A History Of Collapsed Deals And Defaulted Loans

Sydney Morning Herald

Wednesday February 27, 2002

Brian Robins

In the mid-1990s, about 15 years after the first leg of the long delayed eastern suburbs railways opened, the State Government outlined plans for a $260 million extension to Bondi Beach.

Macquarie Bank and Lend Lease were tapped as the preferred tenderer, and negotiations had begun, but the plan collapsed. All involved signed secrecy clauses so the reasons were hushed.

However, it seems it floundered due to the inability of the State Rail Authority to guarantee the number of trains needed on the connection by the private developers to make the numbers to add up.

A $2.50 surcharge on each ticket for use of the station proved unpopular, and there was the wariness over optimistic passenger forecasts.

An extension from Bondi Junction is essential if capacity on the Illawarra line, which feeds through to the eastern suburbs railway, is to be boosted. The failure of the line extension has forced the SRA to commit about $80 million on a `turnback facility' instead.

The collapse of the Bondi Beach line last year came just months after Airport Link Co defaulted on a $200 million bank loan, leaving the Government exposed to this liability. State Rail may have to buy the four privately built stations.

The liability arose from the development of the four stations on the new link Green Square, Mascot, Domestic and International by the private groups Transfield and Bouygues.

Under the deal, private investors were to put up about $200 million, and gain operational control of the four stations, with the Government putting up another $500 million. However, Transfield and Bouygues put up only an estimated $20 million of their own funds, with the rest coming from NAB.

The firms had hoped to make a return by developing Green Square and Mascot into a hub, taking advantage of their quick connection to the city and southern suburbs.

The $9 price tag on a ticket from the city has proven unpopular with travellers, and the Eastern Distributor, which cuts car travel times from the North Shore to the airport, has also undercut demand.

© 2002 Sydney Morning Herald

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