Toll company TransJamaican Highway to list on JSE
Phillip Henriques, chairman of National Road Operating and Constructing Company Limited, NROCC, confirmed on Monday that TransJamaican Highway Limited, which holds a 35-year concession for the Highway 2000 East-West toll corridor, will be going to the market with an initial public offering (IPO) of shares.
But as to the structure of the transaction, the NROCC chairman said it was too early to speak to the details.
However, informed sources say that in preparation for the listing, the Jamaican Government is negotiating a buy-out of the highway concession from its foreign owners, with a price already agreed. The deal is said to include the acquisition of TransJamaican, the company.
Jamaicans know TransJamaican as a French company controlled by construction giant Bouygues Travaux Publics, but a search of Companies Office of Jamaica records shows that the Jamaican Government holds a single preference share in TransJamaican through NROCC.
TransJamaican’s latest annual returns for 2018 described the Government as having “more than 50 per cent” of the issued shares of the company through the preference share, while Bouygues itself holds 48.8 per cent of the ordinary shares and equivalent voting rights.
Well-placed sources say that the pref was created as a ‘golden share’ to give NROCC veto power over the decisions made by TransJamaican as a means of protecting the billions of dollars of financing that the state-owned road company was required to inject into the highway project.
NROCC’s long-term debts were estimated at around $99 billion in the past fiscal year, according to preliminary information in the latest Public Bodies Report, linked to various highway projects.
It’s unclear the conditions under which the preference share is convertible to common equity, but other sources speculate that it was likely meant to be triggered at the point when the highway would have reverted to government control at the end of the 35-year concession period.
NROCC chief executive Ivan Anderson declined to comment for this story, saying via email: “As you have gleaned from your research, TJH is a private company.” Henriques, beyond confirming the plan for the share float, said it was too early to discuss the transaction.
TransJamaican’s financial controller, Susan Gariques-Brown, also told the Financial Gleaner on Monday that discussions were ongoing but otherwise had no comment about what they entailed.
“We are still in negotiations. We are not at a stage for disclosure. Everything is to be finalised,” said Gariques-Brown. “I would say in another week or so we will have formal information,” she added.
Henriques said that the company had not yet selected a broker for the IPO. But the Financial Gleaner was advised that NCB Capital Markets is likely to be the arranger of the share float on the Jamaica Stock Exchange, while a different source added that the Jamaican Government intended to finance the buy-out of the concession with a loan.
TransJamaican Highway was selected as the concessionaire for Highway 2000 in 2001 for the design, construction, operation, and maintenance of the first phase of the toll road over 35 years, less than two decades of which have elapsed.
The ordinary shareholders in the company include Bouygues Travaux, with 13.2 million of 27 million ordinary shares; Vinci Concessions of France, with 6.8 million shares; Washington-based International Finance Corporation, the private sector-funding arm of the World Bank, with 4.6 million shares; and Societe de Promotion et de Participation Pour la Corporation Economique SA of France, which holds 2.4 million shares.
NROCC is the only preference shareholder.
The Toll Authority was not forthcoming with data on the toll concession or other comment on the transaction up to press time; CEO of the authority Joan Fletcher said she would respond when she could.
However, data provided by TransJamaican for 2017 indicate that for the most travelled tolling point – Portmore, St Catherine – the concession holder was pulling in revenues above $8 million on a daily basis, according to Financial Gleaner calculations, based on toll traffic volumes provided by the highway concessionaire. At the time, toll rates were $220 for the lowest of the three classes of vehicles.
TransJamaican indicated that up to that period, revenue had been growing in the range of five to 10 per cent yearly. Rates have since increased.
The East – West toll road network, which is operated through Jamaica Infrastructure Operator, comprises T1, a 43.5-kilometre stretch between Kingston and May Pen, Clarendon, with a connection through Spanish Town, St Catherine, and T2, a 6.4-kilometre stretch that runs between Kingston and Portmore.
The first toll plaza was opened at the Vineyards in St Catherine in 2003, followed by another in Spanish Town in 2004, Portmore in 2006, and Mineral Heights near May Pen in 2012.
The highway company, which became operational in 2002, now employs around 200 persons.