PROVINCE SELLS HIGHWAY 407 FOR 3.1 BILLION US DOLLARS
Toronto - Rob Sampson, Minister without Portfolio with Responsibility for Privatization, today announced the sale of Highway 407 for dlrs 3.1 billion, making it the largest privatization in Canadian history. Highway 407 will be sold to a consortium of Grupo Ferrovial and its subsidiary Cintra Concesiones de Infraestructuras de Transporte, SNC-Lavalin, and Capital d'Amerique CDPQ, a subsidiary of the Caisse de depot et placement du Quebec. The consortium will purchase from the province the right to own and operate Highway 407, along with the obligation to finance, design and build west and east-partial extensions to the highway.
"I am thrilled with the result. With sale proceeds of more than dlrs 3.1 billion, Ontarians will receive double their investment in Highway 407," said Sampson. "In addition, much needed extensions will be built at no additional cost to taxpayers, creating more than 6,000 new construction jobs in the province. This is a great day for all Ontarians."
"Completion of the highway is important to Ontario's continued economic growth. It will stimulate new economic activity in communities across the Greater Toronto Area and throughout the province," said Tony Clement, Transportation Minister. "The extensions will also enhance our transportation infrastructure by reducing congestion on Highways 401, 403, and the QEW."
"The members of the consortium are excited about this opportunity to invest in Ontario," said Jacques Lamarre, President and CEO of SNC-Lavalin. "Work on the extensions will begin right away at a cost of approximately dlrs 500 million. Together with an additional dlrs 400 million required for debt servicing and working capital, this brings the consortium's total investment in the province to more than dlrs 4 billion."
SNC-Lavalin Engineers and Constructors is a subsidiary of SNC-Lavalin Group. It is the largest engineering and construction company in Ontario, employing 700 people in Toronto, Ottawa, Mississauga, and Sarnia.
The province's decision to pursue the sale of the highway was announced February 20, 1998. The transaction is expected to close on May 5, 1999. The terms of the sale will also include an innovative method of regulating tolls and linking toll revenue to congestion relief. "The travelling public will be happy to know that we have struck this deal with their time and pocketbooks in mind," added Sampson.
Backgrounder ------------------------------------------------------------------------- Sale of Highway 407 April 13, 1999 Sale Price dlrs 3.107 billion Purchaser A consortium comprised of the Spanish company Grupo Ferrovial and its subsidiary Cintra Concesiones de Infraestructuras de Transporte, SNC-Lavalin, and Capital d'Amerique CDPQ, a subsidiary of the Caisse de depot et placement du Quebec. Transaction The consortium will purchase from the province the 407 ETR Concession Company, which owns and operates Highway 407. In addition, the consortium will also finance, design and build west and east-partial extensions to the highway. Land and The province will continue to own the Highway 407 Concession Lease lands. The consortium will lease the lands from the province for a period of 99 years and will own the road, buildings and other structures on the Highway 407 lands. These will become the property of the province at the end of the lease. Construction West Extension -------------- - 24 kilometres from the junction of Highway 407 Central and Highway 403 in Oakville to the junction of the QEW and Highway 403 in Burlington. - To be constructed as a six-lane highway, expandable to eight lanes. - Interchanges will be constructed at Highway 5, Appleby Line, Highway 25, Neyagawa Boulevard, and Trafalgar Road. - Work will begin immediately and the extension will be opened by July 31, 2001. East Partial Extension ---------------------- - 15 kilometres from Highway 48 to Highway 7 east of Brock Road in Pickering. - To be constructed as a four-lane highway, expandable to 10 lanes. - Interchanges will be constructed at Markham Road, Regional Road 30, Ninth Line, and Markham Bypass. - Work will begin immediately and the extension will be opened by December 31, 2001. Interchanges ------------ - There will be additional interchanges as well as improvements to some interchanges on the Central portion of Highway 407. Details to be announced at a later date. - Work will begin immediately and the interchanges will be opened by December 31, 2001. Safety The province will ensure the continued safety in the operation, construction and maintenance of Highway 407. The Ontario Provincial Police (OPP) will continue to provide traffic patrol and traffic law enforcement on Highway 407, and the Ministry of Transportation (MTO) will enforce compliance with provincial safety standards, as it does on all other provincial highways. The new owner will pay for OPP and MTO enforcement services on a cost-recovery basis. Tolls The agreement includes an innovative toll-rate mechanism aimed at relieving traffic congestion on existing major routes. The province will have the ability to claw back toll revenues if pre-set traffic levels on Highway 407 are not met. Tolls can be adjusted by two per cent per year plus inflation for the first 15 years, and thereafter, by inflation only. This would mean that tolls could increase by about three cents per kilometre over the first 15 years. Financial penalties will be imposed on the consortium if both the tolls are increased in excess of the specified limits and specified traffic levels are not met. Toll rates for trucks will continue to be two times the automobile rate for single unit trucks and three times the rate for multiple unit trucks. Employees Job offers have been made to all full-time Ontario Transportation Capital Corporation employees consistent with their respective collective agreements. Closing Date May 5, 1999. Provincial The Privatization Secretariat retained the following Advisors advisors to assist with the sale of Highway 407: - Merrill Lynch (financial advisor); - RBC Dominion Securities (financial advisor); - Goodman Phillips & Vineberg (legal advisor); - Fasken Campbell Godfrey (legal advisor); - KPMG (process advisor); - PricewaterhouseCoopers (process auditor); - Dillon Consulting (engineering consultant); - Parsons Brinckerhoff FG Inc. (engineering consultant); - Wilbur Smith Associates (traffic forecasting consultant); and - ADR Chambers Inc. (conflict of interest clearance).
SOURCE Ontario Ministry of Finance
Get content for your website
Enhance your website's or blog's content with PR Newswire's customised real-time news feeds.
Contact PR Newswire
Send us an email at MarketingUK@prnewswire.co.uk or call us at +44 (0)20 7454 5382
Become a PR Newswire client
Request more information about PR Newswire products & services or call us at +44 (0)20 7454 5382