TRANSJAMAICAN Highway Limited (TJH) continues to negotiate with National Road Operating and Constructing Company Limited (NROCC) regarding the newly opened Phase 1C (May Pen to Williamsfield) section of Highway 2000, which opened on September 14.
TJH currently operates 49.9 km of toll roads under its concession agreement which covers T1, being the Kingston to May Pen (with a connection to Spanish Town) portion, while T2 covers the Kingston to Portmore leg. TJH has exercised its right of first refusal to own, operate, and maintain Phase 1C of the highway — which it believes will bring in an estimated US$7 million in revenue and extend its reach by 28km if it succeeds in its bid.
"I really don't want to comment on the negotiations because it's ongoing. Once we reach a stage where we can speak in more detail about the 1C negotiations, I will give you a call to give you an update at that time. NROCC is managing the asset [Phase 1C] as we speak. The toll is free until December 31st," said NROCC Managing Director Stephen Edwards told the Jamaica Observer in a call on Monday.
TJH Managing Director Ivan Anderson confirmed at the company's June 30 annual general meeting that the company had exercised its right of first refusal to operate the new phase. In an update with the Business Observer last month TJH noted that it expects the discussions to be "completed as soon as possible". Phase 1C was developed at an estimated cost of US$188.5 million.
Although shareholders of TJH won't become aware of the final cost of the Phase 1C development until the deal is closed and published in its financial statements, the company's audited financials give some insight into the cost of the different projects. The intangible assets which cover the cost of the concession was US$387 million, with US$212.09 million represented as the carrying cost at the end of 2022 after accounting for amortisation charges. TJH brought in US$65.01 million in revenue from over 25.8 million transactions for 2022. In June TJH earned US$6.08 million of revenue and US$2.70 million of profit before tax.
NROCC is the grantor of the 35-year concession for Highway 2000, with TJH being the concessionaire which can extend the tenure of the concession agreement for an additional 35 years beyond November 2036. NROCC is a government-owned company which represents the Government of Jamaica's interest in the development, financing, operation, and maintenance of toll highways. NROCC is the largest shareholder in TJH, with a 20 per cent stake in the company which is listed on the Jamaica Stock Exchange (JSE). Edwards also sits on TJH's board of directors.
Although the NROCC boss could not provide an update on the discussions, he highlighted that the government company is working through plans for the extension from Williamsfield, Manchester to Hodges, St Elizabeth. The development was first announced by Prime Minister Andrew Holness in his 2023 budget presentation regarding the Southern Coastal Highway Improvement Project.
"We are looking at that project now. We've done an analysis on it already but we are finalising that analysis right now to make sure that [we] have the most feasible project possible, so we're finalising the analysis now. As soon as we're finished with that [analysis] we'll take it through the established government procurement procedures," Edwards added.
TJH is also awaiting the required approval from NROCC to make amendments to the concession agreement and acquire the remaining 49 per cent stake in Jamaica Infrastructure Operator Limited (JIO) from Bouygues Travaux Publics. The amendment is necessary due to restrictions which exist in the current concession agreement.
For the first six months of 2023 TJH generated 20 per cent more revenue to the tune of US$36.21 million, with net profit coming in 442 per cent higher at US$11.01 million as a result of the restructured costs related to JIO. This was against the backdrop of traffic hitting record levels at the four toll plazas. TJH's third-quarter report is to be published by November 14.
Total assets are marginally higher at US$295.57 million, with US$13.51 million in cash and bank balances at the end of June. Total liabilities and shareholders' equity closed the period at US$244.57 million and US$51 million, respectively.
TJH closed Tuesday at $2.53/US$0.0160, which leaves both securities up 66 and 81 per cent, respectively, year to date. TJH declared a $0.1866 to be paid today to shareholders on record as of October 10. This dividend totalled $2.33 billion (US$14.98 million) and was a 118 per cent jump over last year's dividend. Preference shareholders were paid their quarterly dividend last Friday.
TJH is currently working on developing three interchange lanes at different points of the highway, which is meant to address the traffic problem that is expected to increase along the roadways leading to the growing housing developments. While this isn't expected to result in a massive revenue jump, Anderson noted that it will have a positive impact on the company, with the estimated cost to be under US$10 million.
TJH also benefited from Jamaica's recent credit rating upgrade by S&P Global Credit Ratings as its rating moved from B+ to BB–. Fitch maintained its outlook on TJH as positive with a BB– rating.
"Definitely! Part of what we talked about earlier was benchmarking ourselves to the best companies in the world, and we expect to get there over the next few months as we make the changes to our operations. Once we're in that position we expect that we will be able to compete anywhere with anyone," Anderson said regarding the company's potential to explore other opportunities in Latin America and region.