Transurban will offload an underperforming toll road in the US to its banks, in a deal which will provide relief to investors worried it was about to throw good money after bad.
Australia's largest toll-road operator wrote down the value of the Pocahontas Parkway 895 in rural Virginia by $138 million to zero about a year ago, and has since been considering what to do with it.
Transurban wants to complete the transfer of ownership to its lenders by October, which it said would have no cash impact on its business.
The 14-kilometre Virginia toll road has been a major disappointment for Transurban, which spent $US611 million on buying it in 2006.
Transurban ought to quell investor concerns that the performance of the 895 road could give an insight into its other roadway assets in the US. Its new Beltway express lanes around Washington DC had lower-than-expected traffic in the months after they were opened in November.
"The issues facing Pocahontas 895 are asset-specific and do not reflect any broader concerns across the rest of the Transurban portfolio," it said.
Andrew Chambers, a research analyst for fund manager Legg Mason, said the decision to transfer the road's ownership to lenders "gives comfort that they are not going to throw good money after bad, but the question is how the other assets in the region are travelling".
Mr Chambers said the other toll roads in the US were structured in a better way but the poor performance of the 895 road since the global financial crisis did not help investor confidence.
Shares in Transurban, which operates CityLink in Melbourne and the Hills M2 and Westlink M7 in Sydney, closed up 2¢ at $6.88 on Friday, on a day when the market rallied more than 2 per cent.