Macquarie Bank wins Mitcham to Frankston contract

The Victorian Government has awarded the $3.8 billion Mitcham to Frankston toll road contract to the Macquarie Bank led Consortium ConnectEast.

In doing so it eliminated Transurban which had been strongly tipped to win the contract.

About $2.5 billion of the $3.8 billion will be for construction costs with the remainder of $1.5 billion allocated to financial costs. Macquarie expects to reap $80 million advisory, sponsorship and underwriting fees from the toll road contract. It includes a $1.1 billion capital raising through a float to help fund the project.

Following the Federal election, Victorian premier Steve Bracks announced the freeway would go ahead as a toll road. He said it would be completed in 2008.

That will mean tolls of $7 a trip over the road's 40km, after Bracks did an about turn early last year, on an earlier promise not to charge tolls. At that time the federal government protested by withdrawing $420 million in federal funding.

There had been considerable conjecture before the election on October 9 that Bracks would announce the successful bidder without waiting for the poll, “with an appropriate gimmick to convince voters that tolls aren't as bad as they're made out to be,” the Australian Financial Review said.

Also before the election, Leighton chief Wal King, was concerned about militant unions in Victoria, and how they would impact the road project.

However he did not believe that stoush would affect the building of the freeway. “There should be no impediment to that project starting before the end of the year,” he said.

And the consensus seems to be, that with the coalition's resounding election victory and commitment to further implementing findings of the Cole Royal Commission into the building industry, industrial relations around the country should only improve.

Shares in Leighton Holdings, which was involved in both bids for the road, and in the successful bid through subsidiaries Thiess and John Holland, rose 18c to $10.05 immediately following the contract announcement. Transurban's stock price fell 26c to $5.77.

Meanwhile the Macquarie Infrastructure Group has announced it is bidding for a $741 million toll road in Chicago in conjunction with Spanish infrastructure company Cintra in which it has a stake.

Sections

Macquarie Bank wins Mitcham to Frankston contract

Weekly Top Stories

Document Actions