IAWS set to profit from toll deal

SPECULATION the Government is to pay up to €500 million to buy out the M50 toll contract from NTR puts a different perspective on the €130m investment by IAWS Co-op in the group.

If the deal goes ahead, IAWS Co-op will see the value of its investment rise by up to €160m, its estimated share of the €500m the Government is allegedly prepared to pay to take full control of the M50 toll road around Dublin.

At that price the €160m gain to IAWS would more than pay for the €130m Philip Lynch, chief executive IAWS Co-op, spent in buying up shares in NTR from early January 2005.

His investment caught the markets and NTR off guard, particularly when talks to buy out South Western Services (SWS) were at a critical point.

Mr Lynch insists his stake in NTR is long-term and that he is not stalking the company.

NTR has wind energy and waste management subsidiaries as well as its toll road operations.

It was speculated Mr Lynch wanted to acquire Greenstar, the waste management end of NTR's operations to add the waste management potential in SWS.

Senior SWS managers are concerned the move on NTR will make it difficult to float off IAWS Co-op as planned within the next three years.

SWS needs substantial cash to achieve its potential in the utility sectors it is growing.

Already its wind energy division is heading for substantial profits by the end of 2006.

Waste is one of the big money spinners coming down the track but will require substantial investment to achieve its potential.

The prospect of the Government buying back the toll road operations was given substance when the National Roads Authority (NRA) boss Fred Barry said it was a matter the authority would consider.

Mr Barry was speaking before the Joint Oireachtas committee on Tuesday when he said all options on the future of the toll road would be reviewed.

If the Government proceeds with the purchase, the investment by Mr Lynch will have been inspired. It is that ability to spot a good deal that attracted top executives at SWS to a deal with the IAWS Co-op.

But the decision by Mr Lynch to buy into NTR shocked some of them who belive the flotation of the enlarged group has been undermined by as a result of the NTR deal.

Crucial talks between Mr Lynch and the SWS board are due to be held next Wednesday, March 30.

As the talks drag doubts about the deal thought to be a near certainty some time back are beginning to harden. One source said it was far from a done deal at this stage.

And NTR spokesman said yesterday there were no dissuasions going on at the moment on a sale of the franchise back to the state.

"The company has had no approach from the Government of the National Roads Authority concerning this matter," he said.