At a crossroads

Finding a Buyer for the 'Main Street of the Midwest'

The Indiana Toll Road made headlines in September 2014 when a consortium operating the 157-mile highway filed for bankruptcy, barely 9 years into the 75-year lease and operating agreement. The recession had resulted in lower truck traffic on the toll road, and the consortium had not been able to meet payments on its debt.

Once advertised as the "Main Street of the Midwest," the Indiana Toll Road runs across the northern part of the state from the Illinois state line near Chicago to the Ohio line. With over 10 million vehicles traveling the full length of the highway annually, the highway is a vital transportation link between Midwest economic hubs and East Coast cities.

The bankruptcy filing left the consortium's creditors and the Indiana Finance Authority (IFA), the agency in charge of the toll road, with a pressing need to find a qualified buyer for the remaining 66 years of the concession to operate the highway. The creditors formed a special board committee, which turned to UBS to find a buyer.

Based on its global leadership in transportation and cross-border M&A, UBS was selected as Exclusive Financial Advisor. The assignment meant working through the complexities of Bankruptcy Court and coordinating closely with the IFA, while reaching out to major potential bidders, many of whom were outside the United States.

To speed the sales process, a highly customized auction process was organized, one that leveraged UBS's global network and intensified competition among bidders. An IFA approval process was conducted in parallel with the sales effort, helping ensure the toll road remained fully operational.

On March 11, 2015, IFM Investors, a leading global road player backed by major pension funds, signed a definitive agreement to acquire the toll road concession for $5.73 billion. The sale ranks as the largest single toll road deal ever completed*. Creditors achieved 95% recovery with the sale, with the debt valued at 25% above the level on the date when UBS was mandated to undertake the sale.

IFA's announcement noted that IFM's selection had opened the way for the toll road to make a $260 million investment over the next five years in bridge and pavement rehabilitation, a revised travel plaza strategy, and improved environmental management along the road. Said the new chief executive officer of the acquired Indiana Toll Road Concession Company: "We believe these improvements will create meaningful jobs growth over the next few years."

The successful conclusion leaves Indiana with a highly regarded, well-financed operator for a major transportation artery and regional economic asset.