Posted on 12/01/2008 2:50:17 PM PST by Glenn
Bailed out Citigroup fund spends $10 billion buying 44 foreign toll roads.
Just one week after receiving a pledge of $306 billion in support from US taxpayers, Citigroup announced the intended $10 billion acquisition of a debt-laden Spanish toll road group. Citi Infrastructure Partners will hand over $3.6 billion in cash and assume $6.3 billion in debt from Sacyr Vallehermoso, the parent company of the Intinere Infraestructuras toll road group. Itinere operates 32 toll roads in Brazil, Chile, Costa Rica, Portugal and Spain and Ireland. Another twelve concessions are under construction. Sacyr today issued a statement to Spanish investors noting that the company succeeded in offloading 37 percent of its total debt to the US firm.
"With this transaction, the group reaps the value that Itinere accumulated for its mature concession assets and strengthens its financial situation by considerably reducing its indebtedness," the statement explained.
On November 23, the US Treasury announced that it had invested $20 billion in US taxpayer funds in Citigroup in addition to "protection against the possibility of unusually large losses" on $306 billion in bad debt the company had acquired primarily in commercial and residential real estate markets. Armed with the new taxpayer capital, Citigroup believes its purchase of the toll roads will hold long-term value. In the immediate term, Citigroup will sell off Itinere's stakes in five Spanish and Chilean toll roads to Spanish tolling giant Abertis, allowing that company to assume full ownership of its tolling assets. The deal is valued at $786 million.
Other analysts, including Fitch Ratings, view tolling as a risky investment as toll road volumes have plummeted in response to the recent spikes in gasoline prices and the global economic slowdown. In August, Fitch issued a warning that its outlook on tolling had changed to "negative," reflecting a dim view of the creditworthiness of the long-term transactions. In October, Citigroup and Abertis gave up on their joint bid to collect tolls on the Pennsylvania Turnpike. The consortium spent millions bankrolling a slick public relations campaign that ultimately failed to sway public opinion on the wisdom of the 75-year proposal.
Good to see Citi is back to loaning to small businesses. I knew that bail out would work.
I wonder if this is the same Spanish company that Rick Perry tried to sell our tollroad to in Texas.
I am wondering the same....
Foreign toll roads are where it’s at in the new economy. I guess.
I think that was Cintra. Could be wrong.
Cintra. It's from Info Wars / Alex Jones, so... yeah. Bring a sack of salt.
Then we get to bail Citi out again when the Spaniards decide they don’t like paying rent to foreigners and nationalize the roads.
Is there any other American institution that has been bailed out as often as Citi?
Sacyr today issued a statement to Spanish investors noting that the company succeeded punking the US taxpayers for 37 percent of its total debt.
Trolls will be needed to collect the tolls. Maybe FR will lose all it’s trolls to the toll collecting business.
It isn’t really Citigroup that buying this—it’s a fund that they operate and own a minority stake in. This fund probably didn’t see a dollar of the bailout money.
I saw about a dozen trolls on the roads today collecting tolls, even a 3 man operation on a backroad.
Revenue for the county. Highway robbery is what it is.
I just got a notice from them today saying they were going to raise my interest rate to prime plus 23.99%.
However, they went on to say, should I default, have a late payment or should my credit rating change, they reserve the right to raise my rate up to 29.99%
They can bite my ass is what they can do. I'm so glad my tax dollars are propping them up too.
Oh, and after they fail, jail for the executives.
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