BrisConnections traffic smash

Traffic volumes of less than half that expected, bring toll road operator to its knees

Mike King

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Published February 19, 2013 2:36 pm AEDT

Toll road operator, BrisConnections (ASX: BCS) has finally given up the ghost and filed for voluntary administration.

The company that owns and operates Brisbane's $4.8 billion Airport Link toll road has gone into receivership after traffic volumes through the tunnel were less than half of that predicted in the company's prospectus.

Around 50,000 cars are using the tunnel currently, well short of the 135,000 that were expected.

A statement from the company announced that McGrath Nicol Partnership had been appointed as voluntary administrators. After an analysis of traffic levels post the introduction of tolls and a review that determined the enterprise value of BrisConnections was less than the outstanding debt, the company contacted lenders and other stakeholders to see if a reconstruction of the company was possible.

Unfortunately for BrisConnections, its bankers weren't keen on a restructure, and the company was therefore forced into administration. The Airport Link will remain open to users as normal.

This is the second Brisbane toll road to fall into receivership, following the collapse of the Clem7, operated by RiverCity Motorway Group, and comes after the demise of the operators of the Lane Cove and Cross City tunnels in Sydney. Toll roads haven't been a great investment in recent times, and several banks are on the BrisConnections hook.

Construction giant, Leighton Holdings (ASX: LEI) recently wrote off its $63 million investment in the project, but investment bank Macquarie Group (ASX: MQG) recently doubled-down on its investment in Brisconnections, picking up $300 million of debt from Royal Bank of Scotland International. With Macquarie Infrastructure owning 46% of BrisConnections equity, the investment bank stands to lose a big chunk of dough. Nuts if you ask me.

BrisConnections owes around $3 billion of debt to a syndicate of banks, including ANZ Bank (ASX: ANZ), BNP Paribas, Societe General and United Overseas Bank.

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