DALLAS - The Spanish toll-road developer known as Cintra has closed on its first deal in Texas with a $1.36 billion agreement to build State Highway 130 near Austin.
"This financial achievement on the part of our team is especially noteworthy given the current constriction in the financial markets," said Jose Maria Lopez de Fuentes, Cintra's Austin-based director for the United States.
In the deal announced yesterday, Cintra's consortium paid the Texas Department of Transportation a $25.8 million upfront concession payment, which will be used for other projects in the region.
Cintra's consortium, operating under the name SH 130 Concession Co., will finance the project through $197 million of private equity, $685 million of bank loans, and a $430 million Transportation Infrastructure Finance and Innovation Act loan at 4.46% interest rate for 35 years.
Cintra also lined up a second-tranche $35 million additional liquidity provision that is available for 10 years at an interest cost of the six-month London Interbank Offered Rate plus 130 to 170 basis points. The $685 million is set at the same rate.
In order to qualify for the TIFIA loan, the consortium had to get a credit rating from one of the ratings agencies on both tranches of bank debt. Moody's Investors Service issued a Baa3.
The duration of the SH 130 Concession Agreement is 50 years after the completion of construction; at the end of this term, the asset will be handed back to TxDOT. Cintra can raise tolls during that time using a formula based on economic growth in the state.
The financial close on SH 130 comes a year after TxDOT awarded Cintra and its partner JPMorgan the $5 billion State Highway 121 north of Dallas. That 50-year award, the first and largest to a private toll operator, was reversed when state lawmakers had the bidding reopened to the public North Texas Tollway Authority.
The NTTA, which was chosen over Cintra in June 2007, last week sold more than $2.4 billion of revenue bonds for the SH 121 project.
The authority's current interest revenue bonds - rated A2 by Moody's and A-minus by Standard & Poor's - due in 2010 with a coupon of 4.5% brought a yield of 3.22%. Bonds due in 2048 at a coupon of 5.75% earned yields of 6% in the pricing led by Bear, Stearns & Co, Lehman Brothers, and Citi.
Cintra lined up its financing through European banks Banco Santander, Caja Madrid, Caixia Geral, Fortis Bank, and Banco Espirito Santo.
As NTTA officials celebrated more than $16 billion in orders for its bonds Thursday night at the Omni Berkshire Hotel in New York, officials from Cintra, who were staying in the same hotel, crossed their path, Lopez said.
"It was just a coincidence," he said.
Cintra closed on its financing for SH 130 the next day.
"Everyone is very happy about their financing, and so are we," Lopez said.
However, Lopez said that the NTTA's tripling of its debt for the 26-mile SH 121 could limit the authority's ability to pursue other projects. Cintra's bid for SH 121 was rated as superior by consultants at PriceWaterhouseCoopers.
"The issue is not whether they have done a good or bad financing job. The questions is where are they now?" Lopez said. "The SH 121 project brought considerable risk to NTTA."
The NTTA has expressed confidence that it will be able to build all five toll projects that it is considering in the Dallas-Fort Worth area without excessive risk.
The State Highway 130 project near Austin is a 91-mile tollway that will offer an alternative to congested Interstate 35. The portion of the project that Cintra won includes sections 5 and 6, covering 40 miles. Sections 1-3, operated by TxDOT are already open, and section 4 is expected to open soon.
Cintra - or Cintra Concesiones de Infraestructuras de Transporte - is a publicly traded company whose majority stockholder is the 102,000-employee Ferrovial Group. Cintra has more than $24 billion invested in toll roads, including the Chicago Skyway and the Indiana Toll Road.
Cintra is already doing engineering studies for the controversial Trans Texas Corridor, a network of highways designed to carry traffic from the Mexican border to the northern boundaries of the state. Ultimate plans call for more than $150 billion of roadways and rail lines to boost commercial transportation in the state.