NW Parkway financial close pushed off to Nov 19-21 in Denver

Steve Hogan exec director of the Northwest Parkway says they are shooting for a financial close with Brisa on their toll concession Nov 19, 20 or 21. He says the delays have been partly from Brisa, the signed-up concessionaire, and partly the mechanics of the defeasance process - lining up the details of how to pay off the existing debt.

When the 99 year concession was signed August 29 a press release said the financial close was expected "within 30 days." That came up Sept 28.

We've heard speculation that Brisa was backing out of the deal or was unable to raise the capital needed for the $603m deal, possibly because of turbulence in the capital markets and the difficulties of Citi, Merrill and other big financial groups. Who knows? Time will tell. For now apparently both sides are working to fulfill their commitments and complete the transaction as contracted.

Brisa has had people offering tranches of shares in the project to investors. According to one they offered an analysis which produced a prospective 9% internal rate of return on equity which he said was unrealistically low, given the risk.

Offering shares to select groups is not unusual in these situations, although it could be interpreted as a negative for close.

Brisa is the largest toll operator in Portugal and is teamed with an associate CCR of Brazil. Brisa is a publicly traded company formed out of a state owned toll operator when the dictatorship there was overthrown about 30 years ago and free enterprise given greater rein.

The Northwest Parkway was financed as a joint venture of three local governments but shortfalls in traffic have made the financial prospects of the public toll authority (which cannot issue equity) poor.  Toll revenues are expected to be $7.6m this year, the fourth year of operations. Growth has been strong on the 15km (9 mile) road but it started in 2004 from a base of less than half forecast.  The Brisa offer is clearly oriented to taking a decade or more of losses with faith that there will be profits in the out years.

see http://www.northwestparkway.org for details of the concession announcement

TOLLROADSnews 2007-11-07