Lenders rethink sale of Britain’s M6 toll road
Banks that own motorway may refinance business after failing to secure £1.9bn price
The banks that own Britain’s only pay-to-use motorway, the M6 Toll, are considering refinancing the business after struggling to secure a £1.9bn sale price.
Bidders, including a consortium formed by Spanish toll-road operator Abertis and IFM Investors, are unwilling to meet the price, forcing the sellers to reconsider, according to people close to the vendors.
Abertis said it understood that an offer it made had not been accepted but that it had not yet been officially notified. “Our financial discipline does not allow us to make a higher bid,” it added. IFM declined to comment.
The toll road is owned by a group of 27 lenders including Crédit Agricole, Commerzbank and Novo Banco, which took control of the asset from infrastructure group Macquarie in December 2013 following a debt restructuring.
A spokesperson for the lenders said the sales process was continuing and that other unnamed bidders remained in the frame.
But people involved in the sale process said they were assessing whether to sell the company at a lower price — or refinance the debt to make it cheaper to hold on to while they tried to secure a higher offer.
The toll, a 27-mile stretch of road designed to ease congestion on the main M6 in the West Midlands, has not lived up to expectations since it opened in 2003. It was originally forecast that 72,000 vehicles a day would use the route, which charges cars up to £5.50 and lorries up to £11, but the daily average is only about 48,000.
The problems facing the toll road, operated by Midland Expressway, a subsidiary of Macquarie, have been compounded by its £1.9bn debt.
The sale, which has already been delayed by the UK’s Brexit vote, is intended to generate enough money to fully recover that debt. The price tag represents a multiple of about 27 times the company’s earnings before interest, tax, depreciation and amortisation in 2015.
While the toll road failed to meet its initial expectations, traffic numbers have increased over the past few years as the UK’s economy improved. About 17.4m vehicles used the M6 toll road in 2015, a 12.6 per cent increase from the year before. The compound annual growth rate in traffic over the past four years has been 10.1 per cent.
However, Nathalie Tidman, an analyst at Inframation Group, an infrastructure specialist, said the economic uncertainty of Brexit had made traffic revenues “difficult to predict”.
“People might use the free alternative road or not get in their cars as frequently to save on petrol,” she said.
The six-lane highway has come in for criticism, with calls in 2013 for the road to be nationalised to relieve congestion around Birmingham.
Critics at the time blamed excessive tolls for pushing vehicles back on to the M6. It runs on a 53-year concession with 37 years remaining.