MIG-Cintra Consortium Announced Preferred Bidder for Indiana Toll Road

24 January 2006

Today the Governor of Indiana, US, announced that the Macquarie Infrastructure Group (MIG) and Cintra Concesiones de Infraestructuras de Transporte, SA (Cintra) consortium known as Statewide Mobility Partners has been selected as preferred bidder for the 75 year lease of the Indiana Toll Road. 

The purchase price for the lease is US$3,850million (A$5,118million¹), with MIG’s 50% equity commitment upon financial close being approximately US$385million (A$512million ).  The lease will be acquired from the Indiana Finance Authority.

The Indiana Toll Road, which opened to traffic in 1956, is a 253 km (157 mile) long divided highway which runs the full length of northern Indiana.  The Indiana Toll Road connects to the MIG-Cintra owned Skyway in the west and the Ohio turnpike in the east.  It is a critical part of the transcontinental route that moves freight to and from major US distribution hubs.

Mr Stephen Allen, Chief Executive Office of MIG said, “We are delighted to have been selected as preferred bidder for the Indiana Toll Road.  The Indiana Toll Road, often referred to as ‘the main street of America’, is an essential part of the US National Interstate Highway System and serves as an integral connection between the east and west coasts of America.

“Consistent with the integral role of the road in the national economy, we are committed to enhancing levels of service for all Indiana Toll Road users.  This will be done through significant capital improvements over the coming years and the introduction of electronic toll collection.

“The acquisition of the Indiana Toll Road lease is subject to the Indiana House of Representatives and Senate voting in favour of legislation that will allow the State to enter into the Concession Agreement.  This legislation is scheduled for consideration during the first quarter of 2006.  If passed financial close is anticipated for the end of June 2006.

“The Indiana Toll Road will be an attractive addition to the MIG portfolio of roads businesses.  Significantly, it has a long operating history with solid prospects for revenue growth over the 75 year concession.  Traffic has grown over 3.9% per annum since opening.  In addition, an attractive toll schedule has been set in place until 2010 after which tolls will increase at the greater of 2 per cent, CPI and nominal GDP per capita growth.

“This acquisition will increase the average concession term, internal rate of return and equity risk premium of the MIG portfolio,“ Mr Allen said.

The Indiana Toll Road will comprise 5% of MIG’s portfolio on completion.

Investment Fundamentals

• 75 year concession
• Investment IRR² of between 12.5% to 13.5% per annum³ 
• Risk premium of between 8% to 9% per annum over US 10 year bond yield 
• Average expected yield of 2.6% per annum over the first 5 years
• Anticipated 15 year payback period to equity

Tolling Mechanism

• Step up in tolls from 3c to 5.1c per mile for passenger cars effective 1 April 2006
• Step up in tolls for commercial vehicles⁴ from 9.3c per mile to 11.4c per mile effective 1 April 2006, 14.4c per mile effective 1 April 2007, 17.4c per mile effective 1 April 2008, and 20.4c per mile effective 1 April 2009
• Toll schedule that has been set in place until 2010 after which tolls will increase at the greater of 2 per cent, CPI and nominal GDP per capita growth

Acquisition Funding

A final decision regarding funding of MIG’s equity commitment will be made following legislative approval in March 2006 and prior to financial close in June 2006.  MIG has sufficient internal resources to fund the investment.

There is no change to MIG’s distribution guidance.

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1 Based on an exchange rate of $A1.00 to $0.7523
2 Internal rate of return
3 The equity return and yield stated above is based on certain assumptions which, if not achieved, may affect the return/yield.
4 For Class 5 Commercial Vehicles (5 axles)

For further information contact:

Investor Enquiries
Peter Johnston
Head of Investor Relations
Mobile: (61) 413 994055
Email: peter.johnston@macquarie.com

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

Bianca Francis
Investor Relations Manager
Mobile: (61) 413 279 523
Email: bianca.francis@macquarie.com