Two-timer Transurban

The toll road group has already profited handsomely from Leighton's blunder. Now it could be on again.

Transurban (TCL) already has much to thank Leighton Constructions (LEI) for. Now it may well prove just as fortunate a second time.

The toll road group did spectacularly well from its $630.5 million bargain basement price purchase of Sydney's Lane Cove Tunnel, which collapsed into receivership in early 2010, owing $1.14 billion.

Built at a cost of $1.1 billion, the project was jointly owned by Leighton, Mirvac (MGR) and Hong Kong billionaire Li Ka Shing, but was placed into receivership after ambitious traffic forecasts failed to materialise.

Now, the other major infrastructure lemon of the new millenium, Sydney's Cross City Tunnel is facing the same prospect.

Purported to be a Public Private Partnership, it was built entirely on private funds after being auctioned off as a money making venture by a cash strapped NSW state government in 2003.

Built at a cost of $680 million, the original consortium – Germany's Bilfinger Berger, Deutsche Bank and Baulderstone Hornibrook – hit the wall in 2007 as motorists saw little use for the east-west tunnel through a small portion of the city. Again, traffic forecasts had been wildly overblown.

Receivers sold the tunnel to Leighton and Royal Bank of Scotland later that year for $700 million but the project now again is facing receivership, as the owners face difficulties refinancing a $79 million slice of its $600 million debt.

Given RBS owns the debt, Leighton clearly will lose its equity in the project.

Transurban has been touted as the likely buyer of the tunnel. But if it does bother bidding, it would do so at huge discount to book values.

Where the Lane Cove tunnel plugs into its existing network of Sydney toll roads, the Cross City Tunnel is an isolated piece of roadwork infrastructure.

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