CHICAGO - The operator of the Indiana Toll Road on Tuesday won federal court approval for a bankruptcy plan that will either sell the 75-year lease for the highway or restructure the company with $2.75 billion of new debt.
ITR Concession Co. won approval from U.S. Bankruptcy Judge Pamela Hollis on Oct. 28. The plan gives the company until August 2015 to find a buyer to take over the lease or restructure its debt.
"The debtors have already made progress toward that sale and we expect that process to accelerate that confirmation," Kirkland & Ellis attorney Marc Kieselstein said at the hearing, according to local reports.
If ITR can't find a buyer, it would float $2.75 billion of new debt to its senior creditors or restructure its debt, which totals more than $6 billion, with other financing. Both secured and unsecured creditors would see a full recovery under either plan.
The plan is supported by more than 90% of the company's senior secured creditors, according to reports. The company has been working with creditors on the reorganization plan for more than two years, Kieselstein said.
ITR, a subsidiary of Macquaire Infrastructure Partners, Macquarie Atlas Roads and Cintra, filed for Chapter 11 bankruptcy on Sept. 21.
The company leased the road from the state in 2006 for 75 years. It gave Indiana an upfront payment of $3.8 billion, marking the largest privatization of a public asset to date.
Toll revenue has fallen short of what the company projected when it took over the lease. ITR also has $2.15 billion liability from interest-rate swaps hedging some of its variable-rate debt.
Indiana officials have repeatedly said any new owner will be required to stick to the terms of the 2006 lease, including caps on future toll rate increases.
The head of the Indiana Finance Authority last week sent a letter to state legislators reiterating that the state has no interest in taking over the asset and that the road did not generate enough tolls to cover maintenance when the state ran it.
"In 2005, the year before the road was leased, the state of Indiana did not collect sufficient tolls to support basic road treatments, or repair the deteriorating conditions of the highway and bridges," York wrote.
York was reportedly responding to a request from U.S. Sen. Joe Donnelly, D-Ind., that the IFA should take the road back or push for improvements in long-standing problems at toll plazas and bridges while ITR is in federal court.