In January 1998, a private sector consortium led by Maritime Road Development Corporation (MRDC) and its shareholders, comprising several of the largest construction and infrastructure companies in Canada and the world, Dragados y Construcciones, S.A. (Spain), Fomento de Construcciones y Contratas, S.A. (Spain), Groupe GTM (France), Janin Atlas Inc. and Miller Paving Limited, entered into agreements with the New Brunswick Highway Corporation (a New Brunswick Crown corporation) and a specially established project company to develop, finance, design, build, operate, manage, maintain and rehabilitate the Fredericton-Moncton Highway which, at a length of approximately 218 km, was to be the longest toll-highway in Canada. The project (involving capital and financing costs in excess of $700 million) was heralded as a novel private-public partnership comprising a 30-year concession and a significant financing component (of senior and subordinated debt aggregating $175 million) based on the highway’s projected toll-based revenues.
In June 1999, Bernard Lord’s Progressive Conservatives were sworn into office as the new New Brunswick Government. A cornerstone of the new Government’s electoral platform was the abolition of tolls on the Fredericton-Moncton Highway. Furthermore, the new Premier’s commitment was to be achieved within 200 days of taking office. Effecting such a fundamental change in the nature of the Project presented a significant challenge to the parties.
The Government sought legal advice and representation from Goodman Phillips & Vineberg, while the MRDC consortium turned to Meighen Demers. Both these firms had acted as lead counsel to their respective clients during the original competitive bidding process and the negotiations on the project agreements and financing agreements that originally led to the formation of the public-private partnership.
On December 17, 1999 following over four months of intensive work and negotiations between the Province and MRDC, MRDC’s shadow tolling proposal was approved and agreement (subject only to approval of the lenders and finalization of documentation) regarding implementation was reached. The parties and their respective counsel then proceeded to present to the senior toll-based debt lenders and their counsel, Stikeman Elliott, the shadow tolling proposal and the agreement for implementing same (including amendments to the various project and financing agreements).
On March 1, 2000, after obtaining the requisite approval of the toll-based debt lenders and finalizing the amendments to the various project and financing agreements, collection of tolls on the Fredericton-Moncton Highway ceased and Canada’s first shadow tolling highway came into operation.
Goodman Phillips & Vineberg’s team was led by Donald Pierce and Ira Berg and included Daniel Gormley, Susan Zimmerman and Meredith Roth. Meighen Demers’ team was led by Jacques Demers and Nicholas Williams and included Alan Whiteley, Dana Fuller and Geoffrey Walker (tax). Michael Rumball of Stikeman Elliott acted for the senior toll-based debt lenders and Leonard Hoyt of McInnes Cooper in Fredericton provided counsel to the Project Company.