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2/18/2009
Toll Road Profit Tumbles for Transurban, BrisConnections May Disappear
Toll road future dims as Transurban profit down 86 percent and BrisConnection faces dissolution.

BrisConnections, Transurban logos
A global economic slowdown could turn into fiscal collapse for a pair of Australian toll road companies, one of which is currently seeking to expand its US operations. Transurban, the Melbourne company that owns the Pocahontas Parkway in Richmond, Virginia, today reported an 86 percent drop in profit for the second half of 2008. BrisConnections, the Queensland company that is building the A$4.8 billion Airport Link toll road in Brisbane, now faces a dramatic shareholder vote to dissolve the BrisConnections Unit Trust itself.

As the owner of 48 million shares (12.3 percent of the company), Australian Style Investments Ltd. requested an extraordinary general shareholder meeting to discuss the future of BrisConnections. Nicholas Bolton, the sole director of Australian Style, had purchased the shares for just $47,923. The cheap initial purchase price, however, came with a catch. The BrisConnections stock is a "partly paid security" that requires a A$1 per-share payment on April 29, 2009 and a second A$1 payment on January 29, 2010 for the shares to become fully paid -- A$96 million in Bolton's case. Management determines whether other steps are necessary.

BrisConnections Chairman Trevor Rowe described Bolton's move to shut down the company as a "misguided and ineffective attempt to avoid (his) future obligations to BrisConnections." To complete the dissolution, Bolton would need the support of another 62.8 percent of shareholders, many of whom have also bought into the company at the rock-bottom price without realizing they were liable for up to A$65 million in payments.

By forcing out BrisConnections management, Bolton may succeed in ceasing the collection efforts. The company's bylaws specify that any investor who fails to pay the installment will be charged daily interest until the full sum is paid. If the company determines this amount will never be paid, it can retake and sell the shares.

In comparison to the troubles at BrisConnections, Transurban's 86 percent profit loss appears far less serious. Transurban is currently busy adding the infrastructure needed to toll drivers using the Interstate 495 Capital Beltway just outside of Washington, DC. During the second half of 2008, toll road use in Richmond became far less popular and the company recorded a ten-percent drop in transactions, adding an A$8.3 million loss to the company's balance sheet. This happened despite significant toll rate hikes that took place in January 2008 that brought in an extra 4.4 percent in revenue. Overall, Transurban's net profit declined to just A$3.2 million, despite US and Australian tolling revenue that increased to A$416 million.



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