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According to the Wall Street Journal, SH 130 Concession Company, LLC, a limited liability company owned by Cintra TX 56, LLC (65%) and Zachry Toll Road 56, LP (35%), has hired restructuring lawyers as the company faces a potential default. The newspaper announced a possible refinancing of the project debt.
Cintra and Zachry have a concession granted by the Texas Department of Transportation (TxDOT) for the southern-most tolled sections of SH 130, comprising 41 miles of a 90 mile bypass around the city of Austin, TX.
SH 130 Concession Company LLC is working with restructuring and infrastructure lawyers at Gibson, Dunn & Crutcher LLP although the source said a bankruptcy filing is not imminent.
Moody's recently downgraded the ratings of the SH 130 Concession Company, LLC to Caa3 from B1, including the senior bank facility with $686 million outstanding and the subordinate Transportation Infrastructure Finance and Innovation Act (TIFIA) loan with $493 million outstanding. Moody's said the rating outlook is negative.
A consortium of five European banks, led by Banco Santander of Spain, provided the senior bank debt. The others are Banco Espirito Santo and Caixa-Banco de Investimento of Portugal, Caja Madrid (Bankia) of Spain, and Belgium-based Fortis Bank.
The firm is near full use of the $35 million liquidity facility to fund the June 2013 debt service payment. Moody's revised forecasts now indicate that nearly all of the $30 million of available contingent equity will be used to fund the December 2013 debt service payment and a part of the June 2014 debt service payment.
Moody's expects that the project will have insufficient cash to meet is debt service payments due in June 2014.
A default could cause the Texas Department of Transportation to end the concession agreement, according to the Moody's report.
The concession has a term of 50 years and there is 20-year concession tail after the current senior debt amortizes and the repayment terms of the subordinate TIFIA loan. This could be very positive for a potential refinancing of the project debt by extending the term of the senior bank facility.