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SH 130 Concession Company, LLC, the private entity that operates and maintains the southern sections of the State Highway 130 toll road, has filed for Chapter 11 protection in the Western District of Texas.

SH 130 Concession Company filed for Chapter 11 protection in order to address its outstanding debt obligations and will continue discussions with its lenders to improve the capital structure of the project for the long term. The company said it hopes to be able to announce a resolution in the coming months.

SH 130 Concession Company will continue to operate and serve its customers on an uninterrupted basis as it moves forward with this process.

Alfonso Orol,  CEO of SH 130 Concession Co., said:

“The filing will have no financial impact on the state of Texas. It’s business as usual for our customers, employees, vendors, and surrounding communities during these proceedings.”

The Texas Department of Transportation contributed no money to build the project and is not liable for any of SH 130 Concession Company’s outstanding debt, money that was used to finance construction. The state owns the 41-mile southern section of the SH 130 facility and leases the right to operate and maintain it through its Facility Concession Agreement with SH 130 Concession Co.

This agreement remains in place and will continue to protect the public interest during these proceedings.

Orol said that traffic on SH 130 has increased every year since the facility opened in 2012, including a 15 percent year-over-year increase in 2015. However, traffic has not met original expectations due to the lingering effects of the recession, which reduced traffic volumes regionally during the project’s early years and delayed development along the largely rural SH 130 corridor. He added: 

“We believe that this trend will continue and that the road will become an increasingly popular alternative to I-35 and a valuable asset for the Central Texas region in the years to come as connectivity improves and the area’s economy and population continues to grow.

But the challenges that the project has experienced during its early years have made the current debt payment schedule unsustainable.”

SH 130 Concession Co.’s legal advisors for the Chapter 11 proceedings are Gibson, Dunn & Crutcher LLP and Jackson Walker L.L.P. AlixPartners serves as financial advisor to the company.

SH 130 Concession Company, LLC is a limited liability company owned by Cintra (65%) and Zachry (35%).

Cintra and Zachry have a concession granted by the Texas Department of Transportation (TxDOT) for the southern-most tolled sections of SH 130, comprising 41 miles of a 90 mile bypass around the city of Austin, TX.

The investment will be financed by:

• A 30-year 685.8 million dollar bank loan provided by a consortium of five European banks, led by Banco Santander of Spain. Other lenders included Banco Espirito Santo and Caixa-Banco de Investimento of Portugal, Caja Madrid (Bankia) of Spain, and Belgium-based Fortis Bank.
• A loan granted by the US Department of Transportation under the TIFIA program. The loan amounts to 430 million dollars, plus 45.5 million dollars in capitalised interest during the construction phase. The duration of this loan is 35 years.
• Shareholders contributed equity in proportion to their stake in the consortium: a total of 197 million dollars. 

The concession has a term of 50 years and there is 20-year concession tail after the current senior debt amortizes and the repayment terms of the subordinate TIFIA loan. This could be very positive for a potential refinancing of the project debt by extending the term of the senior bank facility.