A consortium led by Leighton Holdings and ABN Amro bank is set to acquire Sydney’s Cross City Tunnel Group for about US$590M just over half a year after the toll business – Cross City Tunnel Motorway – went into receivership.
The bid by the consortium for the 2.1km tunnel concession saw it named preferred purchaser by Cross City Tunnel Motorway’s receiver, KordaMentha. It beat rivals including Macquarie Bank, Babcock and Brown and Transurban Group.
Subject to regulatory approvals, the ABN Amro-Leighton consortium anticipates that the purchase could be closed by October following three to four months of talks with the road and traffic authority of New South Wales.
The consortium plans for ABN Amro to provide core financing and financial advisory services to the toll tunnel business. Operations and maintenance are be undertaken by Leighton Contractors, part of the Leighton Holdings group. Leighton said a 29 year contract has been signed to perform the work and the first five years was worth about US$38M.
Leighton added it would invest about US$17M for a 6% equity stake in the tunnel company, while ABN Amro would take the remaining 94%. The companies are involved together also in Brisbane, building the North-South Bypass.
The bank plans to issue bonds by October to finance half of its investment, and the balance is to be funded through its existing infrastructure funds portfolio. The Diversified Infrastructure Trust has stakes in the Lane Cove tunnel and RiverCity Motorway, which is building the bypass in Brisbane.
The toll tunnel suffered cashflow problems due to low traffic volumes and local road closures tied to its opening, which angered drivers since it opened in August 2005. The tunnel company went into receivership in December 2006, the original shareholders have written down their holdings, and the sale process got underway in March, advised by investment bank UBS.
