Transurban eyes distressed Aussie road

The toll road operator says it has placed an expression of interest for Sydney’s A$1.6bn Lane Cove Tunnel, which was placed in receivership last month after its sponsor failed to pay interest on A$1.16 billion of outstanding debt.

Australian toll road operator Transurban said today during a results presentation it has submitted an expression of interest for Sydney’s A$1.6 billion (€1 billion; $1.4 billion) Lane Cove Tunnel.

Transurban: buying Lane
Cove if price is right

The Lane Cove Tunnel became the third major public-private partnership project to collapse in Australia over the last ten years when its sponsor was placed in receivership last month for failing to service about A$1.16 billion of outstanding debt. The project had been underperforming almost since opening in 2007, with traffic numbers well below original forecasts.

Transurban says it will now have access to more data on Lane Cove and will use it to place a bid for the asset. Should it end up acquiring it, Lane Cove will allow synergies with one of Transurban’s existing roads. ‘‘It’s adjacent to the M2; it’s in our line of business; it’s a well-constructed asset; it just had an unrealistic expectation inherent in the original business case,’’ chief executive Chris Lynch said during the results presentation.

During the presentation – which included the announcement that the company’s net profit for the last six months of 2009 jumped to A$54.2 million compared to the A$3.2 million it recorded during the same period in 2008 – Transurban said it has not received any more takeover proposals from the Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan.

Both pensions already own upwards of 25 percent in Transurban. But last November, they submitted an unsolicited A$6.78 billion takeover offer for Transurban, offering to pay A$5.25 per Transurban share. The toll road operator rejected the bid saying it undervalued the company, a position it reiterated during today’s presentation. Transurban also said it had appointed Lazard as a corporate adviser, and that it had conducted a separate review of the company confirming its higher valuation.

Transurban did not say what a satisfactory bid would be, though it did say it was open to other proposals.