April 14, 1999

Canada sells highway for $3B

TORONTO -- Rob Sampson, Minister without Portfolio with Responsibility for Privatization, Tuesday announced the sale of Highway 407 for $3.1 billion, making it the largest privatization in Canadian history.

Highway 407 will be sold to a consortium of Grupo Ferrovial and its subsidiary Cintra Concesiones de Infraestructuras de Transporte, SNC-Lavalin, and Capital d'Amerique CDPQ, a subsidiary of the Caisse de depot et placement du Quebec.

The consortium will purchase from the province the right to own and operate Highway 407, along with the obligation to finance, design and build west and east partial extensions to the highway.

"I am thrilled with the result. With sale proceeds of more than $3.1 billion, Ontarians will receive double their investment in Highway 407," said Sampson. "In addition, much needed extensions will be built at no additional cost to taxpayers, creating more than 6,000 new construction jobs in the province."

"Completion of the highway is important to Ontario's continued economic growth. It will stimulate new economic activity in communities across the greater Toronto area and throughout the province," said Transportation Minister Tony Clement. "The extensions will also enhance our transportation infrastructure by reducing congestion on Highways 401, 403 and the QEW."

"Together with an additional $400 million required for debt servicing and working capital, this brings the consortium's total investment in the province to more than $4 billion." said Jacques Lamarre, president and CEO of SNC-Lavalin.

The west extension will be 24 kilometers, from the junction of Highway 407 Central and Highway 403 in Oakville to the junction of the QEW and Highway 403 in Burlington. It will be six lanes, expandable to eight. Interchanges will be constructed at Highway 5, Appleby Line, Highway 25, Neyagawa Boulevard and Trafalgar Road. The extension will be opened by July 31, 2001.

The east extension will be 15 kilometers, from Highway 48 to Highway 7 east of Brock Road in Pickering. It will be constructed as a four-lane highway, expandable to 10 lanes. Interchanges will be constructed at Markham Road, Regional Road 30, Ninth Line and Markham Bypass. The extension will be opened by Dec. 31, 2001.

"Work on the extensions will begin right away at a cost of approximately $500 million," said Lamarre.

SNC-Lavalin Engineers and Constructors is a subsidiary of SNC-Lavalin Group. It is the largest engineering and construction company in Ontario, employing 700 people in Toronto, Ottawa, Mississauga and Sarnia.

The transaction is expected to close May 5. The terms of the sale include an innovative method of regulating tolls and linking toll revenue to congestion relief.