Cartagena – Vera toll road enters bankruptcy proceedings

The Cartagena – Vera toll road has filed a petition for bankruptcy protection in the Madrid courts, as it cannot meet debt repayments on the 550 million euro debt the holding company owes.

According to the company, non payments of maintainence by the Junta and Murcia, and very low (I would say almost non-existent) traffic levels means that it hasn’t been able to keep up with the payments since September 2011.

Driving driving driving… to El Corte Ingles in Cartagena!

Aucosta, the company that runs it, doesn’t have a very good website. Indeed, the last posting in its “daily news” section is from 2008.

The exact daily average of traffic for the road doesn’t seem to be public, but if it was 2.045 vehicles daily in 2010, and taking into account the reported drops in traffic…. let’s say about 1,700 cars a day use it, shall we?

Not all of them do the whole route, so let’s say that the average take is 8€ a vehicle. That’s 136.000€ a day, less IVA: 112.400€ a day or 3.372.000€ a month.

Debt repayments on 550 million euros a year, at 2.5% over 50 years (this calculator doesn’t go past that) is 1,606,783.48€ a month. Leaving them with a profit of… 1.765.217€ a month.

Hmm. They obviously employed someone like me to draw up their original business plan.

7 Replies to “Cartagena – Vera toll road enters bankruptcy proceedings”

  1. Love the maths – spot on though. Of course the only reason to build a duplicate motorway with sky-high tolls is to pour tons of concrete on otherwise virgin coastlines. Cabo Cope having fended off a nuclear power station was slated to have 11,000 new houses and 23,000 hotel beds.
    In addition to the 136.000€/day, those rose tinted glasses also contemplated (or have banked) kickbacks to the value of – well as you do the maths so well…..
    1,700 cars a day – maybe I can’t count, but I’d put it way, way down on that number.
    Oh yeah, and bankrupt – isn’t that where I still drive around in my Mercedes, but the workers haven’t been paid for 6 months.

  2. Simon is as useless as you, David, at maths! 1700 cars a day at 8€ is only 13,600 per day. Using your calculations toll roads really would be a licence to print money which they clearly aren’t!
    He’s right about the merc though – as long as you go bankrupt big enough!

  3. The maths makes a whole bunch of assumptions which could be way off:-

    1) Traffic volumes seem to be ambitious but the road might get better use in the dead of night (when prices are reasonable)

    2) The tariff for the whole journey can be as low as €4.60 (01.00 – 07.00). For part journeys the cost can be just 55c.

    3) The interest rate is too low – they would be paying euribor plus a risk premium. euribor may be low now but 2006 – 2009 it was between 3% and 5% and recently the Spanish risk premium has gone through the roof. Try factoring in 8% to your sums!

    4) What about staff costs? 9 toll areas, both sidea of the road, min 2 staff for each and 3 shifts per day all adds up.

    5) Although irrelvant to profitability a 50 year term seems to be very generous – banks rarely lend that long unless its a dead cert.

  4. 3) ^ The banks already own a lot of the toll road: Globalvía (FCC & Bankia) own 35%, Unicaja, BMN & CAM, have 4,5% each, and Ploder, part owned by FCC, the banks and the state, owning a further 50,7%. Ploder went under last year but is emerging from bankruptcy proceedings at the moment.

    Don’t forget that the staff they do have were ripping them off…

  5. Ah yes, … sounds like you were all accountants or… civil servants oblivious to the real world and economics .If the money is there, it has to be spent!. That is the problem with Spain.

  6. I think that you got your decimal point in the wrong place as €1,700 x 8 = €13,600 per day. They might have stood a chance on your figures.

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