Tuesday, July 21, 2009

Indiana Toll Road close to bankruptcy

Company that leased toll road close to bankruptcy



Richard Essex
WTHR/Eyewitness News
Copyright 2009

Indianapolis - The controversial lease of the Indiana Toll Road may soon end up in court. Macquarie Infrastructure Group, which paid the state more than $3 billion to lease the toll road for 75 years, may be close to bankruptcy and is selling off assets to stay afloat.

The details are outlined in a 112-page lease agreement, which says if the company defaults, sells or goes bankrupt, INDOT would take back control of the daily operation of the toll road.

Many Indiana Democrats opposed the deal at first.

"Now, with hindsight, the amount of the sale looks pretty good, given the way the economy has gone," said David Orentlicher, IU School of Law.

But this most recent issue is giving them further pause of the deal.

"I think that they have been operating poorly and now they are performing poorly internationally and may be sold," said House Speaker Pat Bauer (D-South Bend).

The money was paid up front, banking on three-quarters of a century of toll money to recover their investment. According the company, a reduction in tolls is taking it's toll.

"The governor's argument was, 'Why should we assume the risk of future decreasing revenues? Let this private company assume the risk'," said Orentlicher.

The lease agreement makes it very clear what happens if the company performs poorly or fails.

"The payments that have been made would not be returned. In other words, those that negotiated this lease, I think did a very good job of trying to make certain the interests of the state of Indiana were protected by this lease agreement," said Leigh Morris, deputy commissioner of toll roads.

If the management of the road comes back to Indiana, the governor could be a position to lease the road again. If the company were to fail, Eyewitness News has been told the debt would most likely be restructured in bankruptcy court and the management of the road would not come back to Indiana.

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