Troubled toll bridge part of DIF’s $220m US portfolio acquisition

The Dutch fund manager agreed to buy American Roads, which manages five toll assets, including one in Alabama caught in a legal dispute.

DIF has agreed to pay around $220 million for a portfolio of five US toll assets, including a bridge at the centre of a legal dispute with the Alabama state government.

The Dutch fund manager acquired full ownership of Detroit, Michigan-based American Roads from Bermuda-domiciled Syncora Holdings, according to a statement. American Roads owns and operates four toll bridges in Alabama and has won a concession to operate the US side of the Detroit-Windsor Tunnel, connecting the US and Canada.

DIF is financing the acquisition using an undisclosed amount of equity and debt, through DIF V, which it is currently raising. Earlier this month, Infrastructure Investor reported that the Dutch firm had increased DIF V’s hard-cap to €1.9 billion from €1.75 billion, with a final close expected soon.

According to Syncora, the company is allowed additional payments from American Roads within 12 months of the agreement if “certain conditions” are met. It also says it is entitled to a $31 million cash distribution prior to the transaction’s closing, expected in the third quarter.

One asset in the American Roads portfolio, the Foley Beach Express, a toll bridge near Alabama’s coast, is caught up in a legal dispute between its operators and the Alabama Department of Transportation.

According to local news reports, ALDOT proposed in 2015 an $87 million state-funded bridge project to connect Alabama’s mainland with its local beach cities. State plans are to build the project just two miles west of Foley Beach Express to help ease traffic and provide evacuation routes.

A new bridge in the area would likely decrease Foley Beach Express toll revenue, so American Roads subsidiary Baldwin County Bridge Company filed a lawsuit in April accusing ALDOT of violating past agreements, according to local media. The lawsuit says the new bridge is unnecessary and that ALDOT has not provided traffic studies to substantiate the new bridge’s need.

“We have factored in our due diligence and in our base case forecast that there could be competing roads near the Foley Beach Express. We are monitoring the developments and coordinating further actions, including discussions with the authority,” Allard Ruijs, partner at DIF, told Infrastructure Investor.

He added that if the government project continues, one option would be to lower toll rates to attract users again.

DIF, which manages around €5.1 billion in assets, counts a number of toll assets in its portfolio, including a 33 percent stake in Colorado’s Northwest Parkway, which it acquired in 2016 for $166 million.