The M2 Motorway project presented some fascinating
structuring and documentation challenges.
What is the project all about?
The existing M2 Motorway starts in Sydney's north at North
Ryde and travels to the north-west to join onto the Westlink M7
Motorway. It is a privately owned and operated toll road pursuant
to a concession granted by the NSW Roads and Traffic Authority to
Hills Motorway (wholly owned by Transurban).
In recent years, the M2 Motorway has become increasingly
congested, not only because of strong business and residential
growth in Sydney's north-west, but also the strong business
development in the areas of Macquarie Park, Macquarie University
and North Ryde.
Expected growth in the catchments served by M2 Motorway will put
further pressure on the capacity of the M2 Motorway.
The M2 Upgrade Project is essentially designed to remove certain
"pinch-points" on the M2 Motorway which are causes of
congestion. In particular, the existing tunnel will be widened to
support three lanes in each direction. In addition, some new access
points are being constructed to enable more business and
residential precincts to have direct access to the to the M2
Our client in the matter was the NSW RTA. RTA, as the grantor of
the concession, is the agency responsible for the management of the
concession from the Government's perspective and was the lead
agency responsible for negotiating the terms on which the M2
Upgrade Project is to be carried out.
As the M2 Upgrade Project involves the expenditure of in the
order of $550 million in additional capital costs, those terms
include a toll increase and an extension to the term of the
concession to enable the M2 Upgrade Project to be funded by Hills
Motorway (by raising additional equity and project level
What was your role on the project?
My role was focused on the negotiation of the core project deed
under which the upgrade project is to be delivered, including the
terms upon which the upgrade works will be designed, constructed
and completed by Hills Motorway and the amendments to the existing
concessions deed pursuant to which the upgraded M2 Motorway will be
operated by Hills Motorway.
I was also very pleased to be able to draw upon the skills and
experience of senior people in Clayton Utz's project finance
and planning and environment teams and was well supported by a core
team who dedicated some long hours to the project.
Certainly the requirement to project finance a major upgrade to
an existing asset that itself must at all times continue to meet
the requirements of existing project financiers presented some
fascinating structuring and documentation challenges.
It is enormously satisfying to play a part in a deal of the
calibre of the M2 Upgrade Project, recognised as it has been by the
2011 Government Partnership Excellence award from Infrastructure
Partnerships Australia. In my line of work, it is always satisfying
to feel that I contributed in some small way to projects which have
a positive impact for the ongoing development of Sydney in the way
that the M2 Upgrade Project will.
For further information, please contact Stuart Cosgriff.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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