Cintra, Meridiam close on $2.7bn toll road

The LBJ Express in Dallas will mark the largest privately-financed toll road development in US history. A mix of public funds, bonds, private equity and a federal loan helped bring the financing in place for the project.

The $2.7 billion financing for the LBJ Express project in Texas has been arranged ahead of schedule, bringing the largest privately funded toll road development in US history closer to construction.

LBJ Infrastructure Group, the private concessionaire who was awarded the project in a competitive bidding in February 2009, said in a statement it had secured a combination of private equity, state funds, federal loans and bonds to fund the 17-mile highway improvement in the Dallas metropolitan area.

The biggest piece of the financing is an $850 million loan from the US Department of Transportation’s infrastructure lending programme known as TIFIA. At that amount, the loan will become the largest extension of credit the TIFIA programme has ever made to a privately financed project, according to the TIFIA website.

The second-largest piece of the financing is a $615 million issuance of private activity bonds, a form of municipal debt whose proceeds may be used to finance privately-backed projects. Earlier this month, the bonds were rated BBB- by Fitch Ratings.

LBJ Infrastructure’s equity partners, Spanish toll road developer Cintra and European fund manager Meridiam Infrastructure, will also contribute $339 million (51 percent) and $282 million (42.4 percent), respectively, toward a $665 million equity check for the project. The remaining $44 million (6.6 percent) will come from the Dallas Police and Fire Pension System, a local pension that also invested in another Cintra- and Meridiam-backed project, the $2 billion North Tarrant Express.

Finally, the state of Texas Department of Transportation will contribute approximately $500 million toward the project.

By combining Texas’ transportation funds with the private equity, bonds and TIFIA loan, the “public-private partnership will get traffic moving . . . without waiting for limited taxpayer resources to become available,” Joe Aiello, the chief executive officer of Meridiam Infrastructure North America, said in a statement.

Construction is expected to begin in the first quarter of 2011, according to Andy Rittler, a spokesperson for LBJ Infrastructure. The project will be on a fast-track for completion by 2016, at which time LBJ Infrastructure will be in charge of operating and maintaining the toll road. In exchange for doing so, LBJ will receive a concession, or a right to benefit from the tolls collected on the road, which will be collected by the North Texas Tollway Authority.

The length of the concession is 52 years. The clock on the concession will begin running once the Texas Department of Transportation gives LBJ Infrastructure a notice to proceed with the construction and design for the project, Rittler said.