Friday, August 22, 2014

Back home again in Indiana

And it seems that we can see...

That we were right all along (though under another blogging guise), and Max Sawicky, pgl and the gang at the Angry Bear were hilariously, stupefyingly amateurishly wrong about the lease of the Indiana Toll Road under Governor Mitch Daniels. Lowlights from back in 2006 being (via pgl);
... maybe the other 10 bidders refused to pay enough to the Governor under the table as he was so happy to claim $3.8 billion was better than his reservation price - a reservation price concocted by citing a really sloppy analysis.

So the Governor – aided by what appears to be a faulty Crowe Chisek analysis are selling assets that may be worth $5 billion to private investors for only $3.8 billion. might wonder of the Governor asked them to lowball the reservation price. In other words, is this some form of financial fraud imposed upon the taxpayers? Why would any responsible Governor be engaged in this kind of behavior? Oh but – we are talking about George W. Bush’s first OMB director.
As we pointed out at the time, the state of Indiana actually got about $8.2 billion from the 'winning' bidders, because in addition to the $3.8 billion check they cashed in 2006, the investors also committed themselves to $4.4 billion in upgrades and maintenance/repairs to the ITR. A toll road still owned by the state--they merely leased its operation to Cintra-Macquarie.

We also predicted (8 years ago!) that: In other words Macquarie-Cintra overpaid by about one billion dollars.

So, how's the deal looking for the Spanish-Australian consortium today?
The Indiana Toll Road Oversight Board has asked the Spanish-Australian investor group Cintra-Macquarie about the status of the payment it owes this month after state officials made similar inquiries after news reports that it was struggling last year to make an interest payment, board Director James McGoff told The Times of Munster.

"The answer is the same, they are trying to negotiate more favorable terms with their lenders," McGoff said.

.... Paula Chirhart, a senior vice president for Macquarie Group Limited, declined comment on the consortium's current financial situation.
Under the terms of the contract, if C-M defaults, then the toll road reverts to control by the state. Which gets to keep the $3.8 billion they've already received--and used to build new roads in Indiana--and they then would have the option of running the toll road for themselves, it to some other investors for yet another one-time payment for its net present value.

All thanks to Indiana's then governor and, we are talking about George W. Bush’s first OMB director.

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