Cintra Infraestructuras, S.A., a Ferrovial subsidiary, has reached an agreement to sell 10% of 407 Express Toll Route (ETR) in Toronto (Canada) to Canada Pension Plan Investment Board (CPPIB) for 894,3 million Canadian dollars (640 million euro). To date, Cintra owned 53.23% of 407 ETR; the other partners are Intoll Group (30%) and SNC-Lavalin Inc (16.77%). The operation will be carried out via the transfer of a Canadian subsidiary company which holds 10% of the concessionary company.
The transaction will generate consolidated net capital gains of 2,470 million euro for Ferrovial, which correspond to the sale of 10% as well as the revaluation of the 43.23% that Ferrovial still holds in the company.
The deal is expected to be completed within approximately two months. The sale is subject to a right-of-first-refusal in favour of the shareholders of 407 ETR.
“The sale is part of our asset rotation and revaluation policy and is in response to interest expressed by a number of investors in what is one of the world’s leading infrastructure assets. Our new partner has extensive experience in long-term assets and solid financial capabilities. We plan to use the proceeds from the deal in new projects and to pay down corporate debt,” said Íñigo Meirás, CEO of Ferrovial.
407 ETR is an attractive infrastructure asset and is a strategic fit with CPPIBs portfolio and long-term investment mandate, said André Bourbonnais, Senior Vice-President, Private Investments, CPPIB. The essential toll road is also well situated to benefit from future urban growth in Toronto.
The toll road’s revenues in the first six months of 2010 amounted to 293.2 million Canadian dollar (214 million euro) an increase of 12% with respect to the same period of 2009, and an ebitda of 239 million Canadian dollar (175 million euro).
During the first half of the year, traffic on 407 ETR (measured in vehicle kilometers travelled, VKT) increased by 6% with respect to the same period of 2009. During the period, the road proved to be one of the soundest assets in the world: on 30 June, it set a new record when it was used by 454,275 vehicles (the previous record dates from 5 October 2007).
108 kilometers long with 198 on- and off-ramps
407 Express Toll Route is a bypass around the city of Toronto, Canada; it is 108 kilometers long and has 198 on- and off-ramps. It runs parallel to Toronto’s first beltway, the 401, one of the most congested roads in North America.
The first sections of the road were opened to traffic in 1997 but it was not until 1999 that the consortium headed by Ferrovial obtained a 99-year concession for the asset.
Users of the road benefit from the most advanced tolling system in the world, which does not require vehicles to stop: arches over the on- and off-ramps detect users with transponders and also read vehicle license plates; the system then calculates mileage and handles billing. The system sends over 1.5 million bills per month to users at their home addresses.
The CO2 footprint of 407 ETR users is 50% lower than on other highways in the region since fuel consumption is reduced by 3 liters and drivers save 33 minutes on a 40-kilometer trip. The collision rate is 50% less than on other Ontario highways.
Divestments and financing in 2010
In 2010, Ferrovial has sold 60% of Cintra Chile, 50% of Autopista Trados 45 toll road in Spain and its stakes in UK companies Tube Lines and APP. Additionally, last Thursday, BAA announced the sale of its stake in Naples Airport to an Italian investment fund.
Funding operations in 2010 include raising 2.8 billion dollars (2.260 billion euro) to finance the LBJ toll road, and 2 billion euro (1.36 billion euro) to finance the North Tarrant Express Managed Lanes project, both in Texas. It also inaugurated the M3 toll road in Ireland.
Canada Pension Plan Investment Board
The Canada Pension Plan Investment Board (CPPIB) is a professional investment management organization that invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 17 million Canadian contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, the CPPIB invests in public equities, private equities, real estate, inflation-linked bonds, infrastructure and fixed income instruments. Headquartered in Toronto, with offices in London and Hong Kong, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At June 30, 2010, the CPP Fund totaled C$129.7 billion, of which C$23.1 billion was invested in private investments. For more information about the CPPIB, please visit www.cppib.ca.
