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Australia: Trading Halted on Failing Toll Road
Australian toll road project to cost investors big, while executives pocket big bonuses.

The Australian Stock Exchange on Tuesday halted trading of BrisConnections, the long-troubled toll road firm. BrisConnections built and operates the A$4.8 billion Airport Link toll road in Brisbane that opened in July. Already the project is under water.

"Following analysis and in light of traffic levels post the introduction of tolls for all vehicles, the board has determined today to enter into formal negotiations with its lenders and other keys stakeholders regarding potential reconstruction options, taking into account that on present traffic levels and operating costs, the enterprise value may be less than the outstanding debt," BrisConnections announced in a statement Monday.

In the first three months of operation, BrisConnections lost $55.9 million after spending more in staff costs, advertising and marketing than it received in toll payments. To encourage motorists to become accustomed to using the toll road, it opened free for all drivers with transponders with traffic levels of 85,139 trips per day. Once discounted tolls kicked in on October 18, traffic plunged to 53,172, which is 25,000 trips below the level the company predicted in the prospectus provided to investors in 2008. The firm continued to reassure investors with assessments of its traffic numbers that painted a picture of steady progress.

"We are only 13 weeks in to our 41 year concession so it is still early days and things are still very fluid," BrisConnections Chairman Trevor Rowe said in a statement last month.

The financial collapse of BrisConnections will fall hardest on Macquarie Group, another tolling firm, which owns 178 million in BrisConnections shares that are now worth "substantially below the issue price." Throughout its rocky beginnings, BrisConnections has seen a colorful cast of top shareholders.

In 2008, Mrs. Fang He became the largest shareholder when the stock price dropped to $.001 and she snapped up 32.3 million shares for US$21,700. The following year, a 27-year-old bought 73 million shares and called a shareholder meeting in an attempt to shut down the entire project. The company bought him off with a $4.5 million greenmail payment, and distributed massive bonuses to the firm's top management. This year, the payout to executives was bigger than ever despite the company's looming financial problems.

Ray Wilson received $1,165,266 in total compensation; Nicholas Lattimore $709,935; Charles MacDonald $624,226; Tamira D. Herbst $425,499; Andrew F. Thornton $465,500 and Colin J. Richmond $187,561.

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