This paper is an analysis of the financial outcome of two BOOT (build-own-operate-transfer) toll roads, the M2 Motorway and Transurban City Link. Analysis of the M2 Motorway has been assisted by access to a financial model, hitherto confidential, from which essential information can be derived about equity returns and debt amortization. Evidence is presented that calls into question the integrity of the model and it is concluded from present value analysis that the claimed equity dividends cannot be paid nor can the debt be amortized. Various financial stratagems are being used to maintain solvency and support the share prices. The toll revenue is being augmented with interest income derived from the Infrastructure Borrowings Tax Offset Scheme (IBTOS) which will be described in detail. Long-term borrowings have increased for both projects and losses have been concealed through a trust/company arrangement. These then are the factors which drive the share price and not the traffic counts and tolls alone. (a) For the covering entry of this conference, please see ITRD abstract no. E213716.
Samenvatting