcements, Annual Reports The table indicates that the performance of demerged entities was mixed but generally positive. With the exception of CMH/Crown and Toll/Asciano all of the examples exhibited positive returns over a two year period. CMH/Crown and Toll/Asciano both had a number of unique circumstances that affected this performance which could not be attributed to the effects of the demerger. The generally favourable position noted above is consistent with a number of studies which have found positive abnormal returns over an extended period following a demerger for the demerged entity, its parent, or a combination of the two. 4 A number of studies also 4 P.J. Cusatis, J.A. Miles and J.R. Woolridge, Restructuring though spinoffs; the stock market evidence, Journal of Financial Economics (1993), vol 33, p ; J. Wyatt, Why spinoffs work for investors, Fortune, October 16, 1995; UBS Investment Research, Q-Series: Spin-offs and demergers, UBS Limited, 14 April 2005; UBS Investment Research, Valuation and Accounting Footnotes: Spin-offs (demergers) update, UBS Limited, 2 June 2005; P.L. Anslinger, S.J. Klepper and S. Subramaniam, Breaking up is good to do, The McKinsey Quarterly (1999), Number 1, p16-27 Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 41

219 conclude that the announcement of a demerger tends to result in a positive impact on share price Other factors Continued Macquarie management of MQA We noted in section 5.1 that the investment markets are generally and currently not favouring the externally managed funds model and that in recent times a number of other investment funds have moved away from this model. In contrast the Restructure Proposal involves Macquarie continuing to manage MQA under arrangements that are very similar to those which applied to MIG previously. Prima facie this may appear to be a disadvantage of the Restructure Proposal. However, in our discussions with the IBCs we understand that they have formed the view that Macquarie s continued management of MQA is necessary and is the most appropriate course of action in the current circumstances. In particular this view reflected the fact that, to varying degrees, each of the MQA assets has operational and financial (debt refinancing) challenges that require significant focus and expertise to address, in some cases over many years. These issues are made more complex by the fact that all of the assets are located offshore and in different countries and that MQA (and MIG at present) do not wholly own these assets (with the exception of M6 Toll) and in managing these issues need to work collaboratively with other securityholders in each asset. Some of these other securityholders include Macquarie or other funds managed by Macquarie. The IBCs have formed the view that active management of these assets is required and that Macquarie with its significant expertise and history with respect to each of these assets is best placed to manage those assets. Having formed the view that Macquarie is the most appropriate manager for MQA the IBCs were keen to ensure that the management arrangements that were put in place were appropriate to sufficiently reward and incentivise Macquarie to commit the necessary resources, talent and effort to the management of MQA to ensure that it would maximise its performance. As noted in section above, this involved: Increasing the Base Fee that applied for up to $1 billion in market capitalisation from 1.25% (that currently applies to MIG) to 2%. Between a market capitalisation of $1 billion and $3 billion a fee of 1.25% applies and over $3 billion a fee of 1% applies. Above $1 billion in market capitalisation these rates are consistent with the current MIG management arrangements. Calculating the Base Fee upon market capitalisation without adjustments for debt or cash held at the fund level. These matters are adjusted for under the current MIG arrangements. The base for the calculation of outperformance is reset to the MQA security price based on its 30 Day VWAP (post implementation of the Restructure Proposal). This means that the underperformance deficit (see section above) existing in relation to MIG does not in effect carry over into the new arrangements. 5 T. Kircmaier, The Performance Effects of European Demergers, Centre for Economic Performance, London School of Economics and Political Science, December 2002 Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 42

220 We understand that these changes reflected negotiations between Macquarie and the IBCs and had regard to factors including: MQA is expected to be considerably smaller than MIG (value of assets as at 30 June 2009 of $1.45 billion compared to MIGs value of $5.1 billion). The significant time and effort that will be required to manage the various assets in the MQA Portfolio and in particular to deal with the various debt and operational issues that exist. These are summarised above. The desire to ensure that the new entity is established with sound and commercial arrangements that will maximise the performance of the entity into the future. Providing an incentive for the manager to conserve capital given the absence of cash flow and anticipated future funding requirements of the assets. Based on the above factors we understand the commercial rationale for Macquarie continuing to manage MQA. Our assessment of the MQA management arrangements has been undertaken in the context of these new circumstances. We also note: We have considered the overall cost of management of Intoll and MQA in section above. We have concluded that (excluding Performance Fees) the overall cost of management is likely to decrease for Intoll and MQA relative to the previous cost of management of MIG. It should be noted that this analysis includes the impact of both the change of management arrangements and the impact of separating Intoll and MQA which inevitably involves some duplication of costs between the entities. We highlight as a disadvantage in section that there is a risk that significant Performance Fees could be payable to Macquarie under the MQA management arrangements. However, this would require outperformance of the MQA security price over the S&P/ASX 300 Industrials Accumulation Index Profile of Macquarie Atlas Roads As noted above, to varying degrees MQA s assets have significant levels of debt, are less mature than a number of Intoll s assets and their performance has been quite significantly adversely affected in the current economic downturn. In addition, notwithstanding the rationale outlined above, MQA will be an externally managed fund which in recent times has not been well received in the current investor market. It is also possible that given the nature of the MQA assets, investor interest in MQA may be limited which would affect the liquidity of MQA s securities on the ASX. As a consequence of the above factors there is no certainty as to how MQA s securities will trade on the ASX. There is a reasonable risk that the securities will continue to trade at a significant discount to their net asset backing (possibly even greater than that which currently applies to MIG securities). It may be that a reasonable period of time may be required for any value to be extracted from the MQA asset portfolio and in many cases this will depend upon financial performance leading up to the next major refinancing date for each asset and the terms that can be negotiated for refinancing at that time. As MIG securityholders already have interests in these assets we do not consider this to be a disadvantage of the Restructure Proposal. We believe, however, that securityholders should be aware of these issues. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 43

221 5.5.3 Impact of the Restructure Proposal on control and dilution We note that in a number of other transactions involving the restructure of management arrangements, securities have been issued as consideration for the acquisition or cancellation of management rights. In this case the effective restructure of management arrangements of Intoll will not affect the voting power which Macquarie or any other party exerts over Intoll or MQA and will not result in the dilution of MIG securityholders interests Taxation in relation to the Restructure Proposal MIG securityholders should refer to the section Tax Information for Securityholders contained in section 9 of the Explanatory Memorandum. We recommend that securityholders consider this material carefully. The information provided in the Explanatory Memorandum discusses: The implication of the in-specie distribution of the entities that comprise MQA. The Explanatory Memorandum discusses the potential application of demerger relief provisions and we encourage MIG securityholders to carefully consider this material. The implications of the proposed special distribution by MIG of $0.10 per MIG security. The Explanatory Memorandum indicates that The distribution will be treated as an unfranked dividend paid by MIT(II) (as MIT(II) will be treated as a company for Australian tax purposes). The Explanatory Memorandum discussed the consequences of this for Australian resident and non-resident securityholders who will either be assessable on their receipt of the dividend or subject to dividend withholding tax in Australia. The Explanatory Memorandum also indicates that a MIG entity will make a capital gain of approximately $5 million on the sale of its interests in Chicago Skyway and Dulles Greenway to one of the entities that will comprise MQA. Tax may be payable by MIG securityholders on this gain, the amount of which will be affected by various matters discussed in point 5 of section 9 of the Explanatory Memorandum. An individual MIG securityholder s actual tax position will be dependent upon their own facts and circumstances. As such MIG securityholders should seek their own independent tax advice in relation to the Restructure Proposal Taxation in relation to future distributions Section 4.3 of the Explanatory Memorandum indicates that the components of Intoll s distributions can vary from year to year and are dependent upon how the funds forming part of the distributions have been derived. Such components may include franked distributions, capital gains, tax deferred distributions and foreign distributions. This is the same position as has applied to MIG distributions historically. We note that the same assets (407 ETR and Westlink M7) will be generating the cash flows that will fund Intoll distributions as have in recent times provided the majority of the cash flows for MIG. In addition, Intoll comprises the same corporate entities that presently comprise MIG. We are not aware of any aspect of the Restructure Proposal that would adversely affect the form of future Intoll distributions compared to distributions that might be made by MIG in the absence of the Restructure Proposal. As noted in section above, MQA is not expected to make any distributions for at least eight years. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 44

222 5.5.6 Alternatives considered MIG advised in its ASX announcement dated 30 October 2009 in addition to recent investor presentations and the Explanatory Memorandum that various options were considered to improve value for MIG securityholders. The other options considered by the IBCs are summarised below Maintaining the status quo The Explanatory Memorandum notes that whilst this is a viable alternative to the Restructure Proposal, this option does not address underlying issues, and so was not viewed as delivering any solution for improvement in the security price in the medium term Asset sales Two asset sales were completed in late 2008/early The Explanatory Memorandum notes that subsequent to that, market conditions have made it difficult to achieve optimal value generating outcomes. Whilst market conditions have somewhat improved, the MIG Boards have stated that they continue to believe that satisfactory conditions are not yet present and therefore that asset sales pose an unacceptable risk of value dilution for MIG securityholders Raising capital for early de-leveraging As stated in the Explanatory Memorandum, MIG does not have any fund level debt all debt is held at the asset level, and is non-recourse to the fund itself (and to other assets within MIG s portfolio). It further notes that the majority of the debt issued by assets within MIG s portfolio is of a medium to long term nature (with most refinancing requirements falling after 2011), and is attractively priced. Consequently: The debt at each asset does not require an early deleveraging solution, if at all Any equity raising would be likely to be at a significant discount to both the current price and long term value of MIG securities, and so would likely be dilutive to current securityholders The economics of replacing debt with equity would not be accretive or economically rational at this time In addition, the joint ownership nature of some assets would make it difficult to resolve early recapitalisations without knowing traffic outcomes and future debt market conditions. A deleveraging strategy is therefore not viewed by the MIG management or the MIG Boards as beneficial for MIG securityholders at this time. 5.6 Conclusion In our opinion, the Restructure Proposal is in the best interests of MIG securityholders. In forming our conclusion we have had regard to all of the factors associated with the Restructure Proposal as discussed in section 5 of this report and to the other alternatives considered by the IBCs as set out in section We note that the primary advantage and the main purpose of the Restructure Proposal is to encourage a net re-rating of Intoll and MQA securities relative to the existing MIG securities. Many of the advantages referred to above would be expected to contribute to such a re-rating. A net re-rating would mean that the securities in Intoll and MQA combined would either initially or over time trade at values nearer to their net asset backing than do the current MIG securities. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 45

223 While in this report we discuss a number of factors which we consider should contribute to a net re-rating of Intoll and MQA securities, we note that there is no certainty that this will occur. This is particularly so for MQA securities where it is possible that they may not be rated as highly as MIG at present. The ultimate value of these securities is likely to be determined and realised over a longer period as the issues facing the MQA assets are addressed. We note that Intoll and MQA will collectively hold the same toll road assets as MIG after the implementation of the Restructure Proposal. We have no reason to believe that the underlying value of those assets in the market would change as a result of the Restructure Proposal. The most significant disadvantage of the Restructure Proposal relates to transaction costs that will be incurred (principally being the payments to Macquarie that will occur if the Restructure Proposal is approved and implemented) and the potential that MQA may pay Performance Fees if the specified performance hurdles are met. We have considered the relative significance of the advantages and disadvantages in forming our conclusion. In this regard we note that: In section we set out a comparison of MIG s existing cost of management, as incurred for the year ended 30 June 2009, to the cost of management estimated in the Explanatory Memorandum for Intoll and MQA on an annualised basis. This comparison reflects MIG s existing management arrangements on the one hand and Intoll s standalone management structure and MQA s ongoing management by Macquarie on the other. Consequently it takes into account the fact that the Base Fee as a percentage of market capitalisation for MQA will be higher than that which currently applies for MIG (see section 5.5.1) This comparison indicates a potential reduction in the cost of management (excluding Performance Fees which are considered below) of in the order of $9.2 million per annum. In section we discuss the potential that MQA may incur Performance Fees in the future if certain performance hurdles are met. As illustrated in that section there can be no certainty as to the amount of Performance Fees that could be incurred. In any one period the amount of Performance Fees could be significant. However over the medium to longer term it would be difficult for any manager to materially outperform the relevant indices on a sustainable basis. While it is subjective we consider that it would be unlikely that on a sustainable basis the level of Performance Fees that could be incurred would exceed the cost of management savings of $9.2 million per annum as discussed above. In section we discuss the fees that will be payable to Macquarie if the Restructure Proposal is approved and implemented. We note that the total amount that will be incurred in this regard is uncertain as the financial advisory fee is based on the VWAP of Intoll over the first 30 trading days after listing on the ASX. For the purposes of this analysis however we assume that the total of the two fees could be $87 million which assumes that the Intoll securities increase to trade at their net asset backing. We note that there is no certainty that this could occur. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 46

224 We note that it is not possible to predict with any degree of certainty the extent to which a re-rating will occur. There are however a number of impacts of the Restructure Proposal which has lead us to form the view that some form of re-rating, either initially or over time is likely. We believe that in the short term a re-rating of the Intoll securities is more likely than for the MQA securities where the ultimate value of those securities is likely to be determined and realised over a longer period. As at 1 December 2009 the MIG security price of $1.31 represents a discount of approximately 49% relative to its net asset backing as at 30 June Only a very small net re-rating would be required to offset the $87 million of transaction costs payable to Macquarie referred to above. As an example, in the event that on average the Intoll and MQA security prices reflected only a marginally reduced discount to net asset backing of 47% the increase in market capitalisation resulting would more than offset the $87 million in transaction costs referred to. We note that $87 million represents less than $0.04 per MIG security. Consequently, in our view having regard to all of these factors we consider that on balance the advantages of the Restructure Proposal outweigh the disadvantages. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 47

225 Appendix A Qualifications and declarations Ernst & Young Transaction Advisory Services Limited, which is wholly owned by Ernst & Young Australia, holds an Australian Financial Services License under the Corporations Act, 2001 and its representatives are qualified to provide this independent expert s report. Prior to accepting this engagement, Ernst & Young Transaction Advisory Services Limited considered its independence with respect to MIG with reference to the Restructure Proposal. In our opinion we are independent of MIG. We have provided a range of professional services to Macquarie, MIG and related entities. However we have not provided any services in relation to the Restructure Proposal other than the preparation of this report. It is our opinion that the abovementioned existing and historical relationships do not impact on our ability to provide an independent and unbiased report in the context of the Restructure Proposal. In our opinion, we are independent of MIG and Macquarie. This independent expert s report has been prepared specifically for the IBCs and MIG securityholders. Neither Ernst & Young Transaction Advisory Services Limited, Ernst & Young Australia, nor any member or employee thereof undertakes responsibility to any person, other than the IBCs and MIG securityholders, in respect of this independent expert s report, including any errors or omissions howsoever caused. The statements given in this independent expert s report are given in good faith and the belief that such statements are not false or misleading. In the preparation of this independent expert s report we have relied upon and considered information believed after due inquiry to be reliable and accurate. We have no reason to believe that any information supplied to us was false or that any material information has been withheld from us. We have evaluated the information provided to us by MIG, their advisors, as well as other parties, through inquiry, analysis and review, and nothing has come to our attention to indicate the information provided was materially misstated or would not afford reasonable grounds upon which to base our independent expert s report. We do not imply and it should not be construed that we have audited or in any way verified any of the information provided to us, or that our inquiries could have verified any matter which a more extensive examination might disclose. The information we have had regard to in the preparation of this independent expert s report is set out in appendix B. MIGIL and MIIML as responsible entity for MIT (I) and MIT (II) have provided an indemnity to Ernst & Young Transaction Advisory Services Limited for any claims arising out of any misstatement or omission in any material or information provided to it in the preparation of this independent expert s report. We provided draft copies of this report to the IBCs and management of MIG for their comments as to factual accuracy. Changes made to this independent expert s report as a result of this review have not changed the methodology or conclusions reached by us. We will receive a professional fee based on time spent in the preparation of this independent expert s report, estimated at approximately $210,000 (exclusive of GST). We will not be entitled to any other pecuniary or other benefit whether direct or indirect, in connection with the making of this report. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 48

226 The principal persons responsible for the preparation of this report are Stuart Bright and Ishwar Madhyastha. Stuart Bright, a director and representative of Ernst & Young Transaction Advisory Services Limited and a partner of Ernst & Young Australia has over 19 years experience in providing financial advice and valuation advice and has professional qualifications appropriate to the advice being offered. Ishwar Madhyastha, a director and representative of Ernst & Young Transaction Advisory Services Limited and a partner of Ernst & Young Australia has over 14 years experience in providing financial advice and valuation advice and has professional qualifications appropriate to the advice being offered. In the preparation of this independent expert s report, we have had regard to relevant regulatory guides issued by ASIC, in particular Regulatory Guides 111 and 112. It is not intended that the independent expert s report should be used for any other purpose other than that to assist MIG securityholders to determine how to vote in relation to the resolutions proposed in relation to the Restructure Proposal. Our report relates to the Restructure Proposal only and is being provided to securityholders to assist them to consider how to vote in relation to resolutions that will be required to be passed at a meeting in order for the Restructure Proposal to be implemented. We consent to the issue of this report in the form and context in which it is included in the Explanatory Memorandum to be sent to MIG security holders. Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 49

227 Appendix B Sources of information In arriving at our views, we have had regard to the following sources of information: Macquarie Infrastructure Group Restructure Proposal Explanatory Memorandum and Notices of Meeting Macquarie Atlas Roads Prospectus Financial data provided by MIG Results presentations released by MIG ASX announcements for MIG and comparable companies Financial statements of MIG and comparable companies Analyst reports on MIG and comparable companies Discussions with members of MIG s IBCs and management MIG website ( IBISWorld industry reports Standard & Poor's Market Insight Bloomberg Factiva Reuters Capital IQ Global Insight Comparable company websites Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 50

228 Appendix C Glossary Term Meaning $ All amounts in this report are Australian dollars unless otherwise stated ACCC Australian Competition & Consumer Commission Adviser Advisory Deed ASIC ASX AVT CAPM CNA DCF Demerger EBITDA EPS FSG FY0XA FY0XF GST IBCs Independent Directors ITR KVT Macquarie MBL MCFEL MEL MSA MIG MIGIL MIIML MIT (I) MIT (II) MQA NIV PCP Performance Test Benchmark Return Performance Test Return Report Restructure Proposal RG 111 RG 112 S&P SDELP US$ US/USA VKT VWAP WACC WSRG Macquarie as adviser of MQA MQA Advisory Deed Australian Securities & Investments Commission ASX Limited Average Daily Traffic Capital asset pricing model Caisse Nationale des Autoroutes Discounted cash flow The separation of MIG into two ASX listed groups, Intoll and MQA Earnings before interest, taxation, depreciation and amortisation Earnings per security Financial Services Guide The twelve months ended 30 June 200X Forecast for the twelve months ended 30 June 200X Goods and Services Tax Independent board committees of MIIML and MIGIL The independent directors of MIIML and MIGIL Indiana Toll Road Kilometre Vehicle Travelled Macquarie Group Limited and/or relevant wholly owned entities of Macquarie Group Limited Macquarie Bank Limited Macquarie Capital Funds (Europe) Limited Midlands Expressway Limited Management services agreement Macquarie Infrastructure Group Macquarie Infrastructure Group International Limited Macquarie Infrastructure Investment Management Limited Macquarie Infrastructure Trust (I) Macquarie Infrastructure Trust (II) Macquarie Atlas Roads Net Investment Value Prior comparative period Return as calculated under the Asset Advisory Agreement Return as calculated under the Asset Advisory Agreement This independent expert s report Proposal to restructure MIG and reallocate the underlying investments held by MIG to form two ASX listed entities ASIC Regulatory Guide 111 Content of expert reports ASIC Regulatory Guide 112 Independence of experts Standard & Poor s San Diego Expressway Limited Partnership United States Dollar United States of America Vehicle Kilometres Travelled Volume weighted average price Weighted average cost of capital Western Sydney Roads Group Macquarie Infrastructure Group Independent expert's report and financial services guide Ernst & Young 51

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233 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 165 This page has been left blank intentionally.

234 230 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP This page has been left blank intentionally. Appendix B: Intoll 1 Structure 2 Intoll Portfolio 3 Intoll Financial Information 4 Risk factors 5 Management and corporate governance 6 Taxation implications of holding Intoll Securities 7 Material contracts 8 Additional information Westlink M7, Australia

235 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING Appendix B: Intoll MACQUARIE INFRASTRUCTURE GROUP Structure 1.1 Overview If the Restructure Proposal proceeds, MIG will become known as Intoll. As it comprises the same entities as MIG, Intoll is a triple stapled structure consisting of: MIT(I) (to be renamed Intoll Trust (I) (an Australian registered managed investment scheme); MIT(II) (to be renamed Intoll Trust (II) (an Australian registered managed investment scheme); and MIGIL (to be renamed Intoll International Limited) (an exempted mutual fund company incorporated in Bermuda). Intoll will own and manage the interests in the Intoll Portfolio being the 407 ETR and Westlink M7. MIIML, as the responsible entity of MIT(I) and MIT(II), will become a wholly owned subsidiary of MIT(II) on implementation of the Restructure Proposal. After the implementation of the Restructure Proposal, MIIML will continue to manage MIT(I) and MIT(II), in addition to acting as an adviser to MIGIL, the Bermudian company that forms the third element of Intoll s triple stapled structure. Macquarie Capital / Macquarie 14.0% 86.0% Other Securityholders Intoll Stapled Stapled MIT (I) MIT (II) MIGIL RE RE MIIML Adviser 25.0%* 30.0% Westlink Motorway Group Westlink M7 407 International 407 ETR + Represents Macquarie s Principal Holding as at 11 December As at 11 December 2009, Macquarie had a total relevant interest in approximately 17.6% of MIG Securities.

236 232 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued 1.2 Assets, valuations and key metrics Assets within the Intoll Portfolio: (a) 30% interest in 407 ETR 407 International Inc is the concessionaire of 407 ETR, a 108 kilometre, multi-lane all-electronic toll highway in Toronto, Canada that runs alongside some of the fastest growing areas in the Greater Toronto area. 407 ETR was designed to be a congestion reliever to Highway 401, one of the busiest highways in North America. (b) 25% interest in Westlink M7 Westlink M7 is a 40 kilometre toll road in the west of Sydney, Australia, which links the M2 Motorway at Baulkham Hills in the north, the M4 Motorway at Eastern Creek, and the M5 Motorway at Prestons in the south. It forms a major part of Sydney s 110 kilometre orbital network, linking major employment, industrial and residential areas of western Sydney. The Sydney orbital network also acts as an outer bypass for traf c through Sydney as well as a primary link to inter- and intra-state highways. Intoll Portfolio valuation Valuation Asset Discount Rate 30 June June 2009 Natural Currency 30 June 2009 A$ million Portfolio Weighting 30 June ETR (30% interest) , % Westlink M7 (25% interest) % Portfolio Valuation 9.8 n/a 3, % Non Investment Balances Distribution Net Asset Valuation n/a n/a 3,711 Based on the value of net assets as at 30 June 2009, the Net Asset Backing per Intoll Security is A$1.64. Key metrics (as at 30 June 2009) Ent. Value A$m Net Debt/ EBITDA Tolling Concession Valuation Net Debt Gearing Revenue EBITDA Asset Structure End A$m A$m % A$m 1 A$m ETR Mkt Based Nov ,284 1,324 4, x Westlink M7 AUS CPI Feb x 83 years 3,643 1,621 5, % x Extracted from MIG s management information report for the year ended 30 June In the statutory income statement the interest in these assets are accounted for as investments in nancial assets with the income statement re ecting the movement in fair value of these investments.

237 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Capital structure Each Intoll Security comprises one MIT(I) Unit, one MIT(II) Unit, and one MIGIL Share which cannot be traded separately. The total capital of Intoll will comprise approximately 2,262 million Intoll Securities. In addition, MIGIL has issued a MIGIL B Special Share to MIIML that entitles MIIML to appoint 25% of the MIGIL Board. 1.4 Strategy and Investment Policy Intoll s strategy is to invest in and develop quality toll road assets that are accretive to the Intoll Portfolio over the long term. Returns to Intoll Securityholders are expected to be in the form of both capital growth and distributions. Intoll s portfolio of assets provides investors with an investment proposition that includes the following characteristics: (a) long term assets (83 year weighted average concession life); (b) experienced management team; (c) established track record of strong asset performance; (d) stable cash ows from asset distributions; (e) long term debt maturity pro le; (f) effective hedging pro le; (g) agreed toll escalation mechanisms; and (h) transparent governance framework. Over the medium term, the Intoll strategy will be to maximise the cash generation of the assets within the Intoll Portfolio for the bene t of Intoll Securityholders and to look to optimise the potential for organic growth opportunities. Should a re-rating of the Intoll Securities occur, then it will provide Intoll with an opportunity to consider potential new investments. Future investment opportunities will be assessed on the following criteria: (a) located in OECD or OECD-like countries; (b) offer potential for increasing value; (c) offer sustainable competitive advantages in a traf c corridor; and (d) offer growth in operating cash ows. 1.5 Distribution policy Intoll will have a distribution policy that aligns the distributions to the cash generated by the Intoll Portfolio. The classi cation of Intoll s distributions depends on how these funds has been derived. The components of Intoll s distributions post corporate costs can vary every nancial year and will be disclosed in an annual tax guide. The key components may include: (a) franked distributions; (b) capital gains; (c) tax deferred distributions; and (d) foreign distributions. 1.6 ASX listing and quotation Intoll will continue to be listed on the Of cial List of ASX, and each MIT(I) Unit, MIT(II) Unit and MIGIL Share will be quoted jointly on ASX as part of one Intoll Security such that the securities in the Stapled Entities cannot be traded separately. 1.7 Chess and holding statements Intoll will continue to participate in CHESS and in accordance with the Listing Rules and the ASTC Settlement Rules, will continue to maintain an electronic sub register. Your securityholder identi cation details for your Intoll Securities will be the same as for MIG Securities as Intoll comprises the same entities as MIG. It is expected that holding statements will be dispatched by standard post on 8 February 2010 and the trading of Intoll Securities on a normal settlement basis will commence on 9 February It is the responsibility of persons trading in Intoll Securities to determine their allocation prior to trading in Intoll Securities. Persons trading in Intoll Securities prior to receiving a holding statement do so at their own risk.

238 234 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued 2 Intoll Portfolio % interest in 407 ETR Asset description 407 ETR is a 108 kilometre, multi-lane allelectronic toll highway in Toronto, Canada that runs alongside some of the fastest growing areas in the Greater Toronto area. 407 ETR was designed to be a congestion reliever to Highway 401, one of the busiest highways in North America. 407 ETR currently varies between four and 12 lanes (two to six lanes in each direction). 407 ETR s current con guration is approximately 727 lane kilometres, with a maximum expandable capacity of 1,022 lane kilometres. In September 2007, 407 ETR completed a two-year project to add 100 kilometres of new lanes. The opening of these lanes has increased traf c capacity through one of the busiest section of the road, assisting in relieving congestion on the surrounding network. During 2009, construction was completed on the widening of Highway 407 between Markham Road and York/Durham Line. The widening of this Eastern segment added an additional 13.4 kilometre lane to the highway. As part of traf c planning for the greater Toronto network, an eastern extension of 407 ETR has been proposed (the East Completion - shown in the map below). The East Completion is expected to stretch from the eastern end of 407 ETR to Highway 35/115, with two adjoining links connecting to Highway 401, running through Whitby and Courtice. The Ontario provincial Government has announced plans for construction of the Eastern Extension as well as its intention to toll this new section of the road. Service is scheduled to begin in Once constructed, it is expected that the East Completion will be a catalyst for further traf c growth on 407 ETR. Intoll has a 30% interest in 407 International Inc. CANADA Markham 407 ETR 401 Brampton Georgetown Toronto Oshawa Pickering 401 Milton QEW Oakville Lake Ontario Burlington Hamilton NEW YORK STATE

239 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Concessionaire ownership structure and change of control provisions MIG holds a 30% interest in 407 International Inc. (407IC), which in turn owns 407 ETR Concession Company Limited, the 407 ETR concessionaire. Intoll Cintra SNC 30% 53% 17% 407 International Inc Concessionaire 407 ETR Shareholding arrangements and change of control The 407 ETR Shareholders Agreement provides each shareholder with the right to nominate a speci ed number of directors to the 407IC board, depending on the level of the shareholder s shareholdings. At present, MIG s subsidiary has the right to nominate four of 407IC s thirteen directors. In addition, the 407ETR Shareholders Agreement provides that certain matters of fundamental importance to 407IC require the approval of all shareholders, subject to certain exceptions. The 407 ETR Shareholders Agreement also restricts the ability of shareholders to transfer their shares of 407IC. A proposed transfer of 407IC shares by one shareholder to a third party gives rise to pre-emptive rights (rights of rst refusal and piggy-back rights) in favour of other shareholders. Subject to certain conditions, a shareholder may transfer its shares of 407IC to a permitted transferee such as a wholly-owned af liate. There have been several reorganization transactions pursuant to which shareholders have transferred their shares of 407IC to wholly-owned af liates. The shareholder arrangements do not apply to transfers of shares in Intoll. There are no change of control provisions contained in the Master Trust Indenture for the 407ETR, which governs 407ETR s debt terms Tolling structure Tolls are charged based on distance travelled, the time of use and the section driven. Additional fees are levied for administration fees, overdue accounts and for each trip by users without a transponder. In 2009, 407 ETR introduced a Trip Toll Charge that is a xed usage fee regardless of distance travelled. The toll system is fully electronic and barrier-free. Instead of toll plazas, there are a pair of overhead gantries at each entry and exit point period. 407 ETR has over 950,000 transponders in circulation. Peak tolls for light vehicles are currently cents in the Regular Zone and cents in the Light Zone. The off peak rate for the entire road is being held constant from 2008 to 2009 at 18 cents. A new trip toll of 25 cents per trip was introduced in 2009 for all light vehicles. There are no limits on the concessionaire s ability to raise tolls. Toll setting decisions are subject to a congestion payment calculation designed to ensure a minimum level of traf c is maintained.

240 236 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued Traf c performance Traf c in 2009, as measured by vehicle kilometres travelled (VKT), is 3.0% below pcp as a consequence of both a reduction in total trips and a decrease in average trip length. This reduction is driven primarily by the continuing impact of slowing economic activity across North America, including a reduction in heavy vehicle traf c compared to The slowing economy has also reduced average workday trips by 1.9% and average daily trips by 1.8%. 700, , , , , , , % 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% Sep-06Dec-06 Mar-07 Jun-07 Sep-07Dec-07 Mar-08 Jun-08 Sep-08Dec-08 Mar-09 Jun-09 Sep % Total VKT (LHS) Growth vs pcp (RHS)

241 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Financial performance Total revenue (comprising tolls, account fees and interest charges on overdue accounts) on the 407 ETR increased by 1.4% from C$540.7m in FY2008 to C$548.2m FY2009. The major factors in uencing revenue were: (a) a reduction in overall traf c on the road, with total VKT falling 3.0% against pcp; (b) average toll revenue per trip on the 407 ETR for the FY2009 increased to C$4.20, from C$4.18 for the FY2008, representing an increase in average toll revenue per trip of 0.5%. This change in average toll revenue per trip has been the result of the toll increase introduced on 1 February 2009, marginally offset by a reduction in average trip length; (c) a lower average trip length of 19.4km as at 30 June 2009, compared with 19.6km at the same time last year. This resulted from a greater reduction in non-workday trips (which are typically longer trips) compared to workday trips; and (d) a decrease in video transponder charges, due to a non-cash provision and a change to tolling fees on 1 February EBITDA for FY2009 was C$416.1m, a decrease of 2.8% against pcp. EBITDA was impacted by a large non recurring provision for doubtful debts relating to the historic suspension of plate denial (C$24.6m). Adjusting for this non recurring item, EBITDA was 3.0% above pcp Financing structure The debt of 407IC currently consists of a number of tranches of bonds, totalling approximately C$4.9 billion at 30 September Under the terms of the lending documents, 407IC is able to increase its borrowings subject to satisfying speci ed coverage ratios and maintaining its current credit ratings. This gives 407IC exibility to increase debt levels as traf c and tolls increase. Debt service and other reserves, totalling approximately C$370 million are currently held. 407 ETR revenue (C$m), 12 months ended 30 June 407 ETR EBITDA (C$m), 12 months ended 30 June % 76.4% 78.2% % 75.9% Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 EBITDA Expenses EBITDA Margin Extracted from MIG s management information report for the year ended 30 June 2009.

242 238 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued On 15 January 2009, C$500m of bonds were issued through a syndicate of Canadian banks as follows: (a) C$200m of the issue was 5yr senior debt, issued at a yield of 5.12% or 345 bps spread above the corresponding Government of Canada curve; (b) C$300m of the issue was 3yr senior debt, issued at a yield of 4.69% or 340 bps spread above the corresponding Government of Canada curve. The weighted average yield of the issued debt is 4.86% or 342 bps spread above the corresponding Government of Canada curve. This compares favourably to the C$400m of re nanced debt that had a coupon rate of 6.05%. Since December 2008, indicative all in cost of debt on 5 and 10 year debt decreased by approximately 123bps and 104bps respectively over six months to 30 June Debt pro le 60.0% 57.6% 50.0% 40.0% 30.0% 25.9% 20.0% 10.0% 0.0% 6.6% 4.4% 5.5% 0.0% 1, % % 0.0% % 2,616 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19+

243 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP % interest in Westlink M Asset description Westlink M7 is a 40 kilometre toll road in the west of Sydney, Australia, which links the M2 Motorway at Baulkham Hills in the north, the M4 Motorway at Eastern Creek, and the M5 Motorway at Prestons in the south. It forms a major part of Sydney s 110 kilometre orbital network, linking major employment, industrial and residential areas of western Sydney. The Sydney orbital network also acts as an outer bypass for traf c through Sydney as well as a primary link to inter- and intra-state highways. The road is two lanes wide in each direction, which allows for the development of future public transport initiatives and bypasses 48 sets of traf c lights. Westlink M7 opened to traf c on 16 December 2005 and is a fully electronic road with tolls charged on a per kilometre basis. It has 44 toll gantries and 17 interchanges which provide for 148 possible trip combinations. Tolls are capped for trips longer than 20 kilometres. Intoll has a 25% interest in Westlink M7. Castle Hill M2 M7 Blacktown Parramatta M4 Bankstown Liverpool LANE COVE TUNNEL CBD GORE HILL FREEWAY SYDNEY HARBOUR BRIDGE/TUNNEL CROSS CITY TUNNEL EASTERN DISTRIBUTOR M5 M5 EAST

244 240 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued Concessionaire ownership structure and change in control provisions MIT (I) QIC managed funds 50% 50% Transurban WSRG 50% 50% Westlink Motorway Partnership Westlink Motorway Group Crown Lease/Property/Assets Stapled Sub lease WSO Co. Westlink M7 Concessionaire MIG holds a 50% interest in Western Sydney Road Group (WSRG). WSRG is owned in equal parts by Intoll and funds managed by QIC Private Capital Pty Limited (ABN ) (a wholly owned subsidiary of Queensland Investment Corporation, a leading Australian institutional investment manager) on behalf of its clients. WRSG holds a 50% interest in Westlink M7. The other 50% interest is owned by Transurban Group. The Westlink Equity Participants Deed provides for pre-emption rights in respect of transfers of interests in Westlink M7, and Western Sydney Road Group. Under those arrangements, a sale by Intoll of its interests in WSRG would be subject to pre-emption by both QIC and Transurban Group. The Westlink Equity Participants Deed also provides that a change of control of a partner or shareholder will automatically trigger the preemptive rights process discussed above. However, changes of control of listed investors, including Intoll, are exempt from this requirement. The Westlink M7 investors have provided certain undertakings to the Westlink project lenders. In particular, the investors have undertaken that they will not transfer (i.e. sell dispose of, part with possession of, or create) any interest in the Westlink Motorway Partnership, any subordinated loan notes issued by the Westlink Motorway Partnership or any marketable securities in the capital of the borrower, the Westlink entities or a Westlink partner) unless certain conditions are satis ed. The conditions include but are not limited to: (a) the transfer does not give rise to an event of default under the Westlink loan documents, or breach the change of control clause in the Westlink M7 Project Deed; and (b) The agent giving its prior written consent to the transfer (such consent not to be unreasonably withheld). This undertaking does not apply to transfers of shares in Intoll.

245 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 241 The Westlink M7 Project Deed restricts the transfer of interests in Westlink in certain circumstances. In particular, Intoll investor must not transfer its interest in Westlink (or its indirect interests), without the prior written consent of the New South Wales Road and Traf c Authority. This consent is not to be unreasonably withheld. Such consent is not required where transfer occurs, among other circumstances, between existing investors (including to pursuant to the operation of the pre-emption provisions). Consent is not required in the circumstance of a change of control of a listed Westlink Investor Tolling structure Tolls on the Westlink M7 are based on actual distance travelled and are collected by a free- ow electronic tolling collection (ETC) system, with no cash collection or stopping at toll booths, resulting in smooth traf c ow. Tolls are charged on a per kilometre basis, and are capped for trips longer than 20 kilometres. The tolls for the June 2009 quarter were set at cents per kilometre, with a maximum toll of $6.63 for 20km and above. Westlink M7 is a fully electronic road and commuters are able to use transponders and casual user (video tolling) products to pay tolls. The concession allows for toll escalation quarterly based on CPI Traf c performance Average daily trips increased 4.8% for the year compared to pcp, with average daily tolled vehicle kilometres travelled increasing 5.1% in the period. Like other roads within the portfolio, the headline volume growth for the June quarter is comprised of strong growth in light vehicles (up 5.4%) being impacted by a reduction in commercial traf c (down 8.7%). Tag penetration averaged 90.3% throughout the 2009 nancial year. Westlink M7 quarterly traf c performance (Ave. Daily Tolled VKT ) 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , , % 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep % Avg Daily Tolled VKT (LHS) Growth vs pcp (RHS)

246 242 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued Financial performance Westlink M7 s operating revenue for the 2009 nancial year increased 7.8% to A$162.4 million from A$150.6 million in the pcp. The increase in revenue has been driven by the continuing increase in tolled vehicle kilometres travelled (which were up 5.1%), as well as quarterly CPI linked toll increases (average toll has increased 4.6% for the period). Westlink M7 revenue (A$m), 12 months ended 30 June Operating expenses fell 13.0% following the one off costs associated with the Westlink M7 s credit rating upgrade and the early release of its rampup reserve in FY2008, as well as the contracted reduction in tolling and customer management expenses. Removing the impact of the one-off expense items incurred in FY2008 results in a 3.4% decrease in operating expenses over the period Financing structure Westlink M7 currently has a senior debt facility of A$1,250 million. Key terms of this facility are summarised below: (a) interest only facility with a weighted average tenor of 4.8 years; (b) weighted average interest margin of 0.63%; and (c) interest rate hedging in relation to 100% of the face value of the debt to 30 September 2008 and 85% to 31 December The rst re nancing requirement is a maturity of A$500 million required in December Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Westlink M7 EBITDA (A$m), 12 months ended 30 June 55.4% % % % Westlink M7 debt maturity pro le (A$m) Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 EBITDA Expenses EBITDA Margin 70.0% 60.0% 50.0% 40.0% 40.0% 40.0% 30.0% 20.0% 20.0% 10.0% 0.0% 0.0% % % 0.0% % 0.0% 0.0% FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19+

247 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Intoll Financial Information 3.1 Introduction The following nancial information relating to Intoll, assuming the Restructure Proposal is implemented, has been presented: (a) summary pro forma statutory income statement for the year ended 30 June 2009; (b) summary pro forma statutory balance sheet as at 30 June 2009 (together with the summary pro forma statutory income statement for the year ended 30 June 2009, Intoll Pro Forma Historical Financial Information); (c) pro forma proportionate earnings for the three years ended 30 June 2009; (d) pro forma aggregated operating cash ows for the three years ended 30 June 2009 (together with the pro forma proportionate earnings for the year ended 30 June 2009, Intoll Pro Forma Management Information); and (e) accounting policies, assumptions and notes relevant to the above. Important Notes The Intoll Pro Forma Historical Financial Information has been reviewed by PricewaterhouseCoopers Securities Ltd whose Investigating Accountant s Report relating to this information is included at section 7 of the Explanatory Memorandum. The Intoll Pro Forma Historical Financial Information has been prepared in an abbreviated form. It does not contain all the disclosures that are usually provided in an annual report prepared in accordance with the Corporations Act. 3.2 Basis of preparation Statutory Financial Information The Intoll Pro Forma Historical Financial Information set out below is derived from MIG s audited 30 June 2009 Financial Report, and has been prepared on the basis set out in section 3.3 of this Appendix B and is prepared in accordance with Australian Accounting Standards (AASBs). Non Statutory Management Information The Intoll Pro Forma Management Information set about below is derived from the MIG Management Information Reports for the three years ended 30 June 2009 and has been prepared on the basis set out in section 3.4 of this Appendix B. MIG s Management Information Report is not subject to audit or review. Copies of MIG s audited nancial report and MIG s Management Information Report for the year ended 30 June 2009 can be found on MIG s website at Accounting consequences of the Restructure Proposal MIG had previously designated its non controlled toll road assets as investments in nancial assets at fair value through pro t or loss. As Intoll is effectively a continuation of MIG it will continue to account for its investments in 407 ETR and Westlink M7 on this basis. As these assets are mature in nature this continues to be an appropriate measurement basis. The Restructure Proposal will result in the following payments to Macquarie: (a) a one-off payment of A$50 million to Macquarie for among other things, its role in facilitating the implementation of the Restructure Proposal and the provision of assets, services and resources to MIG, (b) a payment of approximately A$25.6 million for the shares in MIIML. This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal; and (c) a one-off Advisory Fee. The allocation of the A$50 million payable to Macquarie for facilitating the Restructure Proposal to its respective components is not yet complete but it is likely that the majority will be expensed in the income statement of Intoll for the year ending 30 June The Advisory Fee will also be expensed by Intoll. Pro forma adjustments have been re ected in the income statement shown in Section of this Appendix B. Intoll will record a gain on the In-Specie Distribution of the MQA Securities to MIG Securityholders. This gain will be re ected in the statutory income statement of Intoll for the year ending 30 June 2010, but has not been re ected in the Intoll pro forma income statement for the year ended 30 June 2009 on the basis that it is non-recurring. Intoll will acquire MIIML, the Responsible Entity of MIT(I) and MIT(II), for an amount equal to the net assets of MIIML. As the net assets of MIIML will comprise of cash deposits, this transaction has no net impact on the pro forma nancial information.

248 244 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued 3.3 Intoll Pro Forma Historical Financial Information Summary pro forma statutory income statement The table below sets out the pro forma statutory income statement for Intoll assuming the transaction was effective on 1 July Intoll pro forma year ended 30 June 2009 $ m (vii) Revenue and other income from continuing activities Toll revenue - Revaluation (loss)/gain from continuing activities (i) (199.1) Interest income (ii) 3.6 Total revenue and other income from continuing activities (195.5) Operating expenses from continuing activities Finance costs - Corporate operating expenses (iii) (14.1) Restructure Proposal - transaction costs (7.0) Facilitation and Co-Operation Payment (iv) (50.0) Reimbursement of corporate operating expenses (iii) 7.8 Advisory Fee (v) (28.3) Total operating expenses from continuing activities (91.6) Loss from continuing activities before income tax bene t/(expense) (287.1) Income tax bene t/(expense) (vi) (6.4) Loss from continuing activities after income tax bene t/(expense) (293.5) The above pro forma historical income statement should be read in conjunction with the accompanying notes and MIG s audited Financial Report for the year ended 30 June Notes: i) During the year ended 30 June 2009 MIG sold its interest in Westlink M7 to WSRG. MIG retains an effective 25% interest in Westlink M7. Revaluation (loss)/gain from continuing activities has been adjusted for the closing ownership position of 25%. ii) Interest income has been calculated based on: a. An opening cash balance for Intoll of A$80 million b. An assumed average interest rate of 4.5% for the year ended 30 June 2009 iii) An adjustment has been made to Intoll corporate operating expenses to re ect the costs which will be incurred as a standalone listed entity. Certain costs incurred by Intoll during its rst 12 months will be recoverable from Macquarie. The above pro forma historical income statement re ects a full years corporate operating expenses and the reimbursement of an estimated $7.8 million from Macquarie, being the amount recoverable in the rst 12 months. Refer to section 3 of the Explanatory Memorandum for further details.

249 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 245 iv) The allocation of the A$50 million payable to Macquarie for facilitating the Restructure Proposal to its respective components is not yet complete but it is likely that the majority will be expensed in the income statement. There will also be a payment of approximately A$25.6 million for the shares in MIIML. This amount is equivalent to MIIML s net assets which comprise cash balances. This amount will increase or decrease to the extent that MIIML s net assets are higher or lower than A$25.6 million on implementation of the Restructure Proposal. v) An Advisory Fee is payable by Intoll to Macquarie of 1.00% of the post Restructure Market Capitalisation of Intoll. An estimate of this fee has been made based on the following: a) Intoll 30 day VWAP of A$1.25; and b) Market capitalisation of A$2.8 billion. Refer to Section 3 of the Explanatory Memorandum for further details and sensitivities if the Intoll 30 day VWAP is not $1.25. (vi) While Intoll is recording losses from continuing activities before income tax, a deferred tax asset has not been recognised for the tax losses and consequently the income tax bene t/(expense) reported is minimal. (vii) Intoll will record a gain on the In-Specie Distribution of the securities in MQA to MIG Securityholders. This gain will be recorded in the statutory income statement for the year ending 30 June 2010, but has not been re ected in the Intoll pro forma income statement on the basis that it is non recurring. An estimation of this gain based on the 30 June 2009 fair values is $1.7 billion. This gain will be recalculated based on the fair values at the date the Restructure Proposal is implemented.

250 246 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued Pro Forma Balance sheet The table below sets out the pro forma consolidated balance sheet for Intoll assuming the transaction was effective on 30 June Intoll pro forma as at 30 June 2009 $ m Current assets Cash and cash equivalents 80.0 Receivables and other assets 3.4 Total current assets 83.4 Non-current assets Investments in nancial assets 3,642.7 Total non-current assets 3,642.7 Total assets 3,726.1 Current liabilities Payables (9.3) Current tax liabilities (5.8) Total current liabilities (15.1) Total liabilities (15.1) Net assets 3,711.0 Equity Intoll security holders interest Contributed equity 3,341.0 Retained pro ts and reserves Total Intoll security holders interest 3,711.0 The above pro forma balance sheet should be read in conjunction with the accompanying notes and MIG s audited Financial Report for the year ended 30 June 2009, which includes the accounting policies applicable to Intoll as effectively the continuation of MIG. The above balance sheet re ects an allocation of the assets and liabilities to Intoll based on the 30 June 2009 MIG pro forma balance sheet disclosed in Section 6 of the Explanatory Memorandum Signi cant policies and notes to the pro forma nancial information Consolidation and stapling arrangements UIG 1013: Consolidated Financial Reports in Relation to Pre-Date-of-Transition Stapling Arrangements requires one of the stapled entities of an existing stapled structure to be identi ed as the parent entity for the purpose of preparing consolidated nancial reports. As Intoll is effectively a continuation of MIG, MIT(II) will continue as the parent of Intoll comprising MIT(I) and its controlled entities, MIT(II) and its controlled entities and MIGIL and its controlled entities. Investments in nancial assets MIG has previously designated its investments in nancial assets, comprising its non controlled toll road assets, as nancial assets at fair value through pro t or loss. As Intoll is effectively a continuation of MIG its investments in 407 ETR and Westlink M7 continue to be designated as nancial assets at fair value through pro t or loss. Investments in nancial assets at fair value through pro t or loss are revalued at each reporting date, or when there is a change in the nature of the investment, to their fair values in accordance with AASB 139: Financial Instruments: Recognition and Measurement. Changes in the fair values of these investments, both positive and negative are recognised in the income statement for the year.

251 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Intoll Pro Forma Management Information This Section includes the Pro Forma Management Information which provides information supplementary to the Pro Forma Historical Financial Information. This information has been derived from the MIG Management Information Report for the years ended 30 June 2007, 30 June 2008, and 30 June 2009 and is based on the policies detailed in those reports. Intoll intends to continue to provide information supplementary to its Annual Report Pro Forma Proportionate Earnings Detailed in the table below are the pro forma proportionate earnings of Intoll for the three years ended 30 June Pro forma year ended Pro forma year ended Pro forma year ended 30 June 2007 $ m 30 June 2008 $ m 30 June 2009 $ m Operating revenue Operating expenses (40.7) (44.5) (49.6) EBITDA Asset maintenance capex (6.7) (6.9) (6.4) Asset net interest expense (86.1) (76.6) (86.1) Proportionate earnings from road assets Corporate net interest income (ii) Corporate net expenses (iii) (14.1) (14.1) (14.1) Intoll Proportionate earnings The above Pro Forma Proportionate Earnings should be read in conjunction with the accompanying notes and MIG s Management Information Report for the year ended 30 June Proportionate earnings from road assets decreased from $82.6 million for the year ended 30 June 2008 to $73.8 million for the year ended 30 June 2009 due to the impact of lower interest income on cash balances, a consequence of lower interest rates in Australia and Canada, and higher average debt balances during the year ended 30 June Notes: i) During the year ended 30 June 2009 MIG sold its interest in Westlink M7 to WSRG. MIG retains an effective 25% interest in Westlink M7. Proportionate earnings from Westlink M7 have been adjusted for the closing ownership position of 25% for all three years shown above. ii) The interest income has been adjusted to re ect: a. An opening cash balance for Intoll of $80 million; and b. Assumed average interest rates of 6.5%, 7.7% and 4.5% for the years ended 30 June 2007, 30 June 2008 and 30 June iii) Corporate expenses for Intoll have been adjusted to re ect post implementation management arrangements. As detailed in Section 3 of the Explanatory Memorandum the estimate of corporate costs following the implementation of the Restructure Proposal are $14.1 million and has been assumed to be this amount for all three years presented above. Certain costs incurred by Intoll during its rst 12 months will be recoverable from Macquarie. Refer to Section 8 of the Explanatory Memorandum for further details. The above re ects a full year s management costs and does not assume any amounts are recoverable even though in the rst 12 months certain costs will be recovered from Macquarie. iv) Costs relating to the Restructure Proposal have been excluded on the basis that they are non-recurring.

252 248 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued Pro Forma Aggregated Cash Flows Detailed in the table below are the Intoll pro forma aggregated cash ows for the three years ended 30 June Pro forma year ended Pro forma year ended Pro forma year ended 30 June 2007 $ m 30 June 2008 $ m 30 June 2009 $ m Cash ow received from assets 407 ETR Westlink M7 (i) Total cash ow received from assets Other operating cash ows Interest received on corporate cash balances (iii) Other receipts and payments (iv) (14.1) (14.1) (14.1) Total operating cash ows The above Pro Forma Aggregated Cash Flows should be read in conjunction with the accompanying notes. Notes: i) During the year ended 30 June 2009 MIG sold its interest in Westlink M7 to WSRG. MIG retains an effective 25% interest in Westlink M7 through its 50% ownership of WSRG. Cash ows received from Westlink M7 have been adjusted for the closing ownership position of 25% for all three years shown above. Cash ows for the year ended 30 June 2008 included a non-recurring release of ramp-up reserves and other accumulated cash reserves from Westlink M7. ii) Cash ows received from assets are re ected at the historical rate of exchange at the time of the transaction and have not been restated. iii) The interest income has been adjusted to re ect: a. An opening cash balance for Intoll of $80 million b. Assumed average interest rates of 6.5%, 7.7% and 4.5% for the years ended 30 June 2007, 30 June 2008 and 30 June 2009 iv) Certain costs incurred by Intoll during its rst 12 months will be recoverable from Macquarie. Refer to Section 8 of the Explanatory Memorandum for further details. The above re ects a full years cash ow management costs and does not assume any amounts are recoverable even though in the rst 12 months certain costs will be recovered from Macquarie. v) Costs relating to the Restructure Proposal have been excluded on the basis they are non recurring, and will be funded from the cash balances of MIG.

253 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Valuations and Net Asset Backing Per Security The table below sets out Intoll s individual asset valuations at 30 June Valuation Discount Rate 30 June June 2009 Portfolio Asset as at 30 June 2009 Natural currency m A$ m Weighting 30 June ETR 9.50 C$3,081 3,284 90% Westlink M A$ % Portfolio valuation 3, % Non-investment balances 68 Net asset valuation 3,711 Number of stapled securities on issue (#) 2,261,732,048 Net asset backing per security ($) 1.64 The values of the Intoll Portfolio have been determined based on discounted cash ow analysis, as it is the generally accepted methodology for valuing toll road assets and the basis upon which market participants have derived valuations for speci c transactions. Discounted cash ow analysis is the process of estimating future cash ows that are expected to be generated by an asset and discounting these cash ows to their present value, by applying an appropriate discount rate. The valuations derived from the discounted cash ow analysis are periodically benchmarked to other sources, such as recent market transactions, to ensure that the discounted cash ow valuations are providing a reliable measure. The portfolio sensitivity at 30 June 2009 to movements in revenue forecasts and foreign exchange rates is disclosed in the table below. 5% lower 5% higher Change in valuation of portfolio due to movement in revenue forecasts (249.1) % appreciation in A$ 5% depreciation in A$ Change in valuation of portfolio due to movement in foreign exchange rates (164.2) 164.2

254 250 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued 3.6 Debt and Hedging Pro forma Debt Maturity Pro le The debt maturity pro le re ects a 100% consolidation of the debt balances of Intoll s toll road assets as at 30 June Intoll has no corporate level debt. The chart shows the legal maturity of each debt tranche in accordance with the relevant loan agreement. Average debt maturity at 30 June 2009 is 13.0 years. 45.8% % Debt Maturing 28.8% 0.0% 5.2% 8.2% 3.5% 0.0% 4.1% 4.4% 0.0% FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY Hedging Pro le 407 M7 The above hedging pro le re ects the coverage levels for each nancial year, as at 30 June Debt is considered hedged when the interest rate has been xed and therefore includes xed rate debt as well as oating rate debt with interest rate swaps in place % 90.0% Weighted Average Hedging 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY Debt Service Coverage Ratios and Covenants DSCR as at Equity Lock-up Asset 30 June 09 Covenant 407 ETR 1 2.0x 1.35x Westlink M7 1.7x 1.30x 1 This gure for 30 June 09 is an approximation rather than the of cial Average DSCR (ADSCR) reported by 407 ETR management.

255 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Risk factors 4.1 Introduction Intoll s nancial performance, distributions and the market price of Intoll Securities may be adversely affected, sometimes materially, by a number of risk factors. Intoll Securityholders should be aware that an investment in Intoll has a number of risks which are associated with investing in both toll roads and listed securities generally, some of which are beyond the control of Intoll. Accordingly, the price and value of Intoll Securities may rise or fall over any given period. Intoll Securityholders should be aware of the risks outlined in this Section 4.1 (which are some, but not necessarily all, of the risks) that may affect the performance and value of Intoll. Information relating to other risk factors is set out in the following sections: (a) risk factors relating to the Restructure Proposal, including that the risk that the Restructure Proposal may not proceed - see Section 3.3 of the Explanatory Memorandum; (b) risk considerations - see Section of the Explanatory memorandum; (c) general risk factors - see Section 4.2 below. 4.2 Risks associated with Intoll s toll road investments Traf c volumes Intoll s revenue will principally be a function of the traf c volumes on the Intoll Portfolio s toll roads and the level of the tolls. Traf c volumes are directly and indirectly affected by a number of factors, including congestion, the quality, proximity and timing of the development of alternative roads and other transport infrastructure, toll rates, population growth, perceived value for money, fuel prices and general economic conditions. Any circumstances that have the effect of reducing traf c volumes or the growth in traf c could materially adversely affect Intoll s nancial performance, distributions and the market price of Intoll Securities Tolling and revenue collection Increases in tolls are dependent upon increasing in ation, in the case of Westlink M7. In the case of 407 ETR, whilst the toll is unregulated, penalty mechanisms may apply if certain traf c growth rates are not met. The rate of increase in the factors cannot be predicted. Lower than expected increases (or decreases) could materially adversely affect Intoll s nancial performance, distributions and the market price of Intoll Securities. Intoll s tolling revenues depend on reliable and ef cient tolling and revenue collection systems. There is a risk that if the concessionaires of the Intoll Portfolio s toll roads are not able to operate and maintain the tolling and revenue collection systems in the manner expected, or if the cost of operation and maintenance is greater than expected, Intoll s nancial performance, distributions and the market price of Intoll Securities could be materially adversely affected. Motorists who do not pay tolls may be subject to either direct legal action from the concessionaire of the relevant toll road, or may be referred to the state for enforcement action. Intoll Securityholders bear the ultimate risk if either Intoll s or the state s enforcement actions against defaulting motorists are not successful and if Intoll s enforcement actions are more costly or take more time than expected Risks of major repairs and maintenance capital expenditure Under the Intoll Concession Agreements, the concessionaires of each of the Intoll Portfolio s toll roads must meet the cost of all major repairs and maintenance to their relevant toll roads with no entitlement to increase tolls in response to these costs. These costs can be required to be incurred at speci ed intervals while others are due to usual wear and tear. In some circumstances the cost of these repairs and maintenance may exceed the cash ow available from the asset, requiring new or additional capital or debt to be raised. In particular as these capital expenditure requirements may not arise for many years, the amount of this expenditure is often not known until closer to the relevant time. Accordingly, the relevant concessionaire may be unable to make an allowance for these costs before they are incurred or to raise the required capital from internal or external sources.

256 252 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued Overall the need to fund or provide for greater than expected repairs and maintenance expenditure could materially adversely affect Intoll s nancial performance, distributions and the market price of Intoll Securities Operations Risk There is a risk that the operation of the Intoll Portfolio s toll roads could be adversely affected by a number of events, as is inherent in projects of this nature, including (without limitation) failure of the tolling and revenue collection systems; traf c management issues, including temporary closure due to traf c incidents; and extreme weather events Intoll Concession Agreements liabilities and termination There are several circumstances that could result in one, or both of Intoll Concession Agreements being terminated before the scheduled end of the concession period. Depending upon the circumstances that cause the premature termination of the Intoll Concession Agreements, Intoll Securityholders may incur economic loss. The circumstances which may give rise to termination of the Intoll Concession Agreements are addressed in more detail in Section 7 of this Appendix B. The termination of a Concession Deed could materially adversely affect Intoll s nancial performance, distributions and the market price of Intoll Securities Regulatory and change of law risk Intoll Securityholders are exposed to the risk that the Governments that act as the counterparties to the concessionaires may exercise their powers under legislation in a way that is not bene cial to Intoll Securityholders. Depending on the nature of the change and the individual Concession Agreement, the relevant concessionaire may be entitled to compensation and/or a right to renegotiate the Concession Agreement. Refer to Section 7 of this Appendix B. for an outline of the terms of the Intoll Concession Agreements. There is also the risk that a government agency will repeal, amend, enact or promulgate a new law or regulation, or that a government authority will issue a new interpretation of the law or regulation, which will affect a toll road s performance Valuation risk The values of the assets in the Intoll Portfolio in this Appendix B are based on valuations undertaken as at 30 June However, these assets will be transferred to Intoll based on valuations as at 31 December As the value of Intoll s toll road assets may uctuate over time, these valuations may vary. Factors relevant to valuations include traf c volumes and other economic factors referred to in this Section 4. Valuations represent only the analysis and opinion at a certain date and are not guarantees of present or future values. The valuation of an asset may be materially higher than the amount that can be obtained from the sale of the asset in certain circumstances, such as under a liquidation or distressed sale Force majeure Force majeure refers to an event beyond the control of a party, including natural disasters, sabotage, acts of terrorism, unforseen environmental liabilities, dangerous chemical contamination and other events outside the control of a party that can affect a party s ability to perform its contractual obligations. The occurrence of a force majeure event could materially adversely affect Intoll s nancial performance, distributions and the market price of Intoll Securities Joint venture risk Intoll holds minority interests in its companies and af liates jointly through equity or co-operative joint ventures. Although Intoll in uence on the decisionmaking of these joint ventures, decisions require approval of other directors or shareholders of the joint ventures. In the case of 407 ETR, other shareholders, directors, acting in concert are able to make certain decisions without Intoll s consent, thereby limiting the extent of Intoll s control. The co-operation among the joint venture partners of such companies on existing and future business decisions is an important factor for the sound operation and nancial success of such business.

257 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 253 The joint venture partners in these projects may have objectives different from those of Intoll, or be unable or unwilling to ful l their obligations under the relevant joint venture contracts. In order to minimise the risks associated with the development and operation of its joint venture project, Intoll seeks to enter into joint ventures with partners whom Intoll considers to be reputable, creditworthy and reliable and on terms favourable to Intoll. Although to date Intoll has not experienced any signi cant disputes with its partners, disputes among joint venture partners over joint venture obligations or otherwise could have an adverse effect of the nancial conditions or results of operations of these businesses Competition risk An Intoll Portfolio investment may be affected by improvements in existing alternative routes and/ or the construction of new alternative routes and/ or the construction of a new, or the improvement of an existing, means of alternative transportation (such as trains or some other form of public transportation). There is no guarantee that alternative roads that may allow for no tolls or faster travelling speed will not be built or improved. Competition from an alternate route or means of alternative transportation could materially adversely affect Intoll s nancial performance, distributions and the market price of Intoll Securities Carbon pricing There is considerable uncertainty in the global carbon market. Future changes in the regulatory landscape, particularly the introduction of emissions trading schemes are likely to impact jurisdictions in which Intoll operates and could materially adversely affect Intoll s nancial performance, distributions and the market price of Intoll Securities Discount Rate Risks Intoll s investments are unlisted. The valuation of these assets is undertaken using a variety of methods, including discounted cash ows. The valuations will therefore be particularly sensitive to the choice of discount rate used. Intoll uses discount rates which, in its opinion, appropriately account for both the long term risk free and the level of risk associated with each asset. As discount rates comprise the risk free interest rate plus an appropriate risk premium, an increase in interest rates or an increase in the adopted premium, all else being equal, may increase discount rates and consequently reduce the value of Intoll s assets. The valuation of the Intoll Portfolio at the end of each reporting period has a direct bearing on its operating income available for distribution. 4.3 General business risks Borrowing risks (a) Ability to re nance and terms of re nance A signi cant risk of investing in Intoll is that entities operating the Intoll Portfolio, Intoll and any subsidiaries, may be unable to arrange re nancing when debt facilities fall due, or that the terms of re nancing are less favourable than the current terms. This will be affected by the prevailing economic climate and cost of debt as well as the performance of the assets between now and when debt falls due. (b) Increases in interest rates The value of the Intoll Portfolio is exposed to adverse interest rate movements, increasing the cost of debt and potentially adversely affecting returns to Intoll Securityholders. Whilst this risk can generally be reduced through interest rate hedging, such as interest rate swaps or other mechanisms, there is sometimes residual exposure.

258 254 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued Tax risk (a) General The structure of Intoll and the holding structures for the different Intoll Portfolio investments rely on certain existing treatments for taxation purposes and interpretation of applicable scal arrangements. The tax rules or their interpretation, in relation to an investment in Intoll may change during the life of Intoll. In particular, both the level and basis of the taxation may change. A change of low or administrative practice in jurisdictions where toll road investments are located could adversely impact on existing tax assumptions which could have a ow on effect to toll road valuations. In addition to risks at the entity level, an investment in Intoll may involve tax considerations which may differ for each Intoll Securityholder. Each prospective Intoll Securityholder is encouraged to seek professional tax advice in connection with an investment in Intoll. (b) ATO Class Ruling Intoll (formerly MIG) intends to apply for an ATO Class Ruling for the bene t of Intoll and MQA Securityholders. The ruling will con rm the availability of demerger relief in relation to the Restructure Proposal and that the ATO will not apply certain tax integrity measures. If the ATO does not agree with the view of Intoll and its advisers that demerger relief is available, the impact of the In-Specie Distribution by MIT(II) and MIGIL would be as follows: MIG Securityholders would have a reduction in cost base of their investment in MIT(II) and MIGIL equal to the market value of the property being distributed to the extent that the In-Specie Distribution is debited against the contributed capital of MIT(II) and MIGIL. To the extent that amount is greater than a MIG Securityholder s cost base then a taxable gain could arise. To the extent the market value of the property being distributed exceeded the amount debited against the contributed capital of the entity (whether debited against reserves or not), such an amount is likely to be treated as an assessable dividend in the hands of MIG Securityholders for Australian tax purposes. If the ATO decided to apply tax integrity measures (in addition, or as an alternative, to denying demerger relief) all or part of the In-Specie Distribution could be treated as an assessable dividend. In a worst case scenario the impact to MIG Securityholders would be assessable income equal to the total In-Specie Distribution made by MIT(II) and MIGIL. In this instance the value of the In-Specie Distribution of $0.75 per MIG Security (based upon value of assets being distributed of $1,686 million divided by 2,262 million MIG Securities) would be treated as a fully assessable dividend. Such an amount would then be the tax cost base in MQA Securities. Section 9 of the Explanatory Memorandum contains the Tax Opinion which sets out the views of MIG s tax advisor, Greenwood and Freehills, that the ATO, acting reasonably, should con rm the availability of demerger relief to both MIT(II) and MIGIL. (c) MIT(II) ATO Audit MIT(II) is currently subject to a tax audit. The ATO has issued a position paper in relation to a speci c technical matter which MIT(II) does not consider to be correct. However, should the ATO s view ultimately prevail, MIT(II) s liability for additional primary tax and interest could be up to $60.8 million. MIG has not provided for this amount in its nancial statements Divestment and acquisition activities From time to time Intoll may evaluate divestment opportunities and Intoll may investigate acquisition prospects. Any acquisition and/or divestment would lead to a change in the sources of earnings and could increase the volatility of its earnings. Acquisitions involve a number of special risks beyond Intoll s control, including failure of the acquired business to achieve expected results, failure to identify material risks or liabilities associated with the acquired business prior to its acquisition, diversion of management s attention and the failure to retain key personnel of the acquired business, some or all of which could have a material adverse effect on Intoll s business, cash ow and ability to pay distributions on the securities. In addition, failure to successfully integrate acquisitions or to maintain focus on existing operations may adversely impact Intoll s business.

259 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Recruitment and retention of key personnel Intoll will need to compete with other companies to recruit and retain key executives and professional staff. There is no assurance that Intoll will be able to recruit or retain skilled and experienced employees on acceptable terms. A loss of key personnel, or the inability to attract new quali ed personnel, may detrimentally impact Intoll s nancial performance and position Litigation and legal risk Legal and other claims or disputes may arise from time to time with respect to Intoll or its operating business. There can be no assurance that any such dispute or claim will be covered by insurance cover held by Intoll. Legal risks include, but will not be limited to customer claims, advertiser claims, defamation claims, environmental claims, personal injury claims, employment disputes, regulatory or government action and legal action from special interest groups. Any legal dispute or claim may have a material adverse effect on the nancial performance and position of Intoll. (a) OTPP Litigation Ontario Teachers Pension Plan Board and Golden Apple Infrastructure Inc (together, OTPP) has brought proceedings against MIIML and MIGIL alleging that announcements made by MIIML on 24 August 2006 and 3 October 2006 were Trigger Events for the purposes of the Deed Poll (ReCNs Deed Poll) dated 14 February 2003, pursuant to which certain Reset Convertible Notes (ReCNs) were issued by MIIML as trustee of Western Sydney Orbital Funding Trust (WSOFT) to OTPP as part of the funding arrangements for WestLink M7. MIIML is a party to these proceedings in the following capacities: (i) as trustee of WSOFT (issuer of the ReCNs); (ii) as trustee of MIT(I) and MIT(II) (co-guarantors of MIIML s performance of its duties as issuer of the ReCNs with MIGIL); and (iii) in its personal capacity. MIGIL is also a party to the proceedings as coguarantor of MIIML s performance of its duties as issuer of the ReCNs with MIT(I) and MIT (II). OTPP claims that MIIML was obliged to give notice to OTPP of the events referred to in the announcements of 24 August 2006 and 3 October 2006 under the ReCNs Deed Poll and that OTPP has suffered loss or damage as a result of MIIML s failure to do so. The amount currently claimed by OTPP in these proceedings is up to $71 million plus interest and costs. MIIML and MIGIL dispute both the validity of the claim and OTPP s calculations of loss or damage. The hearing of the issues of liability and quantum in respect of OTPP s claim is listed to commence in the Supreme Court of New South Wales on 1 March The proceedings may result in consideration of whether MIIML is entitled to be indemni ed in respect of that liability out of the assets of WSOFT, MIT(I) and/or MIT(II). MIIML considers that it is entitled to be so indemni ed. However, if MIIML were ultimately determined not to be entitled to be indemni ed out of the assets of WSOFT, MIT(I) or MIT(II) then MIIML would need to meet this liability from its own resources. To the extent that the total of the Macquarie Litigation Indemnity and MIIML s own resources were insuf cient to meet the liability to OTPP, MIGIL would be exposed to the balance of the liability (either by OTPP claiming the balance from MIGIL as guarantor or through MIGIL being required to meet the whole of OTPP s claim and then exercise rights of subrogation against MIIML to the extent of its personal assets). Section of the Explanatory Memorandum sets out the treatment of any liability of MIIML in its personal capacity arising out of the OTPP Claim after implementation of the Restructure Proposal. (b) Intoll s nancial exposure to the OTPP Claim As explained in Section of the Explanatory Memorandum, Intoll has an exposure to a claim by OTPP that MIIML has breached its obligations to OTPP under the ReCNs Deed Poll. If a liability to OTPP results for Intoll from the OTPP Claim, it will need to be met by Intoll out of its operating income and cash balances.

260 256 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued Foreign exchange and foreign country risk The majority of Intoll s portfolio assets are located offshore. This exposes Intoll Securityholders to uctuations in foreign exchange rate risks, which affect the values of the assets and the value of associated distributions when translated to Australian dollars or to the come currencies of overseas Intoll Securityholders. Intoll does not hedge its exposure to movements in exchange rates as they may relate to the value of Intoll s portfolio investments or the value of expected distributions. Intoll will use, from time to time, derivative instruments such as forwards, swaps, currency options and foreign currency borrowings as hedges of foreign currency. Intoll may have residual exposure, which may have a material adverse effect on the Intoll s future nancial performance and position Future payment of distributions Intoll s future dividend or other distribution levels will be determined by the Intoll Boards having regard to the operating results and nancial position of Intoll. There is no guarantee that any dividend or other distribution will be paid or, if paid, that they will be paid at previous levels Macquarie being Intoll s largest securityholder On implementation of the Restructure Proposal, Macquarie will have a principal holding of approximately 14.0% of the Intoll Securities (assuming there is no change in Macquarie s Principal Holding in MIG Securities between 11 December 2009 and implementation of the Restructure Proposal). Macquarie has provided no indication on its intentions for its principal holding in Intoll Securities after the Restructure Proposal is implemented If Macquarie sells or is perceived as intending to sell a substantial number of Intoll Securities, the market price of Intoll securities could be adversely affected. The Macquarie holding in Intoll may prevent of facilitate a third party obtaining control of Intoll. Equally, Macquarie could seek to increase its stake in Intoll. 4.4 General risk factors Economic conditions The nancial performance, distributions and the market price of Intoll Securities may be materially adversely affected by a number of general risk factors, including but not limited to changes in: (a) international economic outlook; (b) governmental scal, monetary and regulatory policies; and (c) laws and regulations Equity markets risks There are risks associated with any investment in listed securities. The market price of listed securities such as Intoll Securities are affected by numerous factors. These factors include but are not limited to factors such as in ation, interest rates, changes in supply and demand for infrastructure securities, hostilities, tensions and acts of terrorism, general investor sentiment and the movement of prices on local and international share and bond markets Liquidity and realisation risks There can be no guarantee that an active market in Intoll Securities will develop or that the price of Intoll Securities will increase. There may be relatively few, or many, buyers or sellers of Intoll Securities on ASX at any given time. This may increase the volatility of the market price of Intoll Securities. It may also affect the prevailing market price at which Intoll Securityholders are able to sell their Intoll Securities. This may result in Intoll Securityholders receiving a market price for their Intoll Securities that is less than the listing price ETR Speci c Risks Aside from the General Risks identi ed above, there are no speci c risks associated with Intoll s investment in the 407 ETR. 4.6 Westlink M7 Speci c Risks Re nance Risk the risk that debt facilities may not be able to be re nanced on acceptable terms at their maturity, leading to potential loan default, economic loss or investment write-off. The Westlink M7 has a tranche of $500 million of debt maturing in December Re nance of this loan facility will depend on the continuation of current revenue performance.

261 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Management and corporate governance 5.1 Management After implementation of the Restructure Proposal, Intoll will have its own employees, and as such will incur the costs of staff and other head of ce costs. Full details of the Restructure Proposal are set out in Section 1 of the Explanatory Memorandum. MIIML, the responsible entity of MIT(I) and MIT(II), will become a wholly owned subsidiary of MIT(II) on implementation of the Restructure Proposal. In addition to being the responsible entity of MIT(I) and MIT(II), MIIML, after implementation, will act as adviser to MIGIL. 5.2 Directors and Management Team Interim Intoll Boards As a consequence of the corporate structure, Intoll will have two separate Boards of Directors; one for MIIML, and one for MIGIL. These boards will act together and will co-operate in accordance with the Cooperation Deed. (a) MIIML Board The MIIML Board comprises three directors each with broad industry experience. Two of the four members of the MIIML Board will be independent directors. With the exception of the CEO, if also a director, all the directors of MIIML will stand for re-election on a three year rotational basis as required by the Listing Rules. On implementation of the Restructure Proposal, the MIIML Board will comprise: Paul McClintock (Chairman) is a principal of the private investment banking rm McClintock Associates. He is chairman of Medibank Private Limited, Thales Australia and the COAG Reform Council. From July 2000 to March 2003, he was secretary to the Cabinet and head of the Cabinet Policy Unit for the Australian Government. Paul graduated from Sydney University with a Bachelor of Arts and a Bachelor of Law. David Mortimer (Independent Director) is Chairman of Australia Post, Crescent Capital Partners and Leighton Holdings Limited, a director of Petsec Energy Limited and a governor of the Australia Israel Chamber of Commerce. David was formerly a director of the Australian Graduate School of Management and the former CEO of TNT. David graduated from Sydney University with rst class honours in Economics. David Walsh (Independent Director) is an experienced corporate and commercial lawyer and company director. He was a partner of the law rm Mallesons Stephen Jaques from 1962 to Currently, he is the chairman of Templeton Global Growth Fund and a nonexecutive director of Dyno Nobel Ltd. (b) MIGIL Board The MIGIL Board has four directors each with broad industry experience. It is a requirement of the MIGIL Bye-Laws that no more than two directors may be resident in the same jurisdiction (other than Bermuda) and that the majority of the directors must be resident for tax purposes in Bermuda. Under the MIGIL Bye-Laws, MIIML may nominate one of the directors of the MIGIL Board. All of the directors of MIGIL, other than the MIIML appointee, will stand for re-election on a three year rotational basis as required by the Listing Rules. On implementation of the Restructure Proposal, the MIGIL Board will initially comprise: Robert Mulderig (Chairman, Independent Director) is chairman of the board of nancial services company Woodmont Trust Company Ltd and is also a director of the Bermudan Bank of N.T. Butter eld and Son Ltd. He is a former member of the board of governors of the Bermuda Stock Exchange and was chairman and chief executive of cer of Mutual Risk Management Ltd for 20 years until He attended Columbia University and the Fordham University School of Law.

262 258 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued Jeffrey Conyers (Independent Director) began his professional career as a stockbroker in Toronto and returned to Bermuda in 1985 to join the Bank of Bermuda where his focus was investments and trusts. A founding executive council member and deputy chairman of the Bermuda Stock Exchange, Jeffrey is also a director of numerous other companies in Bermuda, including MAP Airports International Limited, and is the chief executive of cer of First Bermuda Group Limited. The First Bermuda Group provides an advisory and execution service on worldwide offshore mutual funds to individuals and local companies based in Bermuda. Peter Dyer (Independent Director) was previously executive director of Kværner Corporate Development Limited (now Macquarie Infrastructure (UK) Limited). Peter gained extensive experience in the development of Kværner s UK-based PFI projects, including the Birmingham Northern Relief Road (now M6 Toll) and the A1-M1 Road in Yorkshire. Peter was employed by the Kværner Group from 1981 and became a director of Macquarie European Infrastructure pic (now replaced by Intoll Bermuda), following the acquisition of Kværner Corporate Development Limited. Paul McClintock (Independent Director, MIIML appointee) the chairman of MIIML Intoll Boards transitional arrangements Following the implementation of the Restructure Proposal, the Intoll Boards will undergo a period of transition and refreshment. These transition arrangements are designed to ensure continuity from MIG to Intoll, whilst also ensuring a refreshment of talent and compliance with the Principles. For Intoll: (a) Mr David Walsh intends to resign from the board and will be replaced by a suitably quali ed independent director; (b) Paul McClintock will be appointed as the new chairman of Intoll with effect from the date of implementation; (c) following these changes, the MIIML Board will comprise four directors, being three independent directors, including an independent chairman, as well as the managing director and CEO; (d) currently Mr Johnson sits on the MIGIL Board through the appointment rights (the MIGIL Special B Share) held bymiiml. Consequently, it is envisaged that Paul McClintock, the chairman of MIIML, will be appointed (under those same appointment rights) to the MIGIL Board to replace Mr Johnson; (e) in addition, the MIGIL Board will consider whether it is appropriate for any incumbent directors to resign as MIGIL Directors and be replaced by suitably quali ed independent directors. (Pursuant to the MIGIL Bye-Laws, one of the replacements must be a resident of Bermuda with the other being either Bermudian or not a resident of Australia); and (f) all of the Intoll Directors (other than any managing director) will stand for re-election on a three year rotational cycle.

263 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Intoll Management Intoll s management team will be employed by MIIML. MIIML will employ a management team that draws on existing members of MIG Management and will also include the recruitment of external staff to complete Intoll s management structure. Intoll intends to appoint Murray Bleach as interim Chief Executive Of cer of Intoll from implementation of the Restructure Proposal. Intoll intends to appoint Murray Bleach as interim Chief Executive Of cer of Intoll from implementation of the Restructure Proposal. Murray resigned from Macquarie Group on 18 December Prior to that he was Global Head, Macquarie Private Placements Group. Murray was employed by Macquarie from its acquisition of Bankers Trust Australia (which he joined in 1987) in 1999 and he held his nal position from Murray will be paid A$75,000 per month for an inde nite period and will be eligible for a discretionary bonus on completion of his interim appointment. Intoll intends to undertake a search for a permanent Chief Executive Of cer and to make offers to a number of Macquarie personnel for key and other positions between the date of this Explanatory Memorandum and the General Meetings. 5.3 Support Arrangements from Macquarie For up to 12 months after implementation of the Restructure Proposal, MCGL (a member of the Macquarie Group) will provide transitional services to Intoll until Intoll is independently resourced. The arrangement is set out in the Intoll Transitional Services Agreement between MIIML as responsible entity of MIT(I), MIIML as responsible entity of MIT (II), MIGIL and Macquarie which is detailed in Section 11.3 of the Explanatory Memorandum. 5.4 Corporate Governance Arrangements ASX Corporate Governance Standards The ASX Corporate Governance Council has issued the ASX Corporate Governance Principles and Recommendations (Principles) which encompass matters such as board composition, committees and compliance procedures. The Principles are designed to maximise corporate performance and accountability in the interests of investors and the broader economy. While the principles are not prescriptive, listed entities are required to disclose in their annual reports the extent of their compliance with the Principles, if they consider it inappropriate in their particular circumstances. Intoll intends to adopt policies and procedures in full compliance with the Principles. Intoll will include on its website details of its corporate governance regime and a corporate governance statement will be included in Intoll s rst annual report. A summary of the corporate governance regime that applies to Intoll is set out below.

264 260 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued Corporate Governance Statements Intoll will implement a governance deed that provides a number of undertakings to Intoll Securityholders around the governance arrangements in respect of Intoll. It is intended that this deed will ensure Intoll s governance arrangements mirror those of an Australian listed company, and consequently conform to the regulatory requirements in regard to its governance practices. Speci cally the undertakings in this deed would ensure: (a) Intoll will hold a general meeting for MIT(I) and MIT(II) in conjunction with the MIGIL AGM each calendar year by 30 November; (b) the annual MIG nancial report, directors report and audit report must be considered by the AGM; (c) Intoll Securityholders may submit written questions to the auditor; (d) an advisory resolution on the remuneration report will be put to the AGM; (e) MIG s auditor will be required to attend the AGM; (f) the chair of the AGM must allow a reasonable opportunity to ask questions or comment on the management of MIG and on the remuneration report, and ask questions of the auditor; (g) the MIIML Board will be appointed by its shareholder in accordance with an ordinary resolution of Intoll Securityholders; (h) one-third of directors of MIIML and MIGIL (or the number nearest one-third) and any other Director of MIIML and MIGIL (excluding the CEO if also a director) who has held of ce for at least three years is required to retire from of ce at each AGM. There must be an election of directors each year; (i) directors of MIIML and MIGIL may be removed by an ordinary resolution of Intoll Securityholders; (j) the CEO and CFO must make certain declarations to the Intoll Boards in relation to the nancial statements; (k) the directors report must include information to reasonably allow members to make an informed assessment of Intoll s operations, nancial position, and business strategies and prospects; (l) the annual report must include details of directors and the company secretary s quali cations and experience, and the directors attendance at board and committee meetings; (m) the annual report must include details of directors relevant interests in securities issued by the company or a related body corporate and other listed company directorships in the last three years; (n) the directors report must include a remuneration report; and (o) the audit report needs to include statements about non-audit services and auditor independence Intoll Boards and its Committees The Intoll Boards are responsible for the overall corporate governance of Intoll including establishing and monitoring key performance goals. The Intoll Boards have created a framework for managing Intoll, including internal controls and a risk management process. To assist in the execution of its responsibilities, the Intoll Boards have separately established an Audit and Risk Committee, and will establish a Nomination Committee and a Remuneration Committee. These committees will have written mandates and operating procedures Audit and Risk Committee The role of each Audit and Risk Committee is to advise on internal controls and appropriate ethical standards for the management of MIT(I), MIT(II), and MIGIL. Each Audit and Risk Committee also con rms the quality and reliability of the nancial information prepared by MIT(I), MIT(II) and MIGIL respectively, working on behalf of the Intoll Boards with the external auditor, and reviews non-audit services provided by the external auditor to con rm they are consistent with maintaining external audit independence. Each Audit and Risk Committee provides advice to the Intoll Boards and reports on the status and management of the risks to MIT(I), MIT(II), and MIGIL separately. The purpose of the Audit and Risk Committee s risk management process is to ensure that risks are identi ed, assessed and appropriately managed.

265 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP 261 Each Audit and Risk Committee should comprise at least three directors, all of whom must be nonexecutive directors and a majority of whom must be independent. The chairman of the committee must be an independent non-executive director. Each Audit and Risk Committee will meet as often as is required to undertake its role effectively. The chairman of each Audit and Risk Committee may invite members of management and representatives of the external auditor or other external advisers to be present at meetings of the committee. Each Audit and Risk Committee will regularly report to its respective Intoll Board about committee activities, issues and related recommendations. Immediately following the implementation of the Restructure Proposal, the Audit and Risk Committees will comprise the current members of the MIIML and MIGIL Audit and Risk Committees. The MIGIL Audit and Risk Committee will not comply with the three director requirement at implementation. However, the composition of the Audit and Risk Committees will change as part of the Intoll Boards transitional arrangements Remuneration Committee As part of the Intoll Boards transitional arrangements, a remuneration committee will be established for each respective Intoll Board (Remuneration Committees). The role of the Remuneration Committees will be to review and make recommendations to the Intoll Boards on remuneration packages and policies related to the directors and senior executives and to ensure that the remuneration policies and practices are consistent with the strategic goals and human resource objectives of MIT(I), MIT(II), and MIGIL respectively. Each Remuneration Committee will meet as often as is required to perform its functions. Following each meeting, each Remuneration Committee will report to its respective Intoll Board on any matter that should be brought to the board s attention and on any recommendation of the Remuneration Committee that requires board approval. The composition of the Remuneration Committees will be determined as part of the Intoll Boards transitional arrangements which is described in Section 5.2 of this Appendix B Nomination Committee As part of the Intoll Boards transitional arrangements, a nomination committee will be established for each respective Intoll Board (Nomination Committees). The role of the Nomination Committees will be to review and make recommendations in relation to the composition and performance of the Intoll Boards and its committees and ensure that adequate succession plans are in place (including for the recruitment and appointment of directors and senior management). Independent advice will be sought where appropriate. Each Nomination Committee will meet as often as is required to perform its functions. Following each meeting, each Nomination Committee will report to its respective Intoll Board on any matter that should be brought to the board s attention and on any recommendation of the committee that requires board approval. The composition of the Nomination Committees will be determined as part of the Intoll Boards transitional arrangements which is described in Section 6.2 of this Appendix B Continuous Disclosure The Intoll Boards aim to ensure that Intoll Securityholders are informed of all major developments affecting Intoll s state of affairs. Information will be communicated to Intoll Securityholders through ASX announcements, Intoll s annual report, annual general meeting, half and full year results announcements and Intoll s website, The company secretary will act as ASX liaison of cer to ensure timely and appropriate access to information for all investors Securities Trading Guidelines Intoll will adopt a Trading Policy which will apply to the directors and employees of Intoll. The Trading Policy will be intended to explain the type of conduct in relation to dealings in Intoll Securities that is prohibited under the Corporations Act, and establish procedures in relation to directors, executives or employees dealing in Intoll Securities.

266 262 RESTRUCTURE PROPOSAL, EXPLANATORY MEMORANDUM AND NOTICES OF MEETING MACQUARIE INFRASTRUCTURE GROUP Appendix B: Intoll continued Compliance Plan As required by the Corporations Act, MIIML has prepared and lodged with ASIC a compliance plan for MIT(I) and MIT(II). The compliance plan outlines the measures that MIIML must apply in its capacity as responsible entity when operating MIT(I) and MIT(II) to ensure compliance with the Corporations Act and the MIT(I) Constitution and MIT(II) Constitution. As the majority of the MIIML Board will be independent, the Corporations Act does not require, and the MIIML Board does not currently propose to appoint, a separate compliance committee. In the absence of a compliance committee, the MIIML Board will monitor compliance with the compliance plan Independent professional advice The Intoll Boards and Committees may obtain independent professional or other advice at the reasonable cost of Intoll. It is intended that the Intoll Boards will consult the relevant chairman before obtaining such advice Directors Remuneration Directors on the Intoll Boards are entitled to remuneration in aggregate not exceeding A$1 million per annum for MIIML and US$350,000 per annum for MIGIL. Any increase in the aggregate must be approved by Intoll Securityholders. If a director performs additional or special services, for example as a representative of a Intoll Board committee or a representative of Intoll on the board of a Intoll Portfolio investment, Intoll may pay additional remuneration to that director. A director is also entitled to be paid travelling and other expenses properly incurred in attending directors or general meetings of Intoll or otherwise in connection with the business of Intoll.

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