Queensland Motorways, which manages 62 kilometres of toll roads and bridges in the state, may be the front runner to buy the distressed RiverCity Motorway Group, owner of the 6.8 kilometre Clem Jones Tunnel, which collapsed under the weight of debt in 2011 after traffic and toll revenue were one-third of forecasts.
Final bids for RiverCity, built at a cost of $3 billion, are due by close of business, September 23. A decision on who will own RiverCity may come as soon as the end of the month.
The value of RiverCity, based on $1.8 billion of debt including interest, is between $700 million and $750 million, according to hedge funds. This is based on the current market value of RiverCity debt of about 45 cents in the dollar plus interest.
Queensland Motorways chief financial officer Nick Lattimore is a former CFO of BrisConnections and has spent almost three decades lending and investing in infrastructure assets. Queensland Motorways declined comment.
Lattimore and Queensland Motorways chief executive Brendan Bourke, are keen to add to their portfolio of assets, especially in Brisbane where they already own the Gateway and Logan City motorways. Their extensive contacts with government and business in their home state put them in the most favorable position to win the RiverCity auction.
KordaMentha’s Martin Madden and Cassandra Matthews are RiverCity’s receivers and managers, and Goldman Sachs is advising on the sale. Equity holders who lost all their money by investing in RiverCity are suing the traffic forecaster.
The Clem Jones Tunnel was built 60 metres below the Brisbane River, 10 metres into the bedrock. It links with another insolvent toll road, BrisConnections, which connects motorists to the city’s airport. RiverCity links with five other major Brisbane roads.
Other bidders for RiverCity are believed to include UBS Infrastructure; Spanish infrastructure companies Abertis Infraestructuras and Globalvia; Melbourne-based superannuation fund REST Industry Super; and Spanish infrastructure investor Cintra partnering with Australian infrastructure fund manager CP2.