USA and Canada
Cintra focused its efforts on large projects, both new construction («greenfield ») in Texas, Florida, Virginia and British Columbia, and privatizations of existing roads («brownfield») in Pennsylvania and Florida. The growing lack of liquidity in the financial markets has led to difficulties in closing some of these projects, which caused the cancellation of, for example, the mega-privatization of the Pennsylvania Turnpike.
Cintra presented four proposals for greenfield projects in Texas, of which one was in January 2009, another for a greenfield project in Vancouver and two proposals for brownfield projects in Pennsylvania and Chicago. Of the seven, three are still pending or have been cancelled and of the remaining four, Cintra was awarded both the North Tarrant Express and the IH-635 Managed Lanes, both in Texas.
Both highways are managed under a new system known as Managed Lanes, which applies a dynamic toll system combining free lanes and toll lanes with prices varying according to traffic levels on non-toll lanes and the time of day.
Europe
Not forgetting Italy and Portugal, Cintra has focused its efforts on two competitive bids for toll roads in Poland. In January 2009, the company signed the larger of the two projects (A1 Stryków I-Pyrzowice), which provides an initial 12-month period to evaluate the modifications needed to absorb the impact of the economic crisis.
Other markets
In 2008 Cintra decided to perform an analysis of business opportunities in India, Brazil and Mexico. As a result of this analysis, it was decided that the projects do not at this time present an acceptable level of confidence, so no tenders were offered.
Outlook for 2009
2009 has begun with a reasonable number of opportunities in the North American market, fewer contracts in Europe and new opportunities in other markets. The current financial and economic crisis is making it difficult to achieve financing for major projects, but it is also reinforcing the fundamental reasons that create business opportunities, namely: high public debt, the need to promote new infrastructure and increasing traffic congestion on highway networks. Additionally, the restrictions on the availability of private financing of infrastructure have increased the level of competition among government and projects looking for funding. This is requiring them to become more flexible, thereby improving contract terms and increasing the expected yields on new tenders.
Management of the project portfolio
The most notable actions in 2008 include the transfer at the beginning of the year, more than three months ahead of schedule, of the operation of a section of the Ionian Roads by the Greek government, allowing the concession company to begin to collect the tolls earlier than expected.
In the US, the Indiana Toll Road launched its electronic toll system on a section of the concession operated under a closed toll system, thus completing the implementation of electronic tolls along the entire highway. This also marked the beginning of a period of subsidies, during which the Indiana Finance Authority (IFA) will subsidize the increase in toll rates for class II vehicles (dual axle light vehicles) using a transponder. The subsidies will run until 20 June 2016.
The Vila do Mouros connection was inaugurated in April. This section runs 5 km between Viana do Castelo and Vila Nova de Cerveira and marks the conclusion of the refurbishment of the Norte Litoral toll roads on the Portuguese coast.
Project financing
Cintra has been able to obtain approximately 2.4 billion euro in project financing. Among the financial operations carried out in 2008, the highlights are:
- 407-ETR: In January all of the debt maturing within the year was refinanced through two separate issues for a total 550 million canadian dollars.
- Ionian Roads: In February the company closed a syndicated loan for 400.9 million euro of senior debt for the Ionian Roads, in which Cintra holds a 33.34% stake. The syndication was 1.64 times oversubscribed.
- SH 130: In March, the company closed deals for 1.358 billion USD in financing for the construction and operation of segments 5 and 6 of Texas SH 130 through a 430 million USD loan (with 45.5 million USD in capitalized interest during the construction phase) granted by the US Department of Transportation, a 685.8 million USD bank loan and a 197 million USD capital contribution from the consortium partners based on the equity stake held by each.
- Autema: Cintra closed the refinancing of the existing short-term debt in Autema, substituting it for a longterm loan for 292 million euro. Additionally, Cintra financially structured its interest in Autema, allowing for an extraordinary distribution of 316 million euro.
