Harris County Toll Road Authority

1

• Harris County Toll Road Authority
• Quarterly Update
• Mike Strech, P.E.
• Director
• August 1, 2006

2
Financial Alternatives

• HCTRAs financial options as presented to Harris
  County Commissioners Court
• Concession agreement Goldman Sachs
• Asset sale JPMorgan
• County owned and operated Citibank

3
Concession Agreement

• 75 Year Lease Key Assumptions
• 85 EBITDA
• Tolls grow at 3 inflation after 2055
• Volume grows at 1 after 2055
• 35 tax rate
• 5-7 Discount rate (WACC)
• 80/20 Debt/Equity mix
• 10-12 Target IRR

4
Concession Agreement

• 75 Year Lease Key Findings
• EBITDA of 85 not likely to be improved upon by
  concessionaire
• 7.5 12.0 billion valuation

5
Asset Sale

• Strategies Explored
• Sale of minority interest
• via trade sale
• via auction
• via IPO
• Negotiated trade sale
• Auction trade sale
• Sale via IPO
• Dual track (Trade sale / IPO)

6
Asset Sale

• Key Findings
• Assets valued from 4 10 billioncontrol is
  the main variable

7
County Owned Operated

• Foundation
• HCTRA valuable due to success in traffic growth
  and quality of service
• 8.1 20.6 billion enterprise value range

8
County Owned Operated

• Key Recommendations
• Extend the term of existing debt
• Restructure new senior and subordinate liens
• Increase tolls via a forward-looking tolling
  strategy
• Establish higher toll rate covenant
• Modify bond indentures

9
Conclusion

• Harris County Commissioners Court voted
  unanimously to continue running the county's
  lucrative toll road system rather than selling or
  leasing it to a private entity.

• "Not for sale, not for lease!"
• Commissioner Steve Radack