Australian listed toll road operator Transurban has reached financial close on its acquisition of Sydney’s Lane Cove Tunnel with the backing of three banks.
The Australian and New Zealand Banking Group, the Bank of Tokyo-Mitsubishi and Westpac Banking Corporation have provided Transurban with A$260 million (€180 million; $237 million) of non-recourse debt with a maturity of three years. The rest of the transaction will be financed with the equity proceeds of a recent capital raising.
Lane Cove: Three banks
Transurban bought Lane Cove for A$630 million in May from a consortium of Leighton Holdings, Mirvac and Cheung Kong Infrastructure after the latter failed to fully repay interest on about A$1.16 billion in debt earlier this year.
The purchase price represents more than 28x the asset’s 2009 earnings before interest, tax, depreciation and amortisation (EBITDA) and represents a discount of almost A$1 billion to the price paid by the original project sponsors three years ago. The road will allow synergies with Transurban’s M2, a Sydney road adjacent to it.
The collapse of Lane Cove – which includes a 3.6 kilometre twin-tunnel tolled motorway and two tolled ramps – has been blamed on wildly inaccurate traffic projections which have seen the road underperform practically since it opened in March 2007.
Original traffic expectations pointed to daily traffic in the region of 100,000 vehicles but Lane Cove had been averaging half that amount. A traffic high of over 62,000 vehicles was reached last November. But that number still compares unfavourably with the 134,000 vehicles per day expected in 2011, according to the original estimates.