Bankrupt toll road operator sold to IFM investors for $5.7bn

May 2015  |  DEALFRONT  |  BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

May 2015 Issue

May 2015 Issue


IFM Investors, on behalf of IFM Global Infrastructure Fund, has entered into a definitive purchase and sale agreement to acquire ITR Concession Company LLC (ITRCC) for $5.725bn.

ITRCC is party to a voluntary bankruptcy proceeding under Chapter 11 of the Bankruptcy Code. Pursuant to a pre-packaged plan of reorganisation of ITRCC confirmed by order of the Bankruptcy Court, the Special Committee of the Board of Directors of ITRCC was granted the authority to run a competitive bidding process for the sale of ITRCC and to approve a sale of ITRCC. Pursuant to such authority, the Special Committee has approved the sale of ITRCC to IFM Investors under the terms of the purchase and sale agreement.

IFM Investors is a global pioneer and leader in infrastructure investing, infrastructure asset management and operations and maintenance, and regards ITRCC as an attractive investment for its infrastructure portfolio. IFM Investors has significant toll road knowledge from owning assets in the sector for over 15 years and a seasoned team of toll road industry professionals.

The acquisition of ITRCC represents the biggest overseas investment made by IFM Investors and provides access to core infrastructure in the world’s largest capital market.

ITRCC is party to a Concession and Lease Agreement between ITRCC and the Indiana Finance Authority (IFA), pursuant to which ITRCC operates and maintains the Indiana Toll Road, a 157 mile, limited access, divided highway in the state of Indiana. The road spans northern Indiana, from its border with Ohio to the Illinois state line near Chicago, feeding directly into two toll roads at the state lines – the Chicago Skyway in the west and the Ohio Turnpike in the east. For its westernmost 24 miles adjacent to the Illinois border, it runs through the urban region surrounding Gary, Indiana. The remainder of the road is inter-urban, providing a principal link between Chicago and the east coast.

Furthermore, the road forms a critical transportation link between highways leading to major east coast cities and Indiana, the City of Chicago and the western United States. ITR is also critical to the Midwest region, which accounts for over 20 percent of US national GDP and is a significant origin and destination market.

The Concession and Lease Agreement requires ITRCC to operate and maintain the road and grants ITRCC the exclusive right to collect toll revenues from the toll road during the term of the Agreement. For the next 66 years, the Asset will deliver direct linkage to US CPI and GDP. ITRCC also earns rental income from roadside travel plazas along ITR.

The closing of the transaction is subject to regulatory approvals which include obtaining necessary third-party and government authorisations, as well as IFA approval.

“ITR represents a rare opportunity to acquire a large, high-quality, US-denominated transportation asset, giving our investors direct linkage to US GDP and CPI,” said Kyle Mangini, global head of infrastructure at IFM Investors. “ITR is a core infrastructure asset with defensive characteristics, demonstrated by strong financial resilience during the recession. IFM Investors views the Indiana Toll Road as an essential operating asset for its strategic geographical position, long concession duration and inflation and GDP-linked tolling regime. ITR is strategically important to the North American transportation network. We are committed to maintaining the asset to a high standard that provides maximum availability and usability for customers.”

“We believe this is a unique opportunity to invest in a high quality United States transportation infrastructure asset,” said Julio Garcia, head of infrastructure North America at IFM Investors.

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