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UPDATE 3-Abertis preferred for biggest U.S. toll road deal

Reuters: [2008-05-19 22:29:00]

(Adds background)

MADRID/NEW YORK, May 19 (Reuters) - A consortium led by Spanish infrastructure company Abertis <ABE.MC> was named preferred bidder on Monday in the largest U.S. toll road deal ever after offering $12.8 billion to lease the Pennsylvania Turnpike.

Pennsylvania Gov. Ed Rendell said Citigroup <C.N> was also part of the group, which had pledged total investment on the road of $14.5 billion over the 75-year lifetime of the contract. However, the state legislature, which rejected previous privatization plans, still must approve this deal.

In a statement, Abertis -- which also runs airports and has a telecommunications unit -- said the contract would make it the largest infrastructure operator in the world with assets in the United States, France, the UK, Latin America and its home Spain.

It would help it further diversify beyond Spain and "facilitate the expansion of other business units in the largest market in the world," Abertis said in a statement.

Abertis controls half the project, while Citigroup has a 41.67 percent stake, and Spain's Criteria <CRIT.MC>, which groups the industrial holdings of publicly owned bank La Caixa, will also take a 8.33 percent stake.

The deal -- which comes amid a global credit crisis -- would be 41.4 percent funded with equity and 58.6 percent through bank debt, Abertis said.

The Pennsylvania Turnpike network totals 801 km (497 mile) of roads, linking Philadelphia, Scranton, Harrisburg and Pittsburgh.

The Turnpike's annual turnover was $607 million last year and Abertis forecasts it will grow to $780 million in 2009 with EBITDA (earnings before interest, tax, depreciation and amortisation) of $570 million, equivalent to a margin of 73 percent.

Abertis proposes putting toll fees up 25 percent initially, followed by subsequent inflation rate increases and a minimum rise of 2.5 percent.

Abertis estimated an internal rate of return (IRR) on the deal would be "in the low range of double digits," and gave no further details.

It said investment required on the road would not compromise its dividend policy.

Of the investment needed for the deal, $8.5 billion will be financed by bank debt and the three partners will fund the remaining $6 billion.

Abertis will put up $3 billion, Citi will fund $2.5 billion and Criteria $500 million.

PRIVATIZATION CONTROVERSIAL

Gov. Rendell said Abertis had considerable experience in running toll roads and noted that two years ago a bipartisan commission recommended that the state spend $1.7 billion a year on transportation repairs.

But similar privatizations of U.S. roads have recently stalled in several states, including Texas and New Jersey, amid concerns the banks and developers were benefiting at the taxpayer's expense.

Pennsylvania's legislature has already killed similar deals, and some credit agencies say only new roads should be privatized, not existing ones.

The Federal government is now mulling whether to approve levying tolls on Interstate 80, the Turnpike's main east-west competitor.

The price Citi and Abertis offered for the Turnpike, one of the nation's busiest east-west routes, was at the bottom of the $12 billion to $18 billion range estimate by investment bank Morgan Stanley <MS.N>.

The price was so much less because market conditions have changed and Pennsylvania limited yearly toll hikes to around 3 percent instead of the much bigger increases Morgan Stanley's forecast assumed, which were based on an Indiana plan, said Gov. Rendell.

Rendell called the offer by Citi a "slam dunk" because it would raise $150 million a year to improve transportation and allow Pennsylvania to drop plans to get motorists who drive on Interstate 80, the Turnpike's main east-west competitor, to pay tolls for the first time.

"Citigroup is probably as American an institution as you can find," Rendell told reporters, noting questions had been raised about foreign companies that sought to participate.

The Citi-Abertis offer topped the next highest bidder, a Goldman Sachs <GS.N> group which offered $12.1 billion, and a bid from Spain's Cintra <CCIT.MC> and Australia's Macquarie <MIC.N>, Rendell added.

Abertis shares rose 1 percent to 21.08 euros just before they were suspended at 5 pm local time (1500 GMT). The stock market regulator said trading would resume at 0830 am (0630 GMT) local time on Tuesday. (Reporting by Carlos Ruano, Sarah Morris, Joan Gralla and Ben Harding, editing by Richard Chang) ((sarah.morris@reuters.com; +34 91 585 8328; Reuters Messaging sarah.morris.reuters.com@reuters.net)) Keywords: ABERTIS PENNSYLVANIA/CONFIRMATION

Keywords: ABERTIS PENNSYLVANIA/CONFIRMATION

UPDATE 2-Thomson Reuters to cut 140 journalist jobs

Reuters: [2008-05-19 22:11:00]

(Updates share price, rewords disclaimer)

NEW YORK, May 19 (Reuters) - Global information company Thomson Reuters Corp <TRI.TO> <TRIL.L> plans to cut 140 editorial jobs by the end of the year as its Reuters news service absorbs Thomson Financial News.

More than half the cuts will be in Europe, while the rest will be scattered, Editor-in-Chief David Schlesinger wrote in a memo to employees on Monday.

Reuters also plans to add about 50 new jobs in growth areas, Schlesinger said, adding that the news organization should have about 2,500 employees by year's end.

"When two similar and once competing organisations come together, there is natural overlap and duplication in coverage," Schlesinger wrote.

"Wherever possible, we have worked to minimize job losses and to avoid redundancy by moving people into new roles and cancelling open posts that don't fit within the new organisation," he added.

Britain's National Union of Journalists said it had not ruled out a strike but would negotiate with the company first.

"The NUJ has been pressing hard to have any job cuts carried out through voluntary redundancies and will continue to do so," said NUJ representative Myra MacDonald.

Thomson Reuters had said it would shed jobs after Thomson Corp bought Reuters Group Plc for more than $16 billion in cash and stock on April 17.

Thomson Reuters, which employs 50,000 worldwide, could lose about 1,500 jobs in total, according to a BBC report.

Thomson Reuters is cutting as many as 650 jobs in its content, technology and operations division, according to a memo sent to employees by the head of that group, Peter Moss.

"It is important to emphasize that the number of people leaving the company through redundancies will be significantly less than this, with our current projection being approximately 250 people," Moss wrote.

Thomson Reuters spokesman Frank DeMaria confirmed the statements in the memos.

Thomson Reuters shares closed up 1.63 percent at 1,682 pence in London while its New York-listed shares closed up 0.80 percent at $37.95.

(Reporters and editors involved in writing and editing this report may own Thomson Reuters securities and are bound by the Reuters Code of Conduct, which restricts dealing in securities in companies on which a journalist is reporting)

(Reporting by Robert MacMillan; Editing by Jack Reerink & Ted Kerr)

((robert.macmillan@thomsonreuters.com; +1 646 223 6012; Reuters Messaging: robert.macmillan.reuters.com@reuters.net)) Click on http://blogs.reuters.com/category/themes/mediafile/ to see Reuters MediaFile blog Keywords: THOMSONREUTERS/

UPDATE 2-Abertis preferred for biggest U.S. toll road deal

Reuters: [2008-05-19 21:42:00]

(Recasts; adds details, comments from Pennsylvania)

Pennsylvania Gov. Ed Rendell said Citigroup <C.N> was also part of the group bid which had pledged total investment on the road of $14.5 billion over the 75-year lifetime of the contract.

It would help it further diversify beyond Spain and "facilitate the expansion of other business units in the largest market in the world," Abertis said in a statement.

The deal -- which comes amid a global credit crisis -- would be 41.4 percent funded with equity and 58.6 percent through bank debt, Abertis said.

The Pennsylvania Turnpike network totals 801 km (497 mile) of roads, linking Philadelphia, Scranton, Harrisburg and Pittsburg.

The Turnpike's annual turnover was $607 million last year and Abertis forecasts it will grow to $780 million in 2009 with EBITDA (earnings before tax, depreciation and amortisation) of $570 million, equivalent to a margin of 73 percent.

Abertis proposes putting toll fees up 25 percent initially, followed by subsequent inflation rate increases and a minimum rise of 2.5 percent.

Abertis estimated an internal rate of return (IRR) on the deal would be "in the low range of double digits," and gave no further details.

It said investment required on the road would not compromise its dividend policy.

Of the investment needed for the deal, $8.5 billion will be financed by bank debt and the three partners will fund the remaining $6 billion.

Abertis will put up $3 billion, Citi will fund $2.5 billion and Criteria $500 million.

PRIVATIZATION CONTROVERSIAL

Pennsylvania's state legislature still has to approve the toll road deal, Gov. Rendell said, adding that Abertis had considerable experience in running toll roads.

Similar privatizations of U.S. roads have recently stalled in several states, including Texas and New Jersey, amid concerns the banks and developers were benefiting at the taxpayer's expense.

Pennsylvania's legislature has already killed similar deals, and some credit agencies say only new roads should be privatized, not existing ones.

The Federal government is now mulling whether to approve levying tolls on Interstate 80, the Turnpike's main east-west competitor.

"Citigroup is probably as American an institution as you can find," Rendell told reporters, noting questions had been raised about foreign companies that sought to participate.

The Citi-Abertis offer topped the next highest bidder, a Goldman Sachs <GS.N> group which offered $12.1 billion, and a bid from Spain's Cintra <CCIT.MC> and Austraia's MacQuarie <MIC.N>, Rendell added.

Keywords: ABERTIS PENNSYLVANIA/CONFIRMATION

UPDATE 1-Thomson Reuters to cut 140 journalist jobs

Reuters: [2008-05-19 19:03:00]

(Adds comment from National Union of Journalists)