DALLAS – The private operator of a $1.35 billion section of the State Highway 130 tollway east of Austin, Texas, declared Chapter 11 bankruptcy after months of negotiations with creditors.
The operator, a subsidiary of international toll road developer Cintra and San Antonio-based Zachary Construction, said it will "continue discussions with its lenders to improve the capital structure of the project for the long term" after Wednesday's filing.
"The filing will have no financial impact on the state of Texas," said Alfonso Orol, chief executive of SH 130 Concession Co. "It's business as usual for our customers, employees, vendors, and surrounding communities during these proceedings."
The SH 130 filing comes 16 months after the operators of the $3.8 billion Indiana Toll Road declared bankruptcy. Cintra was a part-owner of that tollway, as well.
The North Carolina Department of Transportation said it is reassessing its contract with Cintra to build toll lanes along Interstate 77 after the SH 130 bankruptcy filing.
"The governor has directed us to immediately review every available option – both legal and financial - to reassess the I-77 Mobility Partner's business model and current contract," a statement from the NCDOT said.
Cintra and its partners are also bidding for a $1.8 billion redevelopment of a 12-mile section of Interstate 70 in Denver.
While the state government owns the tollway, the SH 130 Concession Co. holds a 50-year lease on the 41-mile section of tollway between Austin and Seguin, Texas, to the south.
The Texas Department of Transportation contributed no money to build the project and is not liable for any of SH 130 Concession Company's outstanding debt, the company said.
The bankruptcy allows TxDOT to terminate the concession, according to Moody's Investors Service, which downgraded a $1.1 billion Transportation Infrastructure and Innovation Act loan for the project five notches to Caa3 from B1 in June 2014.
Fiscal year 2013 revenue performance on SH 130 was about 60% below original forecast and fiscal 2014 was about 70% below the original forecast, according to Moody's. The senior lenders consist of 10 banks, according to Moody's.
Five of the banks, Banco Santander, Caixabank, Bankia, Banco Espirito Santo and BNP Paribas, hold the majority of the debt and are also the swap counterparties.
TxDOT, which awarded the concession to Cintra-Zachry in 2007, operates the other 50 miles of the SH 130 toll road as the Central Texas Turnpike Authority.
To qualify for the $438 million TIFIA loan, the SH 130 Concession Co. project needed an investment grade credit rating.
In 2008, Moody's rated the concession company's senior-lien debt Baa3 while assigning a junk-bond rating of Ba1 to the subordinate TIFIA debt. The senior bank debt has a final maturity of 2038 and the TIFIA subordinate debt matures in 2047.
On April 12, 2013, Moody's downgraded the $686 million senior-lien debt to B1 and the subordinate-lien to B1, maintaining a negative outlook. Analysts said traffic and revenues were running about half of the projected rate.
On Oct. 15, 2013, Moody's dropped the senior-lien rating to Caa3 from B1, warning that the toll road was headed for default.
Since then, the concession company has been negotiating with its lenders for new debt terms.
The bankruptcy case is SH 130 Concession Co LLC, U.S. Bankruptcy Court, Western District of Texas, No. 16-10262.
After the bankruptcy filing, Moody's lowered its final rating on the TIFIA loan to Ca from Caa3 and said it would withdraw the rating with a stable outlook.
