Thoughts and Opinions On Today's Important Issues

Friday, July 10, 2009

Sale Of The Century

Stop, stop stop!

The Star has to go back to being an afternoon newspaper again. I cannot take the big jokes so early in the morning! My sides hurt from laughing so hard already and I have not had my first coffee as I am writing this BLOG.

Honestly, I cannot make this stuff up.

I think that Sandra knows her political career is limited and is looking for a new job as a Jay Leno politicial joke writer for his new show with her comments. She cannot be serious in what she is saying. However, with the Premier in town, she has to do her part to continue on that the Province really is going to do something for us
  • "Windsor is on the verge of the biggest construction boom in its history, according to local MPP Sandra Pupatello...

    "We are seeing more construction money coming to our area than any time in history," Pupatello said. "We are in the drawing stage and need contract approvals. All these steps take time."

Take time. What an understatement!

This is Gong show stuff just like Dwight tried a few years ago that told us nothing would happen on the border until after 2010 or right before the next Provincial election. Sandra has just told us the same thing. For shame!

I guess she did not read this story first which makes her look completely foolish and self-serving:

  • "Local construction industry representatives say they're disappointed they likely won't see their members at work on the Windsor-Essex Parkway until 2011.

    "We were under the impression we were going to see shovels in the ground this fall and that's not the way it's panning out," said Jim Lyons, executive director of the Windsor Construction Association. "They really won't be touching the ground and getting into any of the big dig until 2011, which for us is a disappointment..."

    Infrastructure Ontario has said it may not have financial closure on the bulk of construction contracts until the end of 2010."

Let me put it in the simplest terms. The Province wants a P3 for the road. The P3 market is dead. The DRIC road as envisaged is dead. Time is needed for another way to figure out how to pay for this road. Ergo, delay, delay, delay.

Consider all of this as well. There are all kinds of DRIC related lawsuits started and to start, the DRIC Bridge is virtually dead, Baird wants to stop the Enhancement Project Bridge, P3s are dead, the DRIC road has no route to the border and Sandra is worried about a labour shortage!

I digress.

Back to the sale of the century. It is a better deal than buying Eh-Channel for a dollar or my 2 cents for the Windsor Star. How would you like to buy the multi-billion dollar projects Chicago Skyway, Indiana Toll road and Dulles Greenway, all for about ONE dollar or less!

These were the projects that helped start the infrastructure toll road bubble that has now been popped. Here is an example from a 2005 article:
  • "Long before Mary Peters was secretary of USDOT under Pres GW Bush and supporting privatization, California did concessions on 91 Express Lanes and the South Bay Expressway (then CA route 125 South), and Virginia did the Dulles Greenway, Chicago Mayor Richard Daley privatized the Chicago Skyway and Indiana was leasing the state Toll Road."

They are P3s and/or a private toll road that are in very poor financial shape. They are concession agreements and alternative financing arrangements that do not work.

And we want this for Ontario. Is someone mad or do they just want to rip-off taxpayers for billions to help out private investors to make obscene profits at taxpayer expense. Trust me, as strucutured by our bureaucrats, no private investor will lose a dime as in these other projects.

That is how desperate certain people are to beat the Bridge Company. They do not care if they bankrupt future generations in order to do so! They can take the plaudits today because they will not be around when the bills have to be paid!

  • "RFQ For Design Build Finance & Maintain - The WINDSOR-Essex Project

    The WINDSOR-Essex Parkway will be publicly owned and controlled. It will not be a tolled road."

In other words, instead of the Government following the traditional approach to construct and to pay for a higheway, we will allow a private operator to make a 20% return on its money.

Back to the destruction of the P3 market for highways. Just read this article out of Australia. Where is the Auditor General for Ontario for heaven's sake after panning other P3 projects. Asleep!

And to make matters even worse and to make you even sicker, this Ontario approach may well hurt many Seniors across the Province and all taxpayers as well. I will get into that another time.

  • "Macquarie Infrastructure Group tumbles on option risks

    MACQUARIE Infrastructure Group is reviewing options to enhance value amid speculation about radical changes for the toll road owner.

    The company is grappling with high debt and some poorly performing assets.

    "In response to a request from the ASX regarding market speculation, MIG advises that it is reviewing options which seek to enhance security holder value," it said in a statement. "No decision has been made by the MIG boards in respect of any of these options."

    Previously, Macquarie Infrastructure had said that it was considering asset sales to boost shareholder value so the fund's use of the word "options" indicates that it is considering other measures that could include a capital raising -- although the fund makes no mention of this.

    Macquarie Infrastructure said it will update the market no later than its full-year results briefing due on August 20. By late morning the fund's securities were down 10.4 per cent at $1.205, outpacing the 1.4 per cent fall in the benchmark S&P/ASX 200 index.

    In their latest research note, Merrill Lynch analysts say that Macquarie Infrastructure's gearing is too high and Australian fund managers view the listed fund as sub-investment grade.

    They say the ratio of net debt to earnings before interest, tax, depreciation and amortisation needs to fall to around nine from 14.4 and to get there Macquarie Infrastructure could give away its US assets, sell its remaining 25 per cent stake in Sydney's Westlink toll road and carry out a discounted rights issue to raise between $1.6 billion and $2bn.

    "We can't see a solution that doesn't involve a recapitalisation via some form of capital raising," Merrill Lynch's Matthew Spence, David Porter and Simon Chan say.

    The overhaul suggestions are the latest in a string of proposals and speculation among analysts, traders and media about the outlook for Macquarie Infrastructure, one of Macquarie Group's listed funds.

    UBS analysts in May said that Macquarie Infrastructure's US assets, including the Chicago Skyway, Indiana Toll road and Dulles Greenway, could be sold for a nominal amount of say $1 to remove fear among investors that the fund may have to pump additional equity into the US assets.

    The problem with the US assets is that the debt taken on to buy the roads was too high given the performance of the roads since they were purchased, Merrill Lynch says.

    "Given this dismal view of the US portfolio is largely held across the market, in order for MIG to re-rate, we believe they need to get rid of the US assets," the Merrill Lynch analysts said. "We don't think it matters who takes them given the nominal equity value."

    In June, Macquarie Infrastructure changed its distribution policy so that future distributions will be based on cash flow. Previously, surplus funds were used to supplement cash flow when paying distributions.

    It paid distributions of 10 cents per stapled security in the first and second half of last financial year but Merrill Lynch expects distribution of just 4c this year, which started July 1.

    Macquarie Infrastructure first said it would look at selling other assets when it announced the sale of its interest in Westlink last December.