Georgia Used Private Offering for South Atlanta Toll Project

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BRADENTON, Fla. — The Georgia State Road & Tollway Authority privately placed $26 million in toll revenue bonds to finance the toll-collection system for a start-up express lane project south of Atlanta.

The unrated bonds underwritten by Citi were sold to qualified institutional buyers on June 26 to pay for the toll collection system for the 12.2-mile-long Interstate 75 South Express Lanes Project.

The deal was sold as three term bonds with $8.87 million as callable capital appreciation bonds and $17.2 million as convertible capital appreciation bonds. The issuance received interest rates of 6.25%, 6.75%, and 7%.

The small size of the offering led SRTA to determine that a private placement was more advantageous than a public sale, according to Bert Brantley, deputy executive director of the State Road & Tollway Authority.

"SRTA has been successful in the past with private placements, and given the outcome we are very pleased we went that direction again," he said. "Citigroup Global Markets Inc. was selected as the underwriter through a competitive procurement and was responsible for marketing the bonds to investors."

While the transaction was exempt from continuing disclosure under the Securities and Exchange Commission's Rule 15c2-12, SRTA agreed to make certain financial and operating information available for the secondary market on EMMA.

The bonds already have been listed on EMMA, and are shown with accreted values that have a combined total of $57.9 million.

Bond proceeds are being used to finance only the tolling system of the project, said Brantley. The system includes toll readers, lane controllers, antennas, cameras, and the software to collect tolls electronically and through a dynamic pricing system.

The private placement memorandum, provided to The Bond Buyer, warns investors in the transaction that the debt is for "a start-up project with no history on which to base projections of future toll revenues."

Construction of the variable-rate managed toll lanes south of Atlanta along I-75 in Henry and Clayton counties is expected to begin later this year, Brantley said.

The Georgia Department of Transportation entered a $176.2 million design-build contract with C.W. Matthews Contracting Co. Inc. of Marietta last year.

GDOT is paying for the work from federal and state motor fuel taxes, and no additional bonds are expected to be issued.

The I-75 South project is one of several under way that are planned to relieve some of the severe congestion in the area around Atlanta.

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Transportation industry Georgia
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