SR125 South Financial Close

23 May 2003

Macquarie Infrastructure Group (MIG) today announced it has reached financial close on the State Route 125 South in San Diego.  MIG has acquired the remaining 15.7% of the project and now owns 100% of SDELP (San Diego Expressway Limited Partnership), the entity with the concession to develop and operate the US$635 million SR125 South toll road in San Diego, California.  The road will pass through Chula Vista to Otay Mesa, adjacent to the Otay Mesa border crossing between the United States and Mexico.

Under the concession MIG will also manage the construction of two sections of untolled, government-funded road, at a cost of US$138 million.  The sections are known as the 'Connector', a 3 km connection to SR125 North, and the 'Gap', a 2 km connection to SR54, and both will play an important role in linking the SR125 to the existing San Diego freeway network.

MIG Chief Executive Officer Mr Stephen Allen said, "After more than a decade in the planning SR125 South will now be built and will offer road users an alternative four lane 18km route east of the North/South Interstate 805 and Interstate 5 routes in the South Bay area of San Diego.

"The SR125 South is a much needed road that has strong community, business and government support.  Since MIG became involved in the project nine months ago we have worked to deliver a project that will provide significant transportation benefits to the region.  Importantly, the project includes a range of environmental measures which will assist in protecting and preserving the diverse wildlife and habitat of the South Bay Area.

"The SR125 South is MIG's first investment in the US. It is an exciting opportunity for MIG to deliver a road that has been part of California's planned freeway system since 1959.  SR125 South will improve regional mobility and enhance access for residents and businesses to the employment centres," Mr Allen said.

Chula Vista Mayor Steve Padilla said, "SR125 South is long overdue. This transportation corridor is vital to Chula Vista's future. For decades, it's been an important part of our transportation planning, and we're relieved that the challenges to this project are now behind us. We are pleased that a group with the experience and financial strength of Macquarie Infrastructure Group has recognized the importance of the project and the potential of the South Bay area. The City looks forward to working with SDELP and Macquarie Infrastructure Group to deliver this project  to the citizens of Chula Vista and San Diego."

SR 125 South Concession

Under the concession MIG will design, finance, construct and then operate the SR 125 South for a 35-year period from the date of opening. The concession, which was granted by Caltrans (State of California Department of Transportation) in 1991, allows the concessionaire flexibility in setting tolls.  Caltrans is to acquire the land for the project including certain protected environmental areas, which is then reimbursed by SDELP.

SR 125 Project Funding

• The total equity commitment to the project by MIG, including the cost of acquisition of the project and the subsequent equity funding, is between US$160 million and US$180 million.
• There will be a net contribution of US$30 million at financial close, a proportion of equity will be contributed during construction with the balance invested at construction completion.
• The total cost of the project is approximately US$773 million:
  • US$635 million total project cost for SR125 South
  • US$138 million total project cost for the Gap and Connector
• The expected equity IRR¹ on MIG's investment is forecast to be between 15% and 20%, based on two independent traffic models that utilised different tolling strategies.
• The remaining 15.7% of SDELP has been acquired from the minority partners Koch Industries, Fluor Daniel Development Corporation, HBG Flatiron Inc and Galaxy for a total consideration of US$8 million.

Construction will be funded through a combination of senior debt, debt from a US Government program and equity:

• Equity contribution of between US$160m and US$180m
• Senior debt of approximately US$321 million
• TIFIA² funding of US$154 million

The SR125 South project has been selected as an eligible project for funding from the United States TIFIA program. The $154 million TIFIA loan will be the first ever provided to a private toll road development. The long term loan will have a fixed rate borrowing cost approximately equal to 30 year US Treasuries.

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¹ The forecast IRR is based on certain assumptions that, if not achieved, may affect the IRR
² Transportation Infrastructure Finance and Innovation Act (TIFIA)

For further information, please contact:

Investor Enquiries
Bianca Francis
Investor Relations Manager
Tel: 61 2 8232 5007
Email: bianca.francis@macquarie.com

Media Enquiries
Jane Rotsey
Public Affairs Manager
Mobile: (61) 401 997 160
Email: jane.rotsey@macquarie.com