Federal, State & Private Role in Financing P3's April 26, 2007 Presentation for: Regarding:

Federal, State & Private Role in Financing P3's

April 26, 2007

Presentation for:

Regarding:

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Evolution of Federal Role I

Recent Example of State Role: SH 121 II

Private Role: An Alternative Source of Capital III

Table of Contents

Tab

I. Evolution of Federal Role

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Federal aid for transportation projects can take many forms. Federal lending vehicles have endured over time.

1993 1995 2002

$120 Mn standby Federal line of credit for San Joaquin Hills

Transportation Corridor Agencies

First Federal Section 129 Loan

(precursor to TIFIA) for

President George Bush Turnpike

$140 Mn TIFIA loan for SR 125 is first-ever provided

for a private toll road development

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Recent Government Subsidies/Financing Sources

TIFIA Overview

The Transportation Infrastructure Financing and Innovation Act (TIFIA) provides loans, guarantees and standby lines of credit for transportation infrastructure projects. It is a taxable US Treasury rate.

In order to become eligible for credit assistance, a project must meet certain threshold criteria, including:

Large surface transportation projects (project costs must exceed $100 million or 50% of State federal highway funds for most recent fiscal year).

TIFIA contribution limited to 33 percent

Investment grade rating requirement (for senior debt)

Dedicated revenues for repayment

Private Activity Bonds (PABs)

Qualified PABs are tax-exempt bonds issued by a state or local government, the proceeds of which are used to build certain qualified facilities that will be owned, leased or otherwise used by an entity other than the government issuing the bonds.

For a PAB to be tax-exempt, 95% or more of the net bond proceeds must be used for one of the several qualified purposes, as described in the Internal Revenue Code. Section 142 of the Code specifically describes what qualifies as an Exempt Facility Bond, which is issued to finance various types of facilities owned or used by private entities.

As opposed to state-by-state volume cap allocations that limit the issuance of certain other PABs, SAFETEA-LU establishes a national limit of $15 billion to be allocated by 2009 and issued by 2015. As a result of this new provision, tax exempt financing will be made available to surface transportation projects with significantly more private participation than has been permitted in the past under the Code.

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FTA has designed its Public Private Partnership Pilot Program to encourage use of alternative delivery and finance approaches.

3 projects will be selected to participate in the Pilot Program

The key benefit of participating will be expedited approval for New Starts funding

Candidates of the new Program must exhibit high “demonstration value” which includes the following five criteria:

Number of project elements the private partner is responsible for

Quality of risk allocation with respect to the cost of project

Extent to which equity capital and development proceeds contribute to project and terms related to contribution

Whether project is part of a plan that incorporate system-wide congestion pricing

Speed of delivery and quality of performance as well as reliability of projections of costs and benefits associated with the project

Applications to the Pilot Program will be reviewed quarterly on a rolling basis for as long as there is an opening

Deadlines for submission:

To qualify for first quarterly review, applications must have been received by March 31, 2007

To qualify for second quarterly review, applications must be received on July 1, 2007

Project’s that submitted for the March 31, 2007 deadline include:

Houston Metro BART –

Oakland Airport Connector

Denver RTD Georgia RTA

II. Recent Example of State Role: SH 121

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The $3.4 billion SH 121 Project is the largest competitively bid concession for a greenfield toll road in the United States to date.

Goldman Sachs has been serving as a concession advisor to the Texas Department of Transportation (TxDOT) on its Comprehensive Development Agreement (CDA) program since October 2005

The CDA, which provides a competitive selection process for developing regional projects, is the program TxDOT uses to enable private investments in the Texas transportation system

On February 28, 2007, TxDOT approved the recommendation of the Cintra consortium as the preferred best value proposer

Two other bidding teams led by Macquarie and Skanska submitted bids for the project

The Cintra team will pay an upfront fee of $2.1 billion, guarantee 49 annual payments of $25 million per year (PV of $716 million), and spend roughly $567 million to extend the main lanes into Collin County for the right to design, build, finance, operate and maintain the 26 mile road for 50 years post final construction

While part of the SH 121 has already been built by TxDOT, this is one of the first Greenfield P3s in the US

TxDOT has imposed a revenue sharing arrangement; above certain gross revenue targets, TxDOT will share an increasing percentage of those gross revenues in addition to the upfront payment and guaranteed annual payments

The Regional Transportation Council of the Dallas-Worth Area, which will largely decide how the upfront funds will be spent, is expected to use proceeds to accelerate funding for needed transportation projects throughout the region

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Project Overview

TxDOT “pre-applied and pre-qualified” for an estimated $700 million TIFIA loan and up to $1.8 billion of Private Activity Bonds (PABs) allocation for this project. The developer has the option to utilize TIFIA and PABs as part of their final funding strategy

Tolls will be approximately $0.139/ mile in 2008 and $0.145/mile in 2010 (higher for trucks). Toll increases allowed every 2 years, capped by increase in CPI or Employment Cost Index. TxDOT will allow time of day and congestion pricing starting 2012

Project is expected to be completed in 2012, 20 years earlier than originally anticipated using traditional funding alternatives

This approach will limit use of public funds since the developer will bear the full cost. TxDOT funds which otherwise would have been used for this project can be redirected to meet other transportation priorities

Developer has committed to higher levels of performance standards than TxDOT currently provides, which will benefit users

Award is conditional pending final environmental approval (expected April 2007) and successful financial close

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Overview of SH 121Location of SH 121

SH 121 is expected to be a ~26-mile tolled diagonal state highway, connecting I-35W near downtown Fort Worth to US-75 near Bonham, Texas

~10 miles of new construction to be completed in 2011, 7 miles already operational as of July 2006, and ~9 miles to be built by the State

Pass north of the greater Dallas area, running through Denton and Collin counties, a densely built-up area with one of the fastest growth rates in the State and through the most affluent counties of the Dallas area

6 main lanes with grade separated interchanges at all major cross streets

Expected to provided improved access to DFW Airport (the 3rd busiest airport in the US) and other critical regional hubs

The Dallas-Fort Worth Metropolitan Area, which is responsible for one-third of Texas’ GDP, is a heavily-developed area with rapid population growth (population increase from 4 million in 1990 to5.8 million in 2004, CAGR of 2.7%)

Highway OverviewMap of Local Area

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Overview of SH 121Transaction Timeline

January 2005: TxDOT received unsolicited proposal from Skanska

March 2005: TxDOT issued request for indicative offers

June 2005: TxDOT received 5 indicative offers

July 2005: 4 consortia short-listed by TxDOT

August 2006: TxDOT issued request for final offers

January 2007: TxDOT received 3 final offers

February 2007: Cintra selected as Apparent Best Value Proposal

April 30, 2007 (est.): Obtain environmental approvals and financial close

III. Private Role: An Alternative Source of Capital

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North America is the growth market for global infrastructure investors.

$6 bn Fund

Raising $1 bn Fund

Rumored to be raising Fund

Wants to see NYSE listed vehicle to invest

$1+ bn Fund

$1+ bn Fund

$1+ bn Fund

$1+ bn Fund

$1+ bn Fund

Over 150 people in U.S.

Adding to base in Austin/Chicago

Building U.S. Team in San Francisco

Moving personnel to New York

Investment team based in U.S.

Considering adding U.S. office

Goldman Sachs

Carlyle Group

Blackstone Group

Apollo Advisors

Morgan Stanley

JP Morgan

GE/Credit Suisse

Deutsche Bank

Merrill Lynch

Macquarie

Cintra

Babcock & Brown

Hastings Management

Transurban

Brisa

U.S. Based Infrastructure

Funds are Raising Equity and Seeking Investments

Established International Infrastructure Investors are

Setting Up U.S.Offices

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Public-private partnerships provide an opportunity to fully capture the “growth wedge” in future revenue increases.

Municipal bond investors rely on historical revenues to determine the leverage levels which constrains total value for the owner

Equity investors look for future returns based on growth

Debt + Equity = Greater Proceeds for Owner of Asset

Net TollRevenues

Maximum Municipal Bond Leverage Concession Sale

Today 40 yrsPast

Debt1.25-2.00x Coverage

99 yrs

Conservative Projections

Today 40 yrsPast 99 yrs

Equity InvestorDebt

Net TollRevenues

Conservative Projections

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Substantial pools of capital are focused on investing in infrastructure and this growth wedge.

$300 Bn80% Debt

$75 Bn 20% Equity

Total Buying Power:

$375 Billion

Examples of Infrastructure Investors/Operators

Babcock & Brown Hastings Fund Star Capital Carlyle Group Galaxy Fund

Macquarie CKI Ontario Teachers Borealis Infrastructure Goldman Sachs

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Goldman Sachs Infrastructure Partners has recently increased its Infrastructure Fund to $6.5 billion

New, infrastructure-focused, investment fund sponsored and managed by Goldman Sachs

Housed within the Merchant Banking Division

Leverage from the relationships and capabilities of the Goldman Sachs franchise

Equity commitments in excess of $6.5 billion

~$20.0 billion in buying power with additional funds coming through co-investment (includes leverage and equity)

Goldman Sachs to provide a significant portion of the equity

Fund structure similar to traditional private equity vehicles

12-15 Year Fund Life

Targets uniquely positioned global infrastructure assets with the following characteristics:

Essential social services

Stable, predictable, low risk cash flows(a)

Insulated from the business cycle

Revenue often linked to local inflation

Able to support high leverage

GSIP Seeks to Invest in Global Infrastructure Assets with Stable Long Term Yields

Potential Target Asset ClassesFund Overview

Type Asset Types

Toll Roads Airports Ports Selected Rail Underground TransportTransportation

Regulated Utilities

Electricity Gas Water

Social Infrastructure

Hospitals Schools Prisons Stadiums

Communications

Broadcast Transmission Networks

Mobile Telephony Satellites and Terrestrial or

Submarine Cable Networks

(a) There can be no assurance that the fund will achieve these objectives.

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Commercial Revenue $49.6 $53.3 NA NA

Passenger Revenue 35.3 34.4 NA NA

Total Toll Revenue $84.9 $87.7 $90.3 $126.0

% Growth 3.5 3.3 2.6 39.5

EBITDA (c) 59.7 60.6 63.9 98.0

% Margin 65.0 63.3 63.5 71.8

Revenue 1.7% 3.4% 8.2% 10.3%EBITDA 4.2% 9.3% 10.0% 13.0%

The recent $3.85 billion lease of the Indiana Toll Road illustrates the PPP market is growing in the US.

(in millions) 2004A 2005A 2006E(b) 2007E(b)

(a) Source: Wilbur Smith/State of Indiana(b) Pro Forma 2006 and 2007 estimates based on Goldman Sachs and Wilbur Smith internal projections(c) Includes historical concession revenues, which were included as part of the Concession Agreement

Critical transportation link between major East Coast cities, the City of Chicago, and the western United States

46 year operating history

Approximately 157 miles in length

The Toll Road is designated as Interstate 90 (I-90) from the Illinois State Line (where it connects to the Chicago Skyway) to the Ohio State Line (where it connects to the Ohio Turnpike)

FY05 AADT of 46,000 on Barrier System, and 25,000 on Ticket System

Unchanged toll rates since 1985 – Among lowest $/mile in US

State mandated increase to become effective on 3/1/2006

Description of the ITR The Road Network

Financial Overview(a) Ownership and Financing Structure

Macquarie50%

Cintra50%

Bank Debt $3,278.5 81%

Equity 770.1 19

Total $4,048.6 100%

Financing Structure

Acquisition bank debt Tenor is 9 years Step up in margins Partial cash sweep

Hedging Fully hedged debt profile for 20

yrs Swap rates step up gradually

from 2006 to 2026, starting at 3% p.a.

Ownership Structure

CAGR3 Yr Hist.

5 Yr Hist.

5 Yr Proj.

10 Yr Proj.

Estimated IRR = 12.5%(d)

(d) Source:Macquarie Website

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Indiana Toll Road: The private operator agreed to key concession terms, including predefined future tolling increases and operating standards.

Operating Standards:

250 pages of operating standards that must be maintained

Restrictions on congestion management with mandated expansion upon certain Level of Service (LOS)triggers

Term of Concession: 75 years

Estimated Additional Capital Expenditures/Road Enhancements: $4.4 billion (2006 dollars)

Toll Increases:

A state-mandated toll increase schedule will be implemented on April 1, 2006.

– First toll increase since 1985

– Passenger car tolls to increase to 5.1¢ / mile, and remain unchanged until 2010

– Commercial vehicle tolls step up as shown below in April 2006, April 2007, April 2008, and April 2009

Concessionaire’s ability to set tolls begins in 2010 with a step up in 2010 to reflect the prior 4 years CPI or nominal GDP per capita growth

Maximum annual toll increase from 2011-2080 (term of concession) will be the greater of 2%, CPI and nominal GDP per capita growth

5.1¢/mile

11.4¢/mile 14.4¢/mile 17.4¢/mile 20.3¢/mile

Greater of 2.0% or CPI or nominal GDP/capita

Greater of 2.0% or CPI or nominal GDP/capita

Passenger Cars

Commercial Vehicles (5-axle)

April 1, 2006

April 1, 2007

April 1, 2008

April 1, 2009

June 30, 2010

June 30, 2011

Catch up of prior 4 years growth

Catch up of prior 4 years growth

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The concession lease of the Chicago Skyway was the first of its kind in the United States.

7.8 miles divided elevated toll road and toll bridge with 3 lanes in each direction

Connects to Indiana East-West Toll Road and Dan Ryan Expressway

Current tolls: $2 per car, $1.20 per truck axle – no change since 1993

Mostly cash-only tolling

Lack of Competing Direct Route

Small Impact of Toll Increases on Traffic Demand

Strong EBITDA Margins and Revenue Growth Rates

Limited Future Capital Expenditures

Modernization Potential

(US$ in millions) 2003 (a) 2004 2005 (a)

2006 (a)

Revenues ($) (b) 39.8 41.2 49.650.1

Operating Expenses ($) (b) 11.4 12.2 12.613.1

EBITDA ($) 28.4 29.0 37.037.1

EBITDA Margin 71.3% 70.4% 74.5%73.9%

Total Vehicles (000) 17,422 17,395 16,26016,422

Revenues 3.0% 11.6% 8.6%

10.3%EBITDA 1.5% 14.1% 10.1%

12.4%

Description of Chicago Skyway The Road Network

Financial Overview Ownership and Financing Structure

Cintra55%

Macquarie45%

Debt $1,000 53%

Equity 882 47

Total $1,882 100%

Initial Financing Structure

$1.4 bn Debt Refinancing

Achieved non-recourse financing

Improved match funding of assets and liabilities versus bank financing

Reduced financing cost through several features including an innovative accreting swap provided by Goldman Sachs Capital Markets L.P.

Ownership Structure

(a) Lane closures due to CIP impacted traffic and revenues (completion of CIP in December 2004).(b) Source: Audited financial statements.(c) Source: Macquarie Website

CAGR3 Yr Hist.

5 Yr Hist.

5 Yr Proj.

10 Yr Proj.

Estimated IRR = 12.3%(c)

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The Skyway $1.4 Billion refinancing gave “proof-of-concept” to US capital markets of debt financing future growth.

Innovative interest rate derivatives created a synthetic floating-rate zero coupon debt instrument allowing: Issue floating-rate securities, enhancing the marketability of its senior debt and enabling the sponsors to achieve

a lower rate than may have otherwise been possible Significantly defer fixed-rate payments to the swap counterparties in the early years to the later years after

scheduled toll increases take effect Financial Security Assurance (FSA) wrapped not only the senior secured debt, but provided a forward

commitment to guarantee certain refinancing debt An aggressive view on growth was necessary to achieve such leverage levels

$0

$50

$100

$150

$200

$250

$300

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Year End Debt Service and Cash Flow Comparison ($000s)

Compounded Annual Growth Rate

2006-2010 2010-2015 2015-2020 2020-2025

Projected Cash Flow 16.0% 12.5% 9.4% 5.3% 10.7%

Projected Cash Flow

Debt Service (DS)

DS Coverage Ratio

1.9x2.6x

2.3x

2.2x

2.2x2.2x

2.3x

2.3x2.4x

2. 5x

2006-2025

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