PR Newswire: news distribution, targeting and monitoring

PROVINCE SELLS HIGHWAY 407 FOR 3.1 BILLION US DOLLARS

Share with Twitter Share with LinkedIn

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



Journalists and Bloggers

Visit PR Newswire for Journalists for releases, photos and customised feeds just for Media.

View and download archived video content distributed by MultiVu on The Digital Center.

Share with Twitter Share with LinkedIn
 

Get content for your website

Enhance your website's or blog's content with PR Newswire's customised real-time news feeds.
Start today.

 

 
 

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

 

 
Regulatory News Search
Search
  
  1. Products & Services
  2. Knowledge Centre
  3. Browse News Releases
  4. Meet the Media
  5. Contact PR Newswire