Pennsylvania Governor Ed Rendell announced a $12.8 billion deal leasing the Pennsylvania Turnpike to Citi Infrastructure and its Spanish partners, Abertis Infraestructuras and Criteria CaixaCorp. The governor fawned over the deal and its positive impact on the citizens of Pennsylvania.
The current Pennsylvania Turnpike carries 190 million cars annually and generates $600 million in tolls. Using price increases in the Governor's press release, that number jumps to $750 million in 2009 and rises 2.5% a year from there. That means well over $160 billion will accrue to the partnership over the life of the lease. Don't believe me? It takes roughly 28 years for the annual toll to double to $1.5 billion a year, then another 28 to reach $3 billion annually. By the end of the lease, Citi and company are grossing over $4.5 billion a year. That's not a bad deal for $12.8 billion upfront and $5.5 billion in capital improvements. Of course, other hyenas are drawn to the scent of such a prize kill.
Governor Ed backs Senator Hillary Clinton for President. Her husband did his part to start the privatization ball rolling when he took the feds investigative arm and sold it as U.S.I.S. The Carlyle Group, an infamous politically connected private equity underwriter, acquired U.S.I.S. in 1999. It flipped it for Carlyle's normal huge gains. It looks like Ed wants to help Citi in a similar fashion. It may land him a VP slot on the Democratic ticket. Surprise!
The current Pennsylvania Turnpike carries 190 million cars annually and generates $600 million in tolls. Using price increases in the Governor's press release, that number jumps to $750 million in 2009 and rises 2.5% a year from there. That means well over $160 billion will accrue to the partnership over the life of the lease. Don't believe me? It takes roughly 28 years for the annual toll to double to $1.5 billion a year, then another 28 to reach $3 billion annually. By the end of the lease, Citi and company are grossing over $4.5 billion a year. That's not a bad deal for $12.8 billion upfront and $5.5 billion in capital improvements. Of course, other hyenas are drawn to the scent of such a prize kill.
Governor Ed backs Senator Hillary Clinton for President. Her husband did his part to start the privatization ball rolling when he took the feds investigative arm and sold it as U.S.I.S. The Carlyle Group, an infamous politically connected private equity underwriter, acquired U.S.I.S. in 1999. It flipped it for Carlyle's normal huge gains. It looks like Ed wants to help Citi in a similar fashion. It may land him a VP slot on the Democratic ticket. Surprise!
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