Operator of First Texas P3 Roadway, SH 130, Files for Bankruptcy
On March 2, SH 130 Concession Co. LLC—the private entity that designed and built and now operates and maintains Segments 5 and 6 of SH 130, a 41-mile portion of the total 91-mile roadway—filed for Chapter 11 protection in the Western District of Texas.
State Highway 130, a toll road that stretches from south Austin to Seguin, was the first P3 initiative in Texas. Central Texas Highway Constructors was the contractor for Segments 5 and 6 of SH 130, a $1.3- billion project. Construction began in April 2009 and was completed in October 2012. No other construction projects were or are planned, a spokesperson confirmed. SH 130 Concession Co. was formed by Cintra and Zachry American Infrastructure.
In the meantime, all operations on SH 130 will continue as usual.
Project financing on SH 130 was arranged by the concessionaire, and the Texas Dept. of Transportation did not contribute money to the project, so the agency is not liable for the debt incurred by SH 130 Concession, which stems from financing construction.
The state owns the 41-mile southern section of SH 130 and leases the right to operate and maintain it through its Facility Concession Agreement with SH 130 Concession Co.
While traffic on SH 130 has increased annually since opening in 2012, including a 15% year-over-year increase in 2015, it has failed to meet initial projections. SH 130 Concession attributes this to lingering effects from the recession, which reduced traffic volumes regionally during the project’s early years and delayed development along the largely rural corridor.
In April 2013, Moody’s Investor Services downgraded SH 130’s concession rating to “highly speculative” and, in October 2013, to “high risk of default.”