Abertis-Citi likely to announce end of bid for Penn Pike early next week - Turnpike Commission wins

The Abertis-Citi current offer of $12.8 billion for a 75 year lease/concession of the Pennsylvania Turnpike expires next Tuesday Sept 30, and signs are it won't be extended. Last week a senior officer of the two companies was saying that without movement on enabling legislation this month, they were done.

"This is their opportunity," he said, "If they (Pennsylvania) don't take it (the $12.8b offer) now then it's not going to be around in a month or two, or next year."

The officer when we spoke last Tuesday, was still hopeful of a last minute move on the legislation before Sept 30. He said that holding commitments for the $12.8b ties up funds that could be used elsewhere, and is "very costly." In addition the two companies have been spending heavily on consultants  and the time of senior staff.

"At some point your people will say: 'They've had their chance (to accept the offer), we've got to move on,' " he said.

If Pennsylvania were to rebid the project next year they would not get a $12.8b bid, the officer said.

It was possible they might not get any bid at all from Abertis-Citi.

"The attitude might be: 'These people aren't serious. They aren't responsible people. They had their chance, they blew it.' "

Governor suggests another shot next year

Last Thursday Governor Ed Rendell told reporters the prospect for enabling legislation this fall session "doesn't look good."

He added: "We'll look again next year for bids."

Rendell said because of the heavy Abertis-Citi investment in the proposal "we'll let them (Abertis-Citi) have first crack at it (next year)."

He is apparently foreshadowing negotiations with Abertis-Citi to renew the offer in the new year.

It is unclear whether they'll be interested in the absence of enabling legislation passed by the legislature, and signed into law.

Now it's the amount of the bid

In recent weeks legislative leaders in Pennsylvania have focused on the amount of the bid as the main obstacle rather than the principle of privatization. They have taken to declaring that $12.8b is not sufficient.

Chair of the house transportation committee Joe Markosek is quoted in the Wall Street Journal (9/26 pC10): "The Pennsylvania Turnpike is a valuable asset and the offer is not sufficient."

In the Pittsburgh Tribune the House Majority Whip, Keith McCall is quoted as calling the Abertis-Citi offer "a fire sale."

Their basis for these claims is hard to fathom since the $12.8b emerged from an open competitive process, followed by best and final offers from the two leading bidders.

But regardless of the reasons stated for not moving legislation, if they won't move the legislation, at some point, the offer dies. We have the impression that point could be early next week.

TOLLROADSnews 2008-09-27