KordaMentha to oversee sale of Sydney’s Cross City Tunnel

It is the second time KordaMentha has run the sale process of the motorway.

KordaMentha partners Martin Madden and Cassandra Matthews have been appointed receivers and managers of Sydney’s Cross City Tunnel, the second time Madden has overseen the sale of the 2.1 kilometre long roadway that links Sydney’s western and eastern suburbs.

“The receivers are confident the tunnel is an attractive asset which will provide solid returns for the right buyer,” Madden said in a statement.

Madden was the KordaMentha partner in charge of the motorway’s receivership in 2006 and sale in 2007 to a group of investors led by RBS Group.   

Madden and Matthews will oversee six Cross City Tunnel holding and operating entities that were put into voluntary administration last week after a dispute with the NSW Office of State Revenue over stamp duty. The state revenue office intends to appeal a Supreme Court decision which affirmed that $64 million in stamp duty was not payable on the 2007 acquisition. 

Cross City Tunnel is cash flow positive but has released no details of its operations except to say about 250,000 vehicles a week utilize the tunnel.
Transurban Group, which owns five Sydney motorways, is seen as logical buyer of the tunnel that bankers value at between $500 million and $600 million. Transurban did not return a call requesting comment.

RBS, Eiser Infrastructure Partners LLP and Leighton Holdings Ltd. bought the tunnel from receivers in 2007 for about $700 million. RBS holds all of Cross City Tunnel’s debt of about $600 million while Assured Guaranty Ltd., which has provided a guarantee on the debt to RBS, are the secured creditors of the motorway. 

“The secured creditors to the entities have signalled their intention to work constructively with the receivers of the tunnel and support the sale process,” said Madden.

Madden and Matthews are overseeing the receivership and sale of RiverCity Motorway Group, owner of the 6.8 kilometre Clem Jones Tunnel in Brisbane, which collapsed under heavy debt in 2011. Final bids are due Monday.

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