WASHINGTON — Australian infrastructure giant Transurban will concede the 8.8-mile Pocahontas Parkway toll road near Richmond, Va. to its lenders, a year after admitting the road was failing to live up to its revenue projections.
Transurban’s board approved earlier this month the transfer of the underperforming road, to which the company acquired sole rights to operate for 99 years in 2006 after it defeased the nearly $400 million bond debt created to finance the road’s construction and acquired a $150 million Transportation Infrastructure Finance and Innovation Act loan from the U.S. Department of Transportation.
Last year the company wrote down the road’s value because its traffic figures were below expectations, but continued to sound an optimistic note.
Fitch Ratings last June issued an analysis that concluded that the reduced forecasts will likely impair the ability of the road to service its bank and TIFIA loans, and the Pocahontas Parkway’s lackluster performance was a factor in Transurban’s more than $58 million reported drop in fiscal year 2012 profit from fiscal 2011.
The Virginia Department of Transportation will still have to approve the transfer to a new operator, a Transurban spokesman said, and the road will continue to operate under the same terms, as the new private party will simply supplant Transurban in partnership with the commonwealth. The process could take several months and will not affect Virginia motorists in any way, Transurban said.
The parkway is already carried at no value on the Transurban Group balance sheet.
The company retains major public-partnerships in Virginia, including the Interstate 95 express lanes in Northern Virginia and the Interstate 495 Express lanes project just outside Washington, D.C.
