Brisbane tests sale for Clem7 tunnel
Receivers are taking expressions of interest in Brisbane's Clem7 tunnel after the financial collapse of the toll road two years ago.
KordaMentha partner Martin Madden expects a deal will be done by the end of the year, pending approval by Brisbane City Council.
The 6.8-kilometre underwater stretch of toll road went bust in 2011, owing $1.3 billion to a syndicate of 24 banks.
Mr Madden said expressions of interest would close by May 13, with bids due by the middle of June. Bidders would have access to limited information but would be subject to a confidentiality agreement. "They'll have about a month to digest that information," Mr Madden said. "Then, together with [sale partners] Goldman Sachs, we'll select the bids we consider most attractive."
During phase two of the sale candidates will enter a virtual data room where they'll gain access to all information relating to the tunnel, including traffic modelling and forecasts.
Mr Madden said it was likely the firm would receive a final bid by August or September, with the council approval process set to take between one and three months.
"Interest [will] come from private financial investors and that's typically pension funds, both here and overseas, looking for long-term returns," Mr Madden said.
Although a ballpark sale figure was not available, he said recent trades on the tunnel's "thriving" debt took place at about 42¢ in the dollar.
"That should provide some indicator as to the worth," he said.
Clem7 was opened to traffic in 2010 to much fanfare, but struggled to meet traffic targets, leading to the ruin of the operators, listed RiverCity Motorway in 2011.
The firm that produced the traffic forecasts for the tunnel is now the subject of legal action brought by Maurice Blackburn on behalf of 800 RiverCity Motorway investors. The investors are hoping to recover losses of more than $150 million.
Similar circumstances preceded the collapse of Brisbane's other major toll tunnel, the $4.8 billion Airport Link, which was placed into voluntary administration in February.
In an announcement to the ASX, the tunnel's operator, BrisConnections, said the company had decided to place the tunnel into administration, citing low traffic levels and debts worth more than the tunnel for the decision.
Meanwhile, work continues on a third toll tunnel for Brisbane, the $1.5 billion Legacy Way project, which is co-funded by City Hall and the federal government.
Legacy Way is due to open by March 2014.