Houston Chronicle 6/19/14 By Dug Begley

Developers of a tollway between Interstate 10 and south Austin are teetering on default with looming June 30 payments, and are working with creditors to restructure their debt, according to a financial outlook released Thursday.
Moody’s Investors Service said the SH 130 Concession Company has depleted all but $3.3 million of its reserves and doesn’t have the cash to make end-of-the-month payments to its creditors. As of December, the tollway operator — a partnership between Spanish-based Cintra and San Antonio-based Zachry American Infrastructure — owed $685.7 million to 10 banks, and $504 million to a federal loan program. The federal repayment is unaffected now, according to a Moody’s report, but executives of the banks and the tollway company are working to restructure their agreement.
A default could descend into a disastrous scenario for the operator, its creditors and the state. If the creditors sweep in and demand full payment, Texas Department of Transportation officials could dissolve their controversial concession agreement with Cintra and Zachry for the 41-mile toll portion, about half of the entire Texas 130 tollway. A termination of the deal would make it harder for creditors to get their money back, Moody’s concluded.
“Lenders are likely to exercise their rights to remediate the default to prevent a concession termination,” analysts said in the financial outlook.
Since opening in 2012, the section covered by the concession agreement from Mustang Ridge, south of Austin, to Seguin, has fallen far short of raising the toll revenue predicted. Even with changes in the policies and discounts offered to entice truckers, revenue in fiscal 2013 revenue was 60 percent below original forecasts, Moody’s analysts said. Fiscal 2014 collections are expected to be 70 percent below initial estimates.
The risk of default comes amid lingering questions about TxDOT’s funding, its overall ability to maintain and expand roads in growing areas of Texas, and its increasing reliance on tolling. Though most Houston-area tollways are maintained by county officials, TxDOT’s role in regional tolling is increasing. Harris County officials recently approved a plan to cede toll lanes along I-10 between Houston and Katy and future lanes along U.S. 290 to TxDOT. State transportation officials also are leading development of the Grand Parkway, a 180-mile third roadway ring around Houston.
Texas Transportation Commission members are scheduled to meet in Pasadena June 26, and one item on their agenda is soliciting interested builders to develop, build and maintain the next 37.4 mile Grand Parkway segment from U.S. 59 north of Houston to I-10 east of the city. The project, expected to begin construction in 2016, is expected to cost $1.2 billion.

Read More