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

Harris County Toll Road Authority Quarterly Update Mike Strech, P.E. Director August 1, 2006. Financial Alternatives. HCTRA’s financial options as presented to Harris County Commissioners’ Court: Concession agreement ~ Goldman Sachs Asset sale ~ JPMorgan

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

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

  2. Financial Alternatives HCTRA’s financial options as presented to Harris County Commissioners’ Court: • Concession agreement~ Goldman Sachs • Asset sale~ JPMorgan • County owned and operated~ Citibank Harris County Toll Road Authority

  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 Harris County Toll Road Authority

  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 Harris County Toll Road Authority

  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) Harris County Toll Road Authority

  6. Asset Sale Key Findings • Assets valued from $4 – $10 billioncontrol is the main variable Harris County Toll Road Authority

  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 Harris County Toll Road Authority

  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 Harris County Toll Road Authority

  9. 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 Conclusion Harris County Toll Road Authority

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