TRANSJAMAICAN Highway Limited (TJH) has begun negotiations to acquire 100 per cent interest in Jamaican Infrastructure Operator Limited (JIO) with an intention to enter in a binding share purchase agreement shortly.
TJH is the company responsible for the development, operation and maintenance of Highway 2000 East-West under a 35-year concession agreement granted by the National Road Operating and Constructing Company Limited (NROCC). It manages the T1 section which is the Kingston to May Pen (with a connection to Spanish Town) portion while T2 covers the Kingston to Portmore leg. T1 is 43.4 km of roadway with three toll plazas while T2 is 6.5 km with only one toll plaza. NROCC owns 20 per cent of TJH.
JIO manages and operates the highway on behalf of TJH under an Operation and maintenance agreement. This also includes the collection of tolls at the four toll plazas. The agreement is set to expire on December 20, 2024, which can be renewed with JIO or contracted to another highly experienced and reputable international toll road operator. It is a joint venture company owned by VINCI Concessions (51 per cent) in partnership with Bouygues Travaux Publics (49 per cent).
The agreement was restated in December 2019 to include a pre-operating lump sum fee for new phases, a monthly fixed operating fee, and a monthly variable fee corresponding to three per cent of the theoretical toll revenues. The monthly fixed fee is 20 per cent payable in United States dollars (USD) and 80 per cent payable in Jamaican dollars (JMD). TJH paid US$16.42 million ($2.55 billion) and US$1.60 million ($247.66 million) in fixed and variable fees to JIO in 2021. TJH owed US$1.66 million to JIO while it had a receivable of US$259,000 from JIO at the end of 2021.
TJH’s first-quarter (Q1) revenue grew 21 per cent to US$14.88 million ($2.29 billion) and exceeded its Q1 2020 performance of US$12.96 million. Traffic on the highway was up 4.5 per cent compared to pre-pandemic Q1 2019, with March 2022 recording the second-highest ever monthly numbers recorded in the company’s history. Traffic for March 2022 was 7.6 per cent above Q1 2019 numbers while profit before tax doubled to US$1.15 million; the net profit only increased by 17 per cent to US$674,000 due to a deferred and corporate tax charge.
The company is currently waiting on Phase 1C (May Pen to Williamsfield) to be complete which will extend the length of the toll road by 28 km or 50 per cent. The US$188.5-million project was 64 per cent complete up to March and is expected to be finished by March 2023. The company is also exploring interchange lanes for different points of the highway — at Grange Lane, Bernard Lodge Road, Salt Pond Road and Old Harbour Road — to address the traffic issue as there is still an issue with build-up along the Mandela Highway. It is also in discussions to develop a gas station near the Portmore leg of the highway.
Total assets decreased by three per cent to US$307.99 million as its intangible asset relating to the rights under the concession agreement was amortised to US$222.18 million. Cash and cash equivalents stood at US$7.96 million ($1.22 billion). Total liabilities and shareholders’ equity stood at US$253.18 million and US$54.81 million, respectively. The company’s JMD stock price closed on Tuesday at $1.45 while the USD share price was at US$0.0084, which gave it a market capitalisation of $18.12 billion. This leaves the JMD security above the initial public offering price of $1.41 but the USD price below the price of US$0.01. The company’s annual general meeting will be held at 10 am this morning at Jamaica Pegasus hotel. Shareholders can also watch the meeting live on YouTube.