Cross City Tunnel interest due on Tuesday

KordaMentha has asked potential buyers for indications of interest in the Sydney toll road by Oct. 8

Buyer expressions of interest in Sydney’s Cross City Tunnel, the 2.1-kilometer toll road that links the city’s eastern and western suburbs, are due on Tuesday next week.

A number of Australian and foreign infrastructure investors and owners, including Transurban Group, are expected to write back to the tunnel’s receiver KordaMentha to confirm interest in bidding for the roadway, which is in receivership a second time.

KordaMentha is not making data on the tunnel’s operations and finances available to those who express interest. Based on the indications of interest and the time potential acquirers would need to secure financing for a purchase, KordaMentha will decide on a due date for preliminary bids. 

Transurban Group, which owns five Sydney motorways, is seen as logical buyer of the tunnel. Infrastructure investors say that Transurban can probably afford to pay more for Cross City Tunnel than rivals as it can integrate the asset into its existing network.

Bankers value the tunnel at between $500 million and $600 million. Transurban did not return a call requesting comment.

Martin Madden and Cassandra Matthews are the KordaMentha partners in charge of the sale. Last week they presided over the $618 million sale of RiverCity Motorway Group to Queensland Motorways Ltd., which was advised by UBS AG.

Madden was the KordaMentha partner in charge of the Sydney tunnel receivership in 2006 and sale in 2007 to a group of investors, led by RBS Group, for about $700 million.

Cross City Tunnel is cash flow positive with about 250,000 motor vehicles a week using the roadway. It is in receivership after a dispute with the NSW Office of State Revenue over stamp duty on the 2007 RBS acquisition.