An Australian company has reached a $5.73 billion agreement to buy the bankrupt business that holds the lease to the Indiana Toll Road.
IFM Investors purchased ITR Concession Co., which holds the lease on the 157-mile highway across northern Indiana for another 66 years. ITR Concession ITR declared bankruptcy last year on more than $6 billion in debt last September, and a federal bankruptcy judge in Chicago approved a plan to put the lease out to bid.
The Indiana Finance Authority, which oversees the highway lease, said in a news release it has reviewed the bid.
"We have said since the bankruptcy was announced that any successor of the toll-road operation must also adhere strictly to the performance standards established in the original lease agreement that ITRCC entered into in 2006. Based on the information provided, and the opinions of experts engaged to assist in reviewing bids and interviewing proposers, we are satisfied that the selected bidder can meet the responsibilities of the lease agreement," said Dan Huge, interim director of the authority.
ITR's parent company, the Spanish-Australian consortium Cintra-Macquarie, paid Indiana $3.8 billion in 2006 for a 75-year lease of the highway. The lease agreement struck in 2006 gives the toll road operator the right to keep the toll revenue it collects and put limits on the toll increases it could impose. It also put limits on how long the operator could take to do everything from fixing a pothole to removing road kill to setting standards for plowing snow.
But ITR's toll revenue didn't meet expectations because traffic fell because of the recession, according to court documents. The company last June missed a debt interest payment.
Julio Garcia, IFM Investors' head of infrastructure for North America, called the lease for the highway that run from the Chicago Skyway to the Ohio Turnpike "strategically important to the North American transportation network."
"We are committed to maintaining the asset to a high standard that provides maximum availability and usability for customers," he said in a statement.
After ITR declared bankruptcy last fall, some critics of privatizing the road said the state should take the road back before conditions deteriorate further. Sen. Joe Donnelly, D-Ind., said he had heard from people that complained of long waits at toll plazas, bridges that haven't been repaired in more than a year and rest stops that reek of urine.
Documents filed in U.S. Bankruptcy Court in Chicago say the transaction must be completed by Sept. 1. They say if the deal is called off by ITR, it would owe IFM Investors $343.5 million.
A release by IFM Investors said it is owned by 30 Australian pension funds and manages $43 billion.