BRADENTON, Fla. - The nonprofit operator of a financially troubled toll road in South Carolina is moving ahead with a traffic and revenue study it hopes will help it restructure its debt or find a private partner as it struggles with a technical default it had hoped to prevent.

The Connector 2000 Association Inc. last week asked six firms for qualifications to do the study to determine if it can achieve an investment-grade rating for restructured debt. The firms are AECOM Technology Corp., Booz Allen Hamilton Inc., Halcrow, IMTech, Stantec Inc., and Steer Davies Gleave. Responses are due May 21 and the association expects to select one firm by June 5.

"The Connector 2000 Association, its consultants, and the South Carolina Department of Transportation will use the information put forth in the study in connection with the possible restructuring of its bond indebtedness and/or the possible transfer of a concession by the association for the operation of the Southern Connector," Peter Femia, executive vice president and general manager of the Connector 2000 Association, said in a statement.

Last fall, the association sought qualifications from firms interested in entering a concession agreement in hopes that a private contractor could operate the toll road. The move came because revenues from the 16-mile Southern Connector, which joins Interstates 85 and 385 in Greenville, are not sufficient to pay debt service.

That solicitation was premature and was placed on hold pending hiring of a financial consultant and a new traffic and revenue study, association spokesman Tim Brett said yesterday.

"There were several components required before we did that [search for a concessionaire]," Brett said. "One was to have a financial consultant on board and secondly we're going to be required to have an investment-grade study."

In February, the association hired Goldman, Sachs & Co. to be its special financial consultant to explore strategic alternatives related to its capital structure.

To build the four-lane toll road, which included four interchanges and 23 bridges, the association sold $200 million of toll road revenue bonds. The 1998A-C bonds were structured as $66.2 million of senior current interest bonds, $87.4 million of senior capital appreciation bonds, and $46.6 million of unrated subordinate capital appreciation bonds. Revenues have never met projections.

Standard & Poor's initially rated the Series A and B bonds BBB-minus. By last August, it had downgraded them to CCC. The agency expects to issue a formal report on the credit later this summer, said analyst Laura Macdonald.

On Jan. 23, U.S. Bank NA as trustee notified the association that it was in default of the revenue covenant on the 1998 senior bonds for failing to meet the required debt service coverage ratio of 1.25% for 36 straight months.

"In the fiscal years of 2005 and 2006, the failure of the association to have met the revenue covenant did not in itself create an event of default," the default notice said. "After 36 consecutive months of not meeting the revenue covenant, however, the association's ongoing failure to comply with the revenue covenant constitutes an event of default under the indenture.

"The indenture provides that upon the occurrence of an event of default, the trustee has various rights that it can take on behalf of the holders of the 1998 senior bonds," the notice said. It also said the subordinate bond trustee, which was not named, would be notified about the default and that actions on behalf of the bondholders were being assessed.

The Connector 2000 Association, a nonprofit public benefit corporation, has a 50-year license with the South Carolina DOT to develop and operate the Southern Connector, which is designated as Interstate 185.


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