Sydney’s Cross City Tunnel is facing receivership for the second time in seven years.
The Tunnel’s owners are required to refinance the project to the tune of $79 million by September 30, however an unpaid stamp duty bill totalling $60 million is preventing approval.
Major shareholders of the Tunnel believed they had successfully defeated the NSW Office of State Revenue in a case disputing the bill, however the potential for an appeal has hindered refinancing attempts.
In a further blow to the Tunnel’s owners, the Australian Financial Review claims the project has failed to attract enough road users to repay its borrowings of almost $600 million.
The decision to place the Tunnel into receivership is held by shareholder Royal Bank of Scotland. The bank reportedly contact insolvency firm KordaMentha on Monday night, indicating receivership is likely.
The Tunnel first went into receivership in 2007, two years after its opening. Following this, RBS, EISER Infrastructure and Leighton bought it for $700million. However, with the onset of the global financial crisis one year later, it transpired the shareholders’ borrowings were greater than the amount the project was capable of generating, given motorist’s unwillingness to use the Tunnel and its unpopular brand in Sydney.
This inability to generate satisfactory returns is despite the toll’s current one-way cost of $4.91 for cars, or $9.82 for larger vehicles.
The Cross City Tunnel is not the only Australian road for sale or being prepared for sale. In Brisbane, the Clem Jones Tunnel and AirportLinkM7 are also available for purchase. A decision will be announced in the coming days.