The financial problems on the Indiana Toll Road (ITR) lease became public this month when the creditors and equity sponsors agreed to a plan to sell the rights to operate the road for the remaining 67 years of a 75-year lease they signed in 2006. The plan permits ITRCC to either sell its assets through a competitive process or recapitalize ITRCC by reducing its debt in a “pre-packaged” Chapter 11 process.

The liquidation analysis in the Chapter 11 filing projects the valuation of the remaining concession rights to be from $1.5 billion to $2.25 billion. Debt refinancing projections assume $2 billion of senior debt (at LIBOR+2.5%) and $750 million of sub debt (at LIBOR+6%).

The timing is right, says a Wall Street banker. “There’s an oversupply of equity chasing too few investment opportunities,” he says. “Whoever is buying is overpaying.”