CKI Tunnels Again in Sydney
Acquires 40% of Lane Cove Tunnel for A$239 Million
4 July, 2004 -- Hong Kong
Cheung Kong Infrastructure Holdings Limited ("CKI" or the "Company") has become the biggest shareholder of the Lane Cove Tunnel Company Pty Ltd ("LCTC") in Australia, after acquiring a 40% equity stake. The consideration for the acquisition is A$239 million (HK$1.3 billion).
In announcing the acquisition, Mr H L Kam, Group Managing Director of CKI, said: "This marks CKI's second major toll road project in Australia, in addition to our investment in Sydney's Cross City Tunnel which has just celebrated its breakthrough and is expected to commence operation ahead of schedule. We have been pursuing quality infrastructure and transportation projects globally and this acquisition represents another important milestone for CKI."
About the Project
The LCTC was awarded the concession to build and operate the Lane Cove Tunnel (the "Tunnel") and the Falcon Street Ramp in Sydney, Australia in December, 2003. Total investment for the project is approximately A$1.7 billion and project financing has been completed. The concession is for a period of 30 years, excluding construction period, and double-digit return is expected.
The Lane Cove Tunnel will run under Epping Road and will complete the crucial link between the Warringah Expressway and the M2 Motorway, the final stage of the most significant ring road built for Sydney. The Tunnel is being built by a 50/50 Thiess Pty Ltd/John Holland Pty Ltd joint venture and is expected to be completed in mid-2007, together with associated road improvements which will substantially improve congestion in the area. The average daily traffic of the Lane Cove Tunnel is expected to be well over 100,000 when operations commence.
Passenger car tolls for the Tunnel and the Falcon Street Ramp will be A$2 and A$1 (at 1999 prices) respectively, and these prices are subject to inflation adjustment. Tolls will be collected by an advanced electronic tolling system.
With a 40% equity stake, CKI will be the largest among LCTC's other shareholders, which include AMP's Infrastructure Equity Fund, AMP Capital Investors, MTAA Super, Westscheme, John Holland Pty Ltd, Thiess Pty Ltd, and the Li Ka Shing (Overseas) Foundation. Transfield Services is the appointed long term operator and maintainer of the Project.
CKI's Comments on the Transaction
Mr Kam commented, "CKI is pleased to acquire this premium asset. The Lane Cove Tunnel is strategically located - it is an integral part of the Sydney Orbital and will link the north-western areas of Sydney with the city center. Currently, severe traffic congestion occurs on Epping Road during rush hour in the mornings and evenings, with average daily traffic figures amounting to about 85,000. The situation is expected to get tighter as more people move to live in the popular north-western suburban residential area, which at present has a population of around one million. The demand for an efficient road system serving the area is eminent. It is expected that the Lane Cove Tunnel could reduce current traveling time from 25-30 minutes to 5-6 minutes."
"Construction for the Lane Cove Tunnel is already in progress and project finance has been completed. The Tunnel is poised to promise a long-term and sizeable return to CKI - in line with the Company's ethos of investing in low-risk and high-return projects. We are pleased that the two major transport infrastructure projects built to enhance traffic in a significant way in Sydney are included in CKI's portfolio - the Cross City Tunnel will be a key thoroughfare in downtown; and the Lane Cove Tunnel will be an important link that connects the populated north-western district to the centre of town."
CKI is the largest publicly listed infrastructure company in Hong Kong with diversified investments in Energy Infrastructure, Transportation Infrastructure and Infrastructure Related Business. Operating in Hong Kong, Mainland China, Australia, the United Kingdom, Canada and the Philippines, it is a leading player in the global infrastructure arena.
CKI is a member of the Cheung Kong Group which recently collaborated with the Australian Government in launching the Endeavour Australia Cheung Kong Scholarship Programme with an aim of fostering cultural exchange between Australia and Asia. The Programme will offer educational exchange opportunities to 100 undergraduate and 40 graduate students every year for three years. The total scholarship amount is A$4.5 million of which half is contributed by the Cheung Kong Group and the other half by the Australian Government.
- Ends -
The Lane Cove Tunnel will be strategically located, connecting the populated north-western areas of Sydney with the city centre. Once completed, the Tunnel will help to drastically enhance traffic on Epping Road and improve convenience for road users, cutting the current traveling time of 25-30 minutes to 5-6 minutes. From left to right, Mr Ian Hunt, Chief Executive Officer of LCTC, Mr H L Kam, Group Managing Director of CKI, and Mr Peter Tulloch, Director of LCTC, observe the rush hour congestion on Epping Road in the leafy Sydney suburb of Lane Cove at 7:45 a.m.
CKI's portfolio includes two of Sydney's major transport infrastructure projects built to enhance traffic - the Cross City Tunnel will be a key thoroughfare in downtown Sydney, while the Lane Cove Tunnel will be an integral part of the link that connects the popular north-western suburban area, which has a population of around one million, with the city center.