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Balancing Act: Macquarie Critics Raise Questions About Fees, Stability

Macquarie1If you're still following news about the Australian folks who now own the Indiana Toll Road, you'll want to check out this article, which is a preview of a piece coming soon in Fortune magazine:

"Fortune's interest in Macquarie follows the bank's move into the US infrastructure securitisation market, which is relatively undeveloped and has become politically controversial.

"Macquarie and Spanish company Cintra did the first privatisation of a US toll road in 2004, when they offered $US1.8 billion for a 99-year lease on the Chicago Skyway toll road, paying almost $US1 billion more than the next highest bid.

"They followed up with a $US3.8 billion deal to run the connecting Indiana Toll Road.

"The article notes that, as the concept of infrastructure privatisation gets off the ground in the US, 'there is widespread resentment and cynicism about the notion of private companies making money off what has long been perceived as public property'.

"The article suggests that the 'financial structures underpinning Macquarie's assets' may be 'as unstable as the steel that supported the Interstate 35W bridge' in the US, which recently collapsed.

"Macquarie chief executive Allan Moss told analysts on Friday that many recent criticisms of the bank had been made by people who had 'not taken the trouble to study Macquarie Bank' closely.

"'They are not views that have been given any serious credit by serious investors or serious analysts,' he said.

"'It is well understood that we have a very robust business model.'"

Comments

And what's the problem with this?

You do realize that we already got our money from them, right? So if they go bankrupt, we get the road back, and we don't have to return the $3.8 billion.

Hell, I hope they go bankrupt.

Do we have the money, all of it, in hand?

It's that kind of "take the money and run" attitude that lost us the road in the first place, friend.

Forgive me for caring about the financial status of the company that has control over one of our largest assets for the next 74 years.

Lost us the toll road, TDW? I drove on it just the other day. It isn't going anywhere -- 'cept between Angola and Gary -- and is pumping much-needed cash into much-needed infrastructure improvements.
I know what you'll come back with: talking points. Well, these points I make are my own, and if Joe Kernan had pulled off this deal, I would have applauded him just the same.
I've said it before and I'll say it again:
One-half million dollars a day, every single day, in interest, for the state of Indiana. That's a helluva deal.
Respectfully

Forgive me for pointing out the obvious ... but you can't have it both ways. Either we spend the money on infrastructure as promised and because it's no longer in the bank, there's no half million a day. Or we keep it in the bank earning interest (which seems to be the plan) and our roads keep falling apart. Well, all that is except the ridiculously over-driven ill-planned stretch we just paid Carmel 90 mil to take off our hands.

Don't forget the new 73rd Street exit off 465 on the west side which goes directly to...wait for it...Patrick Rooney's Golden Rule Insurance building. It's nice to have friends in high places.

While I have no problem with the criticism of "major moves" and the mis-judged priorities it represents, as someone who lives very close to the I465 & 73rd street area, I can tell you that the ramp was needed to relieve traffic congestion and, more importantly, had been in the works from before the Daniels coup.

If it had been in the works for some time, then why were there giant "Major Moves" signs claiming credit for all the work at the 71st Street interchange? How could the work be both planned for some time AND thanks to Major Moves? And you can't claim it doesn't go to Golden Rule. What's the betting that that ramp would not exist except for Patrick Rooney?

"Do we have the money, all of it, in hand?"

Yes, it was wired to state coffers the day the deal closed.

"It's that kind of "take the money and run" attitude that lost us the road in the first place, friend.

"Forgive me for caring about the financial status of the company that has control over one of our largest assets for the next 74 years."

I'm confused by your comments, TDW. I would think you Dems of all people would want this "foreign" business to go under Down Under.

What you all fail to realize is how carefully this lease was drafted. If at any point the lessee goes bankrupt, or if they fail to meet the traffic standards set forth, we get the road back, we keep the money, and we get the future revenues.

Hell, if we get the road back again in five years, we can LEASE IT AGAIN FOR ANOTHER $4 BILLION!!! That sounds golden to me.

3:58 - Hell, I bet a whole bunch of people, er foreign companies, would stand in line to take massive profits out of Indiana for 75 yrs. The deal was structured for so long so they could suck the money out of the asset and out of our pockets. Any investments in other IN highways (if Daniels actually does any on his own watch - note the 3 year delay in US 31 in Hamilton County) will be long used up by the time this all ends. Bottom line - we get sucky roads for some 40 to 50 plus yrs - they get our money.

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