Thursday, May 31, 2007

Portuguese highway operator beats the usual suspects in bid for Denver area toll road

Brisa, CCR Win Colorado Road, to Invest $543 Million


By Anabela Reis and Jim Silver
Copyright 2007

Brisa-Auto Estradas de Portugal SA and Companhia de Concessoes Rodoviarias won a contract to run an 11- mile (18-kilometer) stretch of highway in Colorado, marking the toll-road companies' entry in the U.S.

The partnership led by Brisa, Portugal's largest highway operator, will invest about $543 million in the Denver-area Northwest Parkway. Brisa will invite "financial'' and "construction'' partners, reducing its stake in the project to as little as 50 percent from 90 percent, Chief Financial Officer Joao Azevedo Coutinho said in an interview today.

Brisa, based in the Lisbon suburb of Sao Domingos de Rana, is pursuing expansion in Brazil and in faster-growing U.S. states such as Colorado to compensate for slower growth in its home market. The company bought a stake in 2001 in Companhia de Concessoes, or CCR, Brazil's biggest toll-road operator, whose sales rose six times faster than Brisa's last year.

"This shows Brisa's ability to win contracts abroad and increases expectations it will be able to win other concessions,'' said Bruno Almeida da Silva, an analyst at Banco BPI. Brisa is seeking other contracts in the U.S., Latin America and Poland, he said.

Shares of Brisa rose 18 cents, or 1.8 percent, to 9.89 cents in Lisbon today, giving the company a market value of 5.9 billion euros.

Contract Terms

The 99-year Northwest Parkway concession includes about 8.7 miles of highway already in operation, with another 2.5 miles to be constructed by 2020. The contract sets minimum toll increases of at least 2 percent a year, with the maximum tied to economic growth and inflation rates.

Winning the project opens the way for Brisa and partners to bid on other stretches of highway around Denver, and will help the company's chances in other U.S. states it's looking at, including Texas and Florida, Azevedo Coutinho said. "We're starting to be on the radar,'' he added.

Brisa hasn't decided on future bids in the Denver area, though "it's a strong possibility,'' he said. Brisa forecasts average annual traffic growth of 9.5 percent on the Northwest Parkway in the next 10 years, driven by the area's population and economic expansion, he added.

Other bidders for the contract included Madrid-based Cintra Concesiones de Infraestructuras de Transporte SA; Barcelona, Spain-based competitors Abertis Infraestructuras SA and Fomento de Construcciones & Contratas SA; Goldman Sachs Global Infrastructure Partners; the Macquarie Group, and Morgan Stanley, according to the Northwest Parkway's Web site.

CCR Partnership

Abertis is Brisa's second-biggest shareholder, with a 10.2 percent stake. Azevedo Coutinho said Brisa doesn't exclude partnerships with Abertis, though it's focused for now on expansion with Sao Paulo-based CCR, in which Brisa is one of four investors with stakes of almost 18 percent.

Cintra, controlled by Madrid-based construction company Grupo Ferrovial SA, already runs toll roads in Chicago, Indiana, and Toronto. Cintra won a contract in March to invest $5 billion over the next 50 years to construct and run a toll road linking Dallas and the nearby city of Fort Worth, an agreement challenged this month by the North Texas Tollway Authority, a regional agency that said it can spend less on building the road.

To contact the reporter on this story: Anabela Reis in Lisbon at ; Jim Silver in Lisbon at .

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