Ferrovial to sell stake in 407 ETR highway

The Spanish infrastructure group has said it wants to sell a 10% stake in Canada’s 407 ETR toll road, owned by subsidiary Cintra. This would reduce Cintra’s stake in the road to 43%, with analysts saying it should have little problem netting €500m for the sale.

Spanish infrastructure group Ferrovial announced yesterday that subsidiary Cintra has started a sales process for the divestment of a 10 percent stake in Canada’s 407 ETR toll road.

The sale would reduce Cintra’s position in the road to 43.23 percent with analysts saying Ferrovial should have no problem getting the €500 million it is said to be seeking for the stake. Media reports say that SNC Lavalin, which currently owns 16.77 percent of the Canadian toll road, is looking into buying Cintra’s stake. RBC Capital Markets is Cintra’s financial adviser on the sale.

If it were to go ahead with the deal, SNC Lavalin would acquire a share roughly equal to Intoll’s 30 percent stake in the 407 ETR. Intoll is part of Macquarie and is the remaining shareholder of the Canadian highway. Ferrovial chief executive Iñigo Meirás said the company plans to use the proceeds from the stake sale to pay down debt and fund new toll road projects. Ferrovial’s debt stood at €22 billion as of September 2009.

The 108-kilometre bypass around Toronto is Cintra’s most important asset. In its third-quarter results for 2009 – its last results reported to the Spanish stock exchange before it merged with majority owner Ferrovial – the 407 ETR accounted for €209 million of Cintra’s €354.5 million in earnings before interest, tax, depreciation and amortisation (EBITDA).

The 407 ETR averaged 370,000 trips per day on weekdays in 2009, Ferrovial said in a statement. The concession was granted by the Canadian authorities in 1999 for 99 years.