Melbourne-based toll road operator Transurban has agreed to acquire Brisbane’s AirportlinkM7 for A$1.87 billion (€1.27 billion; $1.35 billion) from Australia-listed BrisConnections.
The transaction values the project at 60 percent less than its A$4.8 billion original construction cost.
The 6.7-kilometre AirportlinkM7 tunnel, connecting Brisbane Airport with the central business district (CBD), was completed in July 2012.
Despite initial traffic forecasts of 170,000 vehicles a day, less than 50,000 vehicles were using the toll road every day by the time it went to receivership in early 2013, according to local reports.
Transurban and its partners appeared to be the best-suited buyer of the distressed asset, given the company’s dominant position in the Brisbane market and the possible synergies it could extract from its other five Brisbane toll roads.
Transurban has a majority 62.5 percent share in the partnership, with AustralianSuper owning 25 percent and Tawreed Investments, a subsidiary of Abu Dhabi Investment Authority, in control of the remaining 12.5 percent.
The Australian Competition and Consumer Commission (ACCC) approved the transaction yesterday.
Wes Ballantine, Transurban’s general manager, said that the AirportlinkM7 acquisition enhances the company’s existing ‘go via’ network, a 70-kilometre network of roads, bridge and tunnels in Brisbane. The network includes the Gateway and Logan motorways, Go Between Bridge and Legacy Way.
“AirportlinkM7 is a quality urban asset which is adjacent to three of our existing toll roads in Brisbane. It provides efficient connections between the Brisbane Airport and the Australia TradeCoast along with the CBD, and Brisbane’s northern, southern and western suburbs,” Ballantine noted.
The sale is expected to complete in early 2016, at which time Transurban will become responsible for operating the tunnel.
To fund the deal, Transurban has announced it will raise around A$1 billion through a renounceable rights offering to its shareholders. UBS and Morgan Standley will handle the equity raising, which has been priced at A$9.6 per share.
The failed AirportlinkM7 is also the subject of an ongoing lawsuit against Arup, the London-headquartered consulting engineer for its overly optimistic forecasting work. A recent settlement held AECOM Australia accountable for its traffic forecast for Brisbane’s Clem7, another tunnel that went bankrupt in 2011.