TOLL PRICE ESCALATION
At the discretion of the concession company, with defined penalties if certain traffic thresholds are not met
TOLL COLLECTION
100% electronic tolling
CONCESSION END
2098
Nature of the asset
407 ETR is a multi-lane, all electronic toll highway that runs alongside some of the fastest growing areas in the Greater Toronto Area. 407 ETR opened to traffic in June 1997 and tolling commenced in October 1997. It was designed to be a congestion reliever to Highway 401, one of the busiest highways in North America (over 400,000 vehicles per day at its busiest points).
Since opening, 407 ETR has added several sections including a 24 km west extension and 15 km east partial extension in 2001, a lane widening at Pine Valley Way in 2003, a 22 km widening between Highway 401 and Hurontario Street in 2004, a 50 km lane widening between Highway 427 and Highway 404 in 2006, and a 50 km lane widening between Highway 401 and Highway 404 in 2007. 407 ETR’s current configuration is approximately 714 lane km (width between 4 and 10 lanes), with a maximum expandable capacity of 1,022 lane km (width up to 12 lanes).
Tolls are charged based on distance travelled, the time of use and the section driven. Additional fees are levied for administration fees, overdue accounts and for each trip by users without a transponder (electronic vehicle tags). The toll system is fully electronic and barrier-free. Instead of toll plazas, there is a pair of overhead gantries at each entry and exit point, with over 850,000 transponders in circulation.
Nature of the investment
In 1999, the Ontario government privatised 407 ETR. The winning consortium was made up of Grupo Ferrovial/Cintra (61.29%), SNC Lavalin (22.6%) and CDP Capital (16.1%). The acquisition was funded by a combination of equity, junior bridge and senior bridge debt. Construction was originally funded through a sponsor subordinated debt facility. The senior and junior bridge debt have been refinanced through a series of bond issues and the sponsor subordinated debt was replaced with a bank facility, since refinanced with subordinated bonds. 407 International holds a 99-year lease of the 407 ETR, the Operation Centre and Patrol Yard.
Following its purchase of 40% of Cintra in 2001, MIG owned an indirect interest of 24.52% in 407 International. In April 2002 MIG acquired an additional direct and indirect fully diluted 18.45% interest in 407 ETR, taking MIG's fully diluted direct and indirect interests to 42.97%.
In October 2004, MIG sold its 40% interest in Cintra but negotiated a further direct stake of 407 ETR, taking MIG's total direct interest to 30%.
