CHICAGO — Indiana officials say they are watching closely as the private firm that operates the Indiana Toll Road under a historic $3.8 billion 75-year agreement reportedly teeters on the edge of bankruptcy that may lead to a sale of the lease.
The Indiana Finance Agency, the state's borrowing arm, has asked the private firm that operates the Indiana Toll Road to prove that it will be able to make debt payments after the company defaulted on a June payment.
The state agency sent a letter last week to ITR Concession Co., a European-based consortium that includes Macquarie Group Ltd., asking for the information.
The state gave the company 90 days to prove it can meet its obligations to lenders under the lease agreement, according to a report in the Indianapolis Business Journal. If it doesn't, the IFA would tell the company it's in default and give it 60 days to submit a plan to resolve the problem.
ITR is reportedly considering filing for bankruptcy and selling off the 75-year toll road lease, which was signed in 2006. It's in the midst of negotiations with its lenders to restructure $6 billion of debt.
The company missed its June debt payment, according to the report. Part of the problem is lower-than-expected toll revenue on the 156-mile toll road.
The IFA would have to sign off on any new operator taking over the lease.
State Sen. Luke Kenley, R-Noblesville, who is chairman of the Senate Appropriations Committee, said the state is protected even if the company goes bankrupt and sells the lease, according to another local report.
"While I'm sorry that they're not having a good performance themselves, I think for the state of Indiana and for the consumers of Indiana we're fully protected in that situation," Kenley told the Northwest Indiana Times. He said any new operator with have to comply with the terms of the 2006 lease, including toll rates. The lease allows the state to reclaim the road without repaying any of the money if the operator fails to meet certain conditions, according to Kenley.
The 2006, $3.8 billion toll road lease marked the largest long-term asset lease at the time. The state used the proceeds to finance a 10-year transportation construction plan. It has now spent or earmarked all of the proceeds.
