Another step on the road to bankruptcy.
SH 130 Concession Co. filed a bankruptcy reorganization plan Friday that proposes transferring company ownership to its largest lenders, which include the Federal Highway Administration and a group of European banks. The company owes more than $1.6 billion. It is owned by Spanish road developer Cintra, the majority stakeholder, and San Antonio-based Zachry American Infrastructure.
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The company paid TxDOT $125 million upfront for the rights to operate the road, which was built to bypass Interstate 35 traffic between San Antonio and Austin and then became state property. It also agreed to share some of its toll revenue with the state as part of the lease agreement.
Texas 130’s southern section, which connects to a state-operated section that ends in Georgetown, opened in 2012 and became known for its 85-mph speed limit, the highest in the country. But it immediately missed the company’s traffic projections, and Moody’s Investors Service assigned its debt a junk-bond rating three years ago as a result.
The company issued a substantial amount of debt to finance the $1.3 billion project. It owes about $551 million on a Transportation Infrastructure Finance and Innovation loan from the Federal Highway Administration, and about $721 million on its bank loans, according to court filings.
A FHWA spokeswoman was not available for comment Friday afternoon.
The reorganization plan proposes that SH 130 Concession Co., under its lenders’ ownership, would continue to operate and maintain the road. The plan has yet to be approved by the court.
“It’s important to understand that we don’t expect any sudden changes,” Guy Russell, SH 130’s chief operating officer, said in an email. “The plan calls for a smooth transition period of up to 18 months during which SH 130 Concession Company will continue to operate the facility per usual.”
See here, here, and here for the background. Cintra and Zachry will take a bath if this goes forward, which is fine by me. I’m less fine with the Federal Highway Administration getting stiffed, though it’s not clear from this story if that may happen. I’m not sure there’s any lesson to be learned here beyond the obvious one of not building roads where there are no people, but I hope we at least grasp that one.