A toll road business that has received millions of euro in public money to compensate it for poor traffic numbers had a cash pile of €24.5 million at the end of last month.
According to figures published by credit ratings agency, Moody's, Direct Route (Limerick) Finance Ltd, which owns the business that operates the tolled Limerick Tunnel and bypass, had a "sizeable cash balance of €11.7 million at December 31st 2013, on top of its mandatory reserves of €12.8 million", a total of €24.5 million.
Traffic fell
The State's National Roads Authority (NRA) paid the tunnel operator €5 million in 2012 and a similar amount last year because traffic on the €810 million road development fell below the minimum guaranteed by the authority, hitting its revenues. The company charges motorists €1.90.
The company's senior lenders, including the European Investment Bank (EIB) and private bond holders whose repayments are insured by US group, MBIA, require it to hold €12.8 million in reserve. Their terms also demand that it put aside extra cash because revenues have fallen below a level set out in its loan agreements.
According to a spokesman, because its cash flows are lower than expected, Direct Route (Limerick) is also required to withhold payments to shareholders and junior lenders and instead to top up its reserves, hence the extra cash on its books at the end of December. He explained these are strict conditions of its loan agreements. “We are following those contracts to the letter,” he said.
Direct Route (Limerick) Finance owes its lenders €241.1 million, €97.6 million of it to the EIB. The company borrowed the money and re-lent it to the operating business, Direct Route (Limerick) Ltd.
Six shareholders
Moody’s upgraded its rating last week to Ba2 fro Ba3, citing the extra cash and the recent sovereign upgrade amongst its reasons.
The ultimate owners are six shareholders – Irish building groups, Lagan, Roadbridge and Sisk, specialist multinational investment fund, Meridiam, Austrian construction business, Strabag, and AIB.
