Infrastructure developer Cintra is having more money problems with toll roads it owns in the United States. The Spanish-owned company has filed for bankruptcy in the Western District of Texas because of outstanding debt on loans for the SH 130 toll road.
SH 130 Concession Co. announced in a statement on Wednesday, March 2, that it has filed for Chapter 11 protection. It was formed by Cintra and Zachry American Infrastructure back in 2005 to manage the toll project. The company will continue to run the toll road as it attempts to reach a resolution with its lenders. Any resolution is hoped to be announced in the coming months, the company stated.
Neither the Texas Department of Transportation nor any other Texas government agency will be affected by the bankruptcy since the state did not put any money into the investment. Texas owns the 41-mile stretch of SH 130 but leases operation and maintenance rights to SH 130 Concession Co.
SH 130 Concession Co. claims that despite an increase in traffic since the facility opened in 2012, expectations were not met “due to the lingering effects of the recession.” The company believes that traffic and the population will increase, consequently increasing revenue. However, the company blames the economy during the first several years of the project for its current inability to adhere to payment schedules.
In 2008, Land Line reported that Cintra landed a $430 million Transportation Infrastructure Finance and Innovation (TIFIA) loan from the U.S. Department of Transportation. Additional funding came from senior bank loans, private equity and interest income, according to the Federal Highway Administration. In total, the project cost more than $1.3 billion.
Many Texans have been against the toll road from the start, including Terri Hall, founder of Texans Uniting for Reform and Freedom and Texans for Toll-Free Highways.
“It was an ill-conceived project from day one,” Hall told Land Line Now. “It’s too far-flung from any of the urban areas for it to really be a true alternate route, it’s so far out of the way for truckers they have to spend so much gas to get on the highway, and then it’s extremely expensive.”
Hall noted that it’s almost $30 one way for the full length of the toll road.
Signs of financial struggle for SH 130 Concession Co. date back to October 2013 when Moody’s Investor Service downgraded the company’s rating to “poor” and considered it a very high credit risk. In June 2014, Moody’s warned the company would default on its loan if lenders did not reach some sort of resolution.
Everything from decreased rates for truckers to an 85 mph speed limit has been implemented to increase revenue. Lower rates increased truck traffic, but truckers took an alternate path once the original rate returned.
Cintra also owns the Indiana Toll Road and Chicago Skyway. In September 2014, Cintra filed for Chapter 11 bankruptcy. Cintra more than doubled rates after acquiring Indiana Toll Road, leading to reduced traffic. Less than a year later, Cintra and partners put the Chicago Skyway up for the sale.
Land Line Now Staff Reporter Reed Black contributed to this story.
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