TJH can now move to buyout Bouygues and Vinci stake in toll operator JIO

Durrant Pate/Contributor

Jamaica’s toll road concessionaire, TransJamaican Highway Limited (TJH) is reporting that it has received the greenlight from its bondholders to buy out Bouygues Travaux Publics and Vinci Concessions interest in the island’s toll operator, Jamaican Infrastructure Operator (JIO).

Bouygues and Vinci both own JIO, which has been operating and maintaining the Highway 2000 East-West’ toll road leg for the past 19 years.

TJH Managing Director Ivan Anderson has announced that the company has received the requisite consent from the holders of US$183.79 million in bonds, representing approximately 81.68 per cent of its outstanding 5.75 per cent Senior Secured Notes due 2036.

TJH hired UBS Securities LLC, the investment bank and brokerage firm of the Swiss bank UBS, to act as Solicitation Agent and D.F. King & Co. Inc. out of New York to act as Information and Tabulation Agent for the Consent Solicitation. The company has engaged NCB Capital Markets Limited as local coordinating agent.

Bondholders in Jamaica may reach out to NCB Capital Markets with any questions regarding the consent arrangement.

Payment of consent fee

TJH will pay to each bondholder, who has delivered a valid consent by the expiration time of December 16, 2022, US$1.25 in cash for each US$1,000 principal amount of bond in respect of which a valid consent was so delivered. The consent fee is to be paid today (December 20).

Holders of bonds for which no consent was delivered prior to the expiration time or bonds, for which a valid consent was delivered but such consent was validly revoked prior to the consent date, will not receive a consent fee. As a result of receiving the requisite consents, TJH is moving to have Bouygues and Vinci each grant it a call option to purchase their respective equity interests in JIO.

In consideration for the call options to acquire their respective shares in Jamaican Infrastructure Operator, TJH will pay Bouygues and Vinci an option price equal to an aggregate of US$16.1 million with funds currently in deposit in the distribution account. 

Amended fee structure

As previously announced, following the grant of the call options to the company and the consummation of the consent solicitation, JIO and its former owners will amend its operation and maintenance fee structure. The amendment will see a portion of the fixed fee component cut by 72 per cent to a lesser extent such that the variable fee component is increased from 3.0 per cent to 5.0 per cent of the theoretical toll revenues and other minor adjustments.

This fixed fee component is the single largest component of the operating cash costs and expenses of TJH, which are calculated as operating expenses plus administrative expenses, excluding amortization of intangible. The toll operator’s fee represented 70.3 per cent, 74.2 per cent and 78.4 per cent of such costs and expenses in 2019, 2020 and 2021, respectively.

Following the implementation of these amendments, JIO will share more of the variability of the risk of traffic flow, which is expected to result in a lower overall annual toll operator’s fee. TJH will revise the calculation and structure of the operator’s fee, resulting in significant annual cost savings going forward.