Transurban is restructuring $430 million in debt for the Interstate 495 project in Virginia, United States and making an equity call to investors to put more money into the lanes.
Transurban CEO Scott Charlton defended the plan with investors in a conference call last week. Charlton said:
"Traffic and revenue has remained below our project case expectations. We've now completed a full review and the result is a reduction in traffic and an extension of our ramp-up profile.""We think there is long term value here, recognizing that this is a 75-year concession period."
The 495 Express Lanes opened in November 2012 after a six-year construction period. Transurban controls the Interstate 495 lanes until December 2087.
The I-495 project, which was supposed to be a showcase for public-private partnership innovation, collects an average of $64,000 per day from drivers, amount well below projections.
Transurban, which announced it was moving its headquarters to Virginia, unsuccessfully attempted to draw extra traffic to the pay lanes by holding down the speed limit in the general purpose lanes with a non-compete clause in its contract with the Virginia Department of Transportation.
In total, the 495 project lost $51.6 million last year. It collected $11.6 million in tolls and issued $3.2 million in fines and fees. It had operation and maintenance costs of $18.9 million, $36.4 million cost of debt financing and $11.1 million in depreciation.
The state of Virginia gave Transurban control of additional 29 miles of existing lanes, the I-95 Express Lanes. Construction on adding the toll collecting equipment has advanced with a scheduled completion date set for the end of the year.