Moodys: SH 130 Toll Road in 'Technical Default'
By Jim Forsyth
WOAI News Radio
Friday, July 11, 2014
Moody's Investment Service today declared the southern half of the State Highway 130 toll road to be in 'technical default,' saying it rescheduled rather than made a June 30 payment on it's $1.1 billion debt, Newsradio 1200 WOAI reports.
"By executing a waiver agreement, we understand that the project is not in legal default," according to a Moody's investor note. "However, Moody's view is that the failure to meet the full payment that was originally scheduled for June 30, 2014 constitutes a default under Moody's definition."
Since the road, which is the only highway in America where a motorist can legally drive 85mph, is not in legal default, the project will continue said a spokeswoman for the State Highway 130 Concessions Company, which operates the southern half of the highway, pointed out the difference.
"The SH 130 is not in default," spokeswoman Megan Compton said. "It has reached an agreement with lenders that modifies the payment date such that no failure to pay occurred. A portion of the payment was made recently and the remainder is due in the future. As a result of the modification, as a matter of fact and as a matter of law, there is no default."
But Terri Hall, a long time anti toll activist and the founder of Texans Uniting for Reform and Freedom says the bottom line is, the public private partnership toll concept does not work.
"There are never going to be enough people in this state that have the kind of money to plunk down $7, $10, $12 a day in tolls to get around," Hall said.
Hall said the financial troubles facing the SH 130 project will make it a lot less likely that private companies will step forward and agree to finance proposed toll lanes on Loop 1604, Interstate 10, US 281 and elsewhere. She says TxDot and the state bent over backwards to give the SH 130 project every advantage, from the super high speed limit to promoting the highway throughout Austin and San Antonio, and even with those advantages, the project is struggling.
"There is no way that these roads are ever going to cash flow, and make the kind of money that is going to make any private developer want to take a look at it," she said.
She says the proposed toll roads in Bexar County will not have the advantages that SH 130 had, and that will make it even more unlikely that a builder will step up to build the roads.
Compton said Moody's made very clear that the project is not in legal default. She said the lenders do not consider the project to be in default, and that is what matters the most.
"The company continues to provide an excellent service to central Texas drivers and to fulfill all its contractual obligations," Compton said.
Link to article here.
High-Speed Texas Toll Road Considered in Default by Moody’s
By Michelle Fuetsch
July 11, 2014
Moody’s Investors Service has announced it considers the Texas toll road that has the highest speed limit in the country in default for failing to make its full June debt payment.
The state Highway 130 toll road concession group reached an agreement with its lenders June 26 for an undisclosed partial payment and moved the June 30 payment date to Dec. 15, Moody’s said in a July 8 investor advisory.
“By executing the waiver agreement, we understand that the project is not in legal default,” Moody’s said. “However, Moody’s view is that the failure to meet the full payment that was originally scheduled for June 30, 2014, constitutes a ‘default’ under Moody’s definition,” the investors service said.
The SH 130 Concession Co. said the project, which hoped to boost traffic volumes with an 85-mph speed limit, is not in default.
“It has reached an agreement with lenders that modifies the payment date such that no failure to pay occurred,” group spokeswoman Megan Compton said.
“A portion of the payment was made recently, and the remainder is due in the future,” she said. “As a result of the modification, as a matter of fact and as a matter of law, there is no default.”
The privately developed and operated road that runs south from Austin to the town of Sequin located east of San Antonio has struggled financially since its 2012 opening.
The road is owned by the state but was built and is operated by the SH 130 Concession Co. owned by Cintra Tx 56 and Zachry Toll Road 56.
The Texas Department of Transportation “increased the speed limit to 85 mph with the intention to pull fast-moving trucks off more local routes and Interstate 35,” Moody’s said in its advisory.
Truckers have said, however, there’s little advantage in using the 41-mile toll road because most trucks are governed around 65 mph, and the road stops short of where I-35 reaches the Mexican border.
“TxDOT is aware of the project’s debt-restructuring plans and currently has no rights to terminate the concession agreement,” the investor advisory said. “Moody’s believes this is a credit positive for the project given TxDOT could terminate the concession under certain conditions, like a project bankruptcy,” Moody’s said.
TxDOT declined to answer questions about the Moody’s advisory and said “no taxpayer dollars” were used to build the road.
However, federal taxpayers did help finance the project with a $430 million loan to the concession company.
The Federal Highway Administration said in a statement to Transport Topics after the Moody’s advisory was issued:
“The department is working with the project sponsor and other stakeholders to assess potential next steps.”
FHWA also said the first payment on the concession’s loan is not due until 2017.