when is it going to turn around?, page-7

Airport link is not owned by RCY but by the already controversial Bris connections. They were two seperate private public partnerships. Bris connections were partly paid and then people refused etc etc easy to find if you look through brisconnections ASX links.

If you include early completion bonnses, accumulated interest etc it could get up there @ 3.2bn although I think its better to reflect it this way:

These are rough figures : $900m unitholders contribution.
$503m State contribution.
$1366m Finance

The state contribution gets washed then you are left with unit holders and finance at around $2.3bn.

However just to give you an example of how badly its doing:

The builders early completion bonus was $268960 per day. If you assume the average toll to be say $4.25 and 22500 use it per day than the tunnel generates $96000 odd each day and even if you took this up 35% it would be $135,000 per day but they paid the builder $268960 per day to finish early. In reality to do this and based upon a both party saving something than you would say that they must have been expecting at least 40000 vehicles a day to start or why offer such a high early completion bonus. If you say we are less than 50% of expected than we must also say that at least 50% of the capital is at risk in a valuation. If you owe say $1,3bn @ 6% that means you have finance costs of at least $80m let alone the operational costs. You have to do 40000 a day at least - probably just to service the debt.

You may have money in the bank - but if the bank could review your facility to day they would demand that you put more equity into the venture.

In reality the unit holders are next in line than the financiers. Its my contention that this tunnel would never have been built if the experts had projected anywhere near 30000 of vehicles per day usage.

So the asset is fairly priced to build but either the state contributed too little - very definitely. and/or the viability plan was fatally flawed from the start. Thats where the experts come in. The person who signed off the expected traffic should be shot - How did they reach these figures and even reconfirm some of that data for bris connections fairly recently.

This will be an asset to Brisbane but a dead loss to RCY investors and Bris connection holders could also have the same problem. The financiers may also be looking to a loss down the road when the current financing package comes up for review.

I cannot see how if gets to high reward the numbers just dont stack up. Do them for yourselves - look at Lane cove ramp up the Transurban assets and how they performed during ramp up and decide for yourself. When I did that I came to the conclusion that the reward side was never going to get to high but the risk was almost beyond high risk.

Look at some of the earlier posts I posted links to various reports that had done the numbers and found the project to be a serious problem