Milbank Completes $407 Million Acquisition Financing of Pocahontas Parkway Toll Road
Deal Underscores Milbank's Leadership In Toll Road Privatization and Public-Private Partnership Financing
LOS ANGELES, July 10, 2006 – The Transurban Group of Australia has closed on its $611 million acquisition of a 99 year toll road concession from the Virginia Department of Transportation. The international law firm Milbank, Tweed, Hadley & McCloy LLP, led by partner Allan Marks, represented the lenders in structuring, negotiating and closing the acquisition financing.
Commenting on the transaction, Mr. Marks stated, "This landmark transaction reflects the growing viability of public private partnerships as a way to help meet America's transportation needs. In particular, this financing indicates that the bank market can provide a new source of capital for toll roads and that properly structured public concessions can be privately financed on a long-term basis. This deal also demonstrates that innovative financing terms can yield a favorable return to private investors while also serving the public interest in building safe roads, increasing mobility, and helping state budgets."
In addition to Mr. Marks, the Milbank team also included tax partner Mark Regante in New York office and associates Michael Dayen, Joe Tisuthiwongse and Hayes Robbins in Los Angeles.
About the Toll Road and Acquisition Financing
The Pocahontas Toll Road is an 8.8-mile tolled highway (Route 895) seven miles south of Richmond, Virginia, and was the first project to be constructed under Virginia's Public Private Transportation Act of 1995. The four lane toll road was opened to traffic in stages beginning in 2002 and provides an important link in the regional highway network to southern Richmond.
Transurban Group of Australia, through a U.S. subsidiary, has acquired a 99-year concession to toll, operate and maintain the Pocahontas Toll Road from the Virginia Department of Transportation (VDOT) and the Pocahontas Parkway Association. The $611 million transaction was funded through a combination of debt and equity. The debt portion was financed by a thirty-year term loan in excess of $407 million, provided by a group of international banks led by DEPFA Bank plc of Ireland, Bayerische Hypo- und Vereinsbank AG of Germany, and Banco Espirito Santo, S.A. of Portugal (the "Banks"). The loan is secured by the Transurban Group’s subsidiary’s rights under the concession and its other properties. The financial structure includes an interest rate swap fixing the project's variable interest rate exposure. Transurban has committed up to $191 million in equity; $136 million at financial close and up to $55 million over the next six years.
Milbank's Global Project Finance Group is one of the largest and most experienced among the world’s major law firms. Renowned for its leadership, Milbank has pioneered some of the most innovative project financing techniques, and consistently ranks among the top law international law firms by industry trade publications. In recent years Milbank has played a leading role in the development of toll road privatizations and public-private partnerships in the U.S. and was involved in landmark toll road project financings, including the $773 million California SR-125 South toll road in 2003, the $1.8 billion Chicago Skyway privatization project in 2004, and the $1.4 billion Chicago Skyway refinancing and $533 million Dulles Greenway toll road acquisition financing in 2005.
About Milbank
Milbank, Tweed, Hadley & McCloy LLP is a preeminent global law firm that for more than 140 years has provided innovative legal solutions in many of the world's largest, most complex, "first-ever" corporate transactions and litigation. Our transactional expertise includes capital markets, corporate finance and transactions, project finance, acquisition finance, and other major fields of law practice. Milbank litigation teams resolve disputes involving mergers and acquisitions, proxy battles, financings and securities offerings, intellectual property, white collar crime, and corporate restructurings, among others. Our clients range from prominent multinational financial, industrial and commercial enterprises to governments, institutions and individuals. The Firm is headquartered in New York, with offices in Los Angeles, Washington, DC, London, Frankfurt, Munich, Tokyo, Hong Kong and Singapore.