The company operating the southern 41 miles of Texas 130, a tollway that has struggled with light traffic and heavy debt since opening in late 2012, filed for Chapter 11 bankruptcy protection Wednesday afternoon in federal court.
That will put before a federal court negotiations over SH 130 Concession Co.’s lagging payments on about $1.7 billion of debt owed on the four-lane road, a figure that includes $1.27 billion in principal and more than $400 million in unpaid interest, expenses and fees. About $500 million is owed to the federal government under a low-interest loan program for transportation projects, and payments on that portion of the debt begin in 2017.
In its filing for bankruptcy protection, the company (which depleted a $65 million reserve account in 2014) said it is unable to make full payment on its “senior” debt.
Company officials were at pains to point out that neither Texas taxpayers nor drivers on its section of Texas 130, which runs from Mustang Ridge to Interstate 10 near Seguin, will suffer in the wake of the filing.
“The filing will have no financial impact on the state of Texas,” said Alfonso Orol, chief executive officer of the SH 130 Concession Company, which is owned 65 percent by Spanish toll road builder Cintra and 35 percent by Zachry Construction Co. from San Antonio. “It’s business as usual for our customers, employees, vendors and surrounding communities during these proceedings.”
The company, using its own money and borrowed funds, built the $1.3 billion road between 2009 and 2012 under a 50-year lease with the Texas Department of Transportation that expires in 2062. The road — technically owned by TxDOT despite SH 130 Concession’s primacy in its design, construction and operation — opened to great hoopla in October 2012 because of its first-in-the-nation 85 mph speed limit.
Under that lease, TxDOT received a $100 million concession payment in late 2012 and gets 4.65 percent of all toll revenue from the road. In all, according to the bankruptcy filing, TxDOT has received $142.6 million from the road to date.
The problem, despite the road’s potential for speed, has been low traffic. “The lingering effects of the recession,” the company said in a press release Wednesday, “reduced traffic volumes regionally during the project’s early years and delayed development along the largely rural SH 130 corridor.”
The building boom in Central Texas has largely bypassed Lockhart (located just east of Texas 130) and Caldwell County, and several large developments announced along the corridor are still only in aspirational form.
As of 2014, when the road had about 16,400 toll transactions a day, traffic was about 30 percent below the projections used in borrowing the money for the road. Original projections for 2015 and 2016 weren’t available Wednesday.
But use of the road, while not enough to meet the company’s financial obligations, has been improving. According to SH 130 Concession, the road had 5.15 million transactions in 2013, 5.99 million in 2014 (a 16.3 percent increase) and 6.9 million in 2015 (a 15.2 percent increase).
The traffic situation has been much better on Texas 130’s northern 49 miles from Mustang Ridge to the area near Georgetown, a section built and operated by TxDOT. That stretch opened in phases between 2006 and 2008, and it has benefited from its proximity to Austin and heavy development in Pflugerville, Round Rock and Hutto.