Transurban refinances Lane Cove Tunnel

The Australian operator has raised $332m in non-recourse debt, the latest round of a series of transactions to refinance the tolled asset.

Transurban Group, the Australian toll road operator, has completed the refinancing of Lane Cove Tunnel, a 3.6km twin-tunnel tollway in Sydney the company acquired in August 2010.

Lane Cove Tunnel has raised A$460 million ($332.3 million; €296.3 million) via non-recourse debt facilities with a weighted average tenor of over nine years, the Melbourne-based company said in a filing with the Australian Stock Exchange.

The funds raised will go towards repaying A$260 million of existing Lane Cove Tunnel debt, the company added, while the remaining A$200 million will be drawn down in early fiscal year 2017 to repay existing debt at the Transurban Group level.

The new debt facilities have maturities of five, nine, 12 and 15 years and were provided by four banks and three private placement investors both domestic and offshore, a spokesperson for the company told Infrastructure Investor but did not name them as it has in previous refinancings.

This is the second time Transurban is refinancing the Lane Cove debt. It initially raised debt financing of A$260 million to finance part of the A$630.5 million it agreed to pay for the asset, which it acquired in August 2010 and which it has the right to operate until 2048. In August 2013, a few months before the debt was scheduled to reach maturity, Transurban refinanced it with a new A$260 million debt facility, which would have come due this August. According to Transurban's spokesperson, the 2013 refinancing “offered attractive pricing at the time.”

Westpac Banking Corporation was among the lenders participating in the first two loans. It is unclear if the bank is participating in this latest refinancing.

The Lane Cove Tunnel, which connects to Hills M2, another Transurban-owned asset, has had a checkered past since opening to traffic. In March 2007, private consortium Connector Motorways paid A$1.6 billion to become owner and operator of the asset, which was procured as a PPP by the New South Wales government. Less than three years later, the consortium was placed in receivership as a result of lower-than-expected traffic revenues.