SH-130 concession faces bankruptcy

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SH-130 concession faces bankruptcy

According to a June 18 report from Moody's Investors Service, the SH-30 concessionaire is not attracting sufficient traffic to pay their bank loans. The operator of the road with the highest speed limit (85 mph) in Texas and in the United States is in financial trouble.

Moody's said:
"At this time, SH 130 has depleted all but $3.3 million of available liquidity reserves and will not have sufficient funds on hand to fully pay the senior loan interest and related swap payments due on June 30."

In October 2013, Moody's had already 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 was negative.

Moody's had already anticipated that the traffic on the highway was not growing at rates necessary to generate sufficient revenue to meet operating and debt obligations through the June 30, 2014 debt service payment.

In November 2013, we also announced that the SH 130 Concession Company LLC had started to work with restructuring and infrastructure lawyers at Gibson, Dunn & Crutcher LLP. However, it seems they haven't been able to work out a plan to avoid the mentioned liquidity problems.

According to sources, the Federal Highway Administration confirmed that the SH 130 Concession notified the agency of its financial problems.

"We're aware of those issues and we're working with the project sponsor and others, including the Department of Transportation, to figure out what the next steps are," said FHWA spokesman Doug Hecox. "No decisions have been made, but this is not a surprise and, obviously, we're going to take whatever measures we can to protect the taxpayers' interest." He said that the first payment on the federal loan is not due until June 2017.

SH 130 Concession Company, LLC is a limited liability company owned by Cintra TX 56, LLC (65%) and Zachry Toll Road 56, LP (35%).

A consortium of five European banks, led by Banco Santander of Spain, provided the senior bank debt. The other banks included are Banco Espirito Santo and Caixa-Banco de Investimento of Portugal, Caja Madrid (Bankia) of Spain, and Belgium-based Fortis Bank.

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.

The road runs 40 miles south from Austin, through an unpopulated area to Sequin, located east of San Antonio and more than 150 miles from Laredo, where I-35 crosses into Mexico.

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