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Friday, June 20, 2014

Ind. Gov't. - "Indiana monitors Toll Road operators' financial troubles"

Keith Benman of the NWI Times had a story yesterday that began:

The Indiana Finance Authority continues to monitor the financial difficulties of the Indiana Toll Road, where operators who hold the 75-year lease are struggling to meet a June debt payment.

Indiana Toll Road Oversight Director James McGoff said the IFA had inquired of the Toll Road's operators following news reports last year they were struggling to meet a December interest payment. The Toll Road Oversight Board has now inquired about the June payment.

"The answer is the same, they are trying to negotiate more favorable terms with their lenders," McGoff said.

Cintra, a Spanish firm, and Macquarie Group, of Australia, paid the state of Indiana $3.8 billion in 2006 in exchange for the right to operate the 157-mile road and collect all tolls for 75 years. But traffic on the road has never lived up to expectations, taking a direct hit almost immediately from the recession that started at the end of 2007.

The most recent report of the Toll Road's financial travails came from Dow Jones News Service, which reported the its private operators had retained Moelis & Co. as an adviser in negotiations with creditors as it faces a late June payment it cannot afford to make.

More from the story:
The concession agreement the state signed with the consortium formed by Cintra and Macquarie Group in 2006 allows the state to take various actions in cases where the Toll Road operator misses payments to creditors, defaults, or goes bankrupt.

In a worst-case scenario for investors, that includes Indiana basically serving the Toll Road operators with an eviction notice.

"If they default, the road comes back to us," McGoff said.

The same point was often made by former Gov. Mitch Daniels as he pitched the privatization to the Indiana General Assembly and the public in 2006. However, an attempt to take the road back could also set off a legal fight.

Posted by Marcia Oddi on June 20, 2014 08:25 AM
Posted to Indiana Government