MegaProject 1360: US$620 million bond issue to finance highway modernisation P3 project in USA
- John Laing
- Ajax Paving Industries Inc.
- Dan’s Excavating, Inc.
- Jay Dee Contractors Inc.
- C.A. Hull Co., Inc.
- Kroll Bond Rating Agency (KBRA)
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The Michigan Strategic Fund is planning to issue US$622.2 million Limited Obligation Revenue Bonds to finance the Michigan I-75 Modernization Project. The proceeds of the bonds will be loaned to Oakland Corridor Partners LLC (OCP), a special purpose limited liability company formed to develop and operate the project.
OCP is indirectly owned by five private sector sponsors: John Laing Investments Limited (40%), AECOM Capital, Inc. (30%), Ajax Paving Industries, Inc. (10%), Dan’s Excavating, Inc. (10%), and Jay Dee Contractors, Inc. (10%).
Under a design-build-finance-maintain agreement with the Michigan Department of Transportation (MDOT), OCP will reconstruct, widen and improve a 5.5 mile (8.85 km) segment of Interstate Highway 75 (I-75) in Oakland County, Michigan, located in the Midwestern region of the USA. The segment consists of 1.5 miles of rural freeway and 4 miles of urban depressed freeway.
OCP will also construct a 4-mile (6.4km) storage and drainage tunnel beneath the road and a pump station to prevent future flooding. The estimated total cost of the project is US$1.4 billion.
OCP has contracted MI 75 Constructors, LLC to perform the design-build work for the project, which is jointly owned by Dan’s Excavating, Inc., Jay Dee Contractors, Inc., Ajax Paving Industries, Inc. and C.A. Hull Co., Inc.
Design work is scheduled to begin in November 2018 and substantial completion is targeted for August 2023. OCP will retain maintenance and handback obligations once the design build work is complete.
OCP will receive US$101 million in milestone payments during the design and construction term and quarterly availability payments during the 25-year maintenance period, subject to customary deductions for noncompliance and unavailability and annual appropriation by the Michigan legislature.
The I-75 is a key commercial, commuter, and tourist route handling a daily traffic volume of 103,000 to 174,000 vehicles, which is projected to increase 10% by 2035. The Oakland County corridor exhibits aging infrastructure that has not received comprehensive improvements since being built in the 1960s. The project will add much-needed capacity and critical infrastructure to the corridor that will help relieve traffic congestion and improve surface driving conditions and safety.
The Limited Obligation Revenue Bonds have been preliminarily rated BBB by Kroll Bond Rating Agency (KBRA) and Baa2 by Moody's Investors Service.