Toll road operator Transurban Group
(ASX:TCL) says it has reached an agreement with the NSW Government for a major upgrade of its Hills M2 motorway in the north west of Sydney.
The company says the total costs of the upgrade is expected to be approximately $550 million.
Transurban says all tolls on the motorway are to be increased by eight per cent when construction is complete.
The project will reduce congestion in peak periods and improve access to major growth areas.
Transurban will spend $24 million on the upgrade and will consider equity funding, existing and new debt facilities and various capital management initiatives to fund the project.
Financial close is expected in late 2010 with construction expected to be in late 2012.
Transurban says project returns will come from traffic uplift, new tolled ramps, a four year concession to its contract for the road through to 2046, and increases in tolls.
Transurban Group has posted net losses over the last five years.
