Deals

Texas toll road to emerge from bankruptcy

State Highway 130’s operator, which declared bankruptcy in 2016 after the project was met with political resistance and low traffic, has seen its restructuring plan approved by a federal court.

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Fourteen months after filing for bankruptcy, a Texas toll road concession company has had its restructuring plan approved by a US bankruptcy court.

The court’s approval clears the way for SH 130 Concession Company to emerge with new equity partners by the end of next month, the firm said. The toll operator filed for bankruptcy in March 2016, less than three years after the highway opened to traffic, due to lower-than-expected toll revenues.

“The financial restructuring process has left the company with significantly less leverage and an improved capital structure,” said Andy Bailey, SH 130’s incoming chief executive. “This financial stability coupled with a commitment to ongoing capital improvements leaves the company well-positioned for future growth and sustained success.”

In 2007 SH 130, with Spanish toll road operator Cintra holding a majority stake and San Antonio-based Zachry American Infrastructure owning the remaining 35 percent, reached a $1.3 billion agreement with the state transportation department to run the 64km State Highway 130. Running from state capital Austin to Seguin and offering the nation’s highest speed limit (85 miles, or 137km, per hour), the project aimed to ease traffic on Interstate 35 between Austin and San Antonio.

But when the road opened in November 2012, it was met with political opposition and lighter-than-expected traffic, becoming a cautionary tale for the US P3 market. Last year, with 46 years remaining on its concession, the company initiated Chapter 11 bankruptcy proceedings.

The restructuring will see ownership turned over to the project’s lenders, which include private banks as well as the federal government. The latter had provided $430 million in assistance through the TIFIA programme.

SH 130 said it will enter into a fully committed $260 million senior secured term debt facility led by Goldman Sachs, with equity transferred to the existing lender group. In the meantime, the agreement between the state and SH 130 remains in effect, and drivers will not be affected by the ownership change, the company said.