An Australian pension fund has purchased the company that operates the Indiana Toll Road for $5.72 billion. The deal is subject to government approvals, but the purchaser, IFM Investors, says that if it goes through the company would assume control of the toll road and toll collection for the remaining 66 years of the now infamous lease.
According to company information, Australia-based IFM Investors is owned by 30 major pension funds. Part of their portfolio includes infrastructure investment.
The company that had been running the Indiana Toll Road since paying $3.85 billion for a long-term lease in 2006 – the Indiana Toll Road Concession Co. – declared Chapter 11 bankruptcy in September 2014.
A bankruptcy court in Chicago has allowed the ITRCC to sell to the highest bidder to help pay down approximately $6 billion in company debts.
IFM Investors stated in a press release that a special committee set up to oversee the bidding and sale of the ITRCC has approved the sale. However, the Indiana Finance Authority, which is in place to oversee toll road operations in general, has yet to sign off on the deal.
“We believe this is a unique opportunity to invest in a high quality United States transportation infrastructure asset,” Julio Garcia, head of North American infrastructure for IFM Investors, stated in the release.
“IFM Investors views the Indiana Toll Road as an essential operating asset for its strategic geographical position, long concession duration and inflation and GDP-linked tolling regime,” Garcia stated. “ITR is 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.”
Tolls on the 157-mile Indiana Toll Road have increased each year since former Gov. Mitch Daniels signed the 75-year lease agreement in the summer of 2006.
Truck tolls that were $14 prior to the lease were allowed to more than double to $32 during the first five years of the agreement. Subsequent toll increases are tied to the rate of inflation each year for the entire duration of the lease, according to the original agreement. The current rate for a five-axle truck is $38.70, an increase of 176 percent from the pre-lease rate.
It is not clear at this time whether IFM Investors would assume the identical terms to the original lease, or if the toll rates or terms will change.
OOIDA fought against the original lease, which contained a controversial “non-compete” clause that prevents the state of Indiana from significantly improving nearby toll-free routes that compete for toll road traffic. OOIDA helped back a constitutional challenge of the lease in 2006, but the Indiana Supreme Court struck down the challenge.
See related stories:
Bankrupt Indiana Toll Road cleared to be re-leased
Indiana Toll Road failing despite 176 percent toll increase for trucks
Indiana Toll Road lease: Five years later
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