BRISCONNECTIONS, the operator of Brisbane's $4.8 billion Airport Link toll road, has finally gone bust, leaving equity holders and banks facing losses expected to run into the billions of dollars.
The appointment of receivers to the company chaired by high-profile businessman Trevor Rowe is the latest chapter in the unravelling of over-hyped partnerships between governments and the private sector to build roadways and tunnels.
The Airport Link joins Sydney's Lane Cove and Cross City tunnels, and Brisbane's Clem7 as casualties of a model which was based on overly ambitious traffic forecasts.
Seven months after opening to traffic, a consortium of 10 banks, including ANZ and European heavyweights Deutsche Bank and BNP Paribas, finally appointed PPB Advisory as receivers on Tuesday. The banks lent about $3.3 billion to BrisConnections, and stand to lose a sizeable chunk of their money.
A team led by David McEvoy at PPB will decide the fate of the 6.7-kilometre toll road which connects Brisbane's central city to its airport. The eventual outcome is expected to be a sale of the asset for a fraction of what it cost to build.
Queensland Investment Corporation, which owns motorways in the sunshine state, is seen as a logical buyer. Listed toll-road operator Transurban has previously hosed down its interest in Airport Link.
BrisConnections' board has also appointed McGrath Nicol as voluntary administrators after the majority of the banks opted to pull the pin on restructuring proposals.
The administrators will hold a creditors' meeting within the next eight business days. Equity holders including Macquarie Group and Queensland Investment Corporation face a wipeout on their investment in BrisConnections.
John Goldberg, a leading critic of the toll-road model, said the Airport Link was only worth a fraction of the $4.8 billion cost of its construction, which meant that equity holders and banks stood to lose billions of dollars. He expects class actions on behalf of investors to result from the latest collapse.
"It is an appalling lesson for what I call the PPP [public-private partnership] brigade," he said.
Andrew Chambers, a research analyst for fund manager Legg Mason, estimated some $2 billion would be lost by debt and equity holders in BrisConnections.
"Debt providers are going to take a substantial haircut on this. The traffic is so far below the prospectus forecasts," he said. "The equity has been wiped out."
BrisConnections, through its traffic forecaster Arup, had predicted that Airport Link would attract about 135,000 vehicles a day just a month after it opened in July, rising to 291,000 vehicles by 2026.
But the toll-road operator's latest traffic statistics show that it stood no chance of meeting those forecasts. In December, an average of just 47,000 vehicles a day used the toll road.
BrisConnections' board began "formal negotiations" in November with its lenders about "potential reconstruction options" after conceding that its debts may exceed the value of its assets. But on Monday night the board was told the majority of its lenders was not "prepared to support these restructuring proposals". It meant that the directors had no choice but to appoint the administrators after "exhausting the alternatives available" to them.
Mr Rowe said that it was "disappointing that the board has had to reach this decision" as the Airport Link was a "world-class piece of transport infrastructure".