Queensland Motorways is the new owner of RiverCity Motorway Group (RCY) after it agreed to pay $618 million for the company that controls the 6.8 kilometre Clem Jones Tunnel running under the Brisbane River.
RiverCity collapsed under the weight of debt in 2011 after toll revenue were one third of forecasts. The sale of RiverCity is expected to be completed within four months.
The current manager of 62 kilometres of toll roads and bridges in the state, Queensland Motorways was considered the front runner. Its network enabled it to pay more for RiverCity as it could create synergies with its existing network to generate more revenue and perhaps better margins.
UBS AG advised Queensland Motorways. Final bids for RiverCity, built at a cost of $3 billion, were due September 23.
Queensland Motorways chief financial officer Nick Lattimore is a former CFO of BrisConnections, another Brisbane toll road in receivership and the likely next target for the Queensland Motorways in an auction that may start next year.
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. Bourke and Lattimore’s extensive contacts with government and business in their home state put them in the most favorable position to win the BrisConnections auction.
KordaMentha’s Martin Madden and Cassandra Matthews were RiverCity’s receivers and managers. Goldman Sachs Group Inc advised KordaMentha on the sale. Meanwhile, 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.