July 20, 2010

Aecon Group selling stake in cross-Israel highway

TORONTO

Toronto-based Aecon Group Inc. has signed an agreement to sell its 25 per cent interest in the cross-Israel highway to a consortium headed by private equity fund Israel Infrastructure Management for $77.8 million.

The sale of its stake in the toll road owner, Derech Eretz Highways Ltd., is expected to close late this year, the Canadian company said last Thursday.

However, the sale remains subject to several third party approvals, including first-refusal and other rights held by Aecon’s partners in the highway. The Israeli government must also approve the deal.

Despite the sale, Aecon said it will hold on to its 30 per cent stake in the company that operates and maintains the highway as well as interests in other transportation infrastructure in Israel.

The Canadian construction company first invested in and began construction on the highway as a public-private partnership more than 10 years ago.

The electronic toll highway is the biggest infrastructure project in Israel’s history. It runs about 140 kilometres north-south and is the easternmost highway in Israel. It uses a system of cameras and transponders — no toll booths — similar to Highway 407 in Toronto.

Aecon said the sale is expected to generate net after tax cash of between $65 and $70 million for Aecon and a gain of $30 million on its books. Aecon had more than 4,500 employees at the end of 2008.

Canadian Press

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