News Release Archive

Some misconceptions have appeared in various new media reports
concerning the Highway 104 western alignment project.
Specifically, the misconceptions concern the relation of tolls to
profit and financing.

The Department of Transportation and Public Works provides the
following fact sheet to help clarify the issues. This document is
also available at


(Misconception: "Atlantic Highways Corp. will use $57 million of
its own money to build the highway in return for the right to
charge tolls over the next 30 to 35 years.")

- Atlantic Highways Corp. (AHC) is not contributing any money to
  the project. It was the successful (i.e. lowest) bidder in the
  competition to become the private-sector contractor in this
  public-private partnership. It placed a bid of $112.9 million
  for construction costs.

- Taxpayers are contributing $55 million to this cost -- $27.5
  million provincial money and $27.5 million federal money
  through the Strategic Highways Initiative Program.

- The remaining $58 million in construction costs and $2.5
  million in contract-closing costs (such as the cost of
  borrowing, bond registration fees, hiring the independent
  engineer, etc.) is financed through bonds issued to private
  investors by Newcourt Credit Group, a non-bank lender in
  Toronto. There is also a $5.5-million government pension fund
  investment which will be used to seed reserve funds.

- The investors will be repaid from toll revenue collected for 30
  years, according to a detailed schedule drawn up during the


(Misconception: "The (speed zone) changes are part of a contract
with the company building and operating the new high-speed, four-lane, 45-km highway, to ensure it has enough traffic to turn a

- The tolls do not go to AHC. The tolls cover a number of costs:
  the return on investment to the bondholders who placed the $66
  million to cover the cost of the project beyond the government
  contribution, toll operations, the annual maintenance costs of
  $650,000 that go to the Department of Transportation and Public
  Works, and long-term maintenance such as repaving.

- No one but AHC knows what its profit margin is. Its bid of
  $112.9 million contains the profit margin. As a private
  company, it is entitled to keep that information confidential.
  Negotiations with AHC did not concern profits because that was
  part of its bid, already accepted as the lowest.

- The government bears no financial liability for low toll
  revenue. The private investors have taken the full risk for
  traffic volume and for revenue flow from the tolls on the road.


The Highway 104 western alignment is:

- 45 kms between Masstown and Thomson Station

- twinned, four-lane, with a wide (22.6-metre) median

- nine kilometres shorter than old route

- 16 minutes faster than driving the current route

- a public-private partnership

- opening December 1997

- replacing a 54-km section of two-lane highway


Per car                         $3
Per truck                       $2 per axle
Per recreational vehicle        $4
Per kilometre                   6.6 cents


Construction cost               $112.9 million

Government contribution         $55 million, split 50/50


Private contribution

The remaining money is provided by sale of bonds to private
investors underwritten by Newcourt Credit Group of Toronto. Toll
revenues over 30 years will provide the investors a return, pay
for toll operations, cover the $650,000 annual maintenance
provided by the Department of Transportation and Public Works,
and pay for long-term maintenance such as repaving.

The government is not responsible for any financial shortfalls
due to low traffic volumes. The money borrowed from the private
sector by the Highway 104 Western Alignment Corp. was borrowed on
the security of tolls and not the financial guarantees of the

Public-Private Partnership:

Without the involvement of the private sector, this urgently
needed highway could not have been built in a reasonable time
frame, and fatalities on the existing road would have continued.
In a partnership arrangement, the funding is in place at startup,
meaning the highway can be built faster with such efficiencies as
purchasing with economies of scale.

The Players:

- Atlantic Highways Corp., a subsidiary of Canadian Highways
  International Corp. (CHIC) of Mississauga, Ont., is the major

- AHC has involved three major Nova Scotia sub-contractors: Nova
  Construction, Tidewater Construction, and The Foundation Co. of

- CHIC has four equity partners: Monenco-Agra Inc., Dufferin
  Construction, Armbro Holdings Inc., The Foundation Co. of

- Atlantic Highways Management Corp. (AHMC) is a subsidiary of
  AHC and will be subcontracted by the Highway 104 Western
  Alignment Corp. to manage the toll operations.

- Newcourt Credit Group is a non-bank lending institution in
  Toronto and is underwriting the toll revenue bonds for the
  private financing.

- The Highway 104 Western Alignment Corp. is a private company
  owned by the provincial government. It was created by the
  Highway 104 Western Alignment Act (incorporated in July 1995)
  to manage the financing, design, construction, operation and
  maintenance of the project. In this way, the financial
  obligations of the highway are separate from the province's
  debt. This is termed non-recourse funding because the private
  investors have no recourse to government assets or money should
  toll revenue fail to provide them a return on their investment.
  The financial transactions of the corporation are handled
  through the construction trustee, Montreal Trust, and Newcourt
  Credit Group has the right to review these transactions.

- The Department of Transportation and Public Works owns the
  highway. The operation of the highway is turned over to the
  province when the bondholders are repaid in 30 years. (The
  contracts stipulate that the highway must be in excellent
  condition.) Until that time the Highway 104 Western Alignment
  Corp. manages the highway and subcontracts the toll operations
  to AHMC. The Department of Transportation and Public Works
  provides annual maintenance for the highway in return for
  $650,000 per year, paid from toll revenues.


Contact: Susan MacLeod
         Highway 104 Western Alignment Corp.

         Chris Welner
         Transportation and Public Works

trp                     Apr. 22, 1997 - 4:25 p.m.