Key Highlights

  • Total payments to the Tennessee Department of Transportation have a present value of US$21.0 billion as at 12 July 2027, with the blended discount rate at 5.2 per cent.
  • Transurban said the earlier US$24.8 billion figure mixed present-value and nominal amounts; on a consistent present-value basis it equals US$21 billion.
  • Financial close has not occurred, with an official deadline of 12 July 2027, and revenue-sharing terms sit outside the headline figure.

Transurban Group (ASX:TA1), in a release lodged for noteholders of Transurban Finance Company Pty Ltd on 28 October 2026, said the Tennessee Department of Transportation had announced commercial close with the DriveTN Consortium on the I-24 Southeast Choice Lanes project near Nashville. It said total payments to the department have a present value of US$21.0 billion as at 12 July 2027.

Where the project stands

The Concession Agreement was signed on 30 September 2026. The official deadline to financial close is 12 July 2027. The parties named in the releases include Transurban Group, Transurban International Limited, Transurban Holdings Limited, Transurban Holding Trust, the department and DriveTN. Gearing and capital structure will be finalised by financial close, and Transurban said its equity share is expected to be funded from existing balance sheet capacity over time. The maximum leverage under the federal TIFIA term sheet is 75 per cent debt and 25 per cent equity, and compliance with that limit was a procurement requirement.

Clarifying the payment figure

Transurban said the US$24.8 billion figure published at award mixed present-value and nominal amounts, as the request for proposals required, and that on a consistent present-value basis the amount equals US$21 billion, the same value as in its offer. Construction-period payments from 2027 to 2033 total about US$7.7 billion in nominal terms, peaking at roughly US$1.1 billion a year.

The present-value schedule shows US$1.50 billion for 2027, US$0.99 billion for 2028, US$0.94 billion for 2029, US$0.90 billion for 2030, US$0.85 billion for 2031, US$0.81 billion for 2032 and US$0.77 billion for 2033. No payments fall in 2034 and 2035. Later payments are shown in blocks: US$0.47 billion for 2036 to 2040, US$0.59 billion for 2041 to 2045, US$1.53 billion for 2046 to 2055, US$2.34 billion for 2056 to 2065, US$3.72 billion for 2066 to 2075 and US$5.63 billion for 2076 to 2085.

Discounting and conditions

The blended discount rate is 5.2 per cent. About US$0.5 billion of operating-period payments, which sit outside the investment-grade rating, are discounted at 8 per cent, while other payments are discounted at between 5 and 5.5 per cent depending on payment priority. All payments are subject to the amounts available at financial close, and the structure requires an investment-grade rating, as the offer did.

Revenue sharing

The US$21 billion excludes revenue sharing, which Transurban said applies only if the concession outperforms the base case. The department's share of excess revenue rises with the project's internal rate of return above the base case: 12.5 per cent for the first 200 basis points, 25 per cent for the next 200, 50 per cent for the next 200, and 75 per cent beyond 600 basis points.

A separate toll-rate share applies to per-mile tolls above US$3.20 in 2025 dollars. The department receives 50 per cent between US$3.20 and US$4.80, 75 per cent between US$4.80 and US$6.40, and 90 per cent above US$6.40.

What remains to be settled

The release makes clear that several elements are still to be settled. The final mix of debt and equity will not be known until financial close, the payments are conditional on the amounts available at that point, and the rating requirement must be met for the structure to hold. Transurban also pointed out that the revenue-sharing terms sit outside the headline figure, so any payments under them would be additional to the US$21 billion and would arise only if performance exceeds the base case.

Financial close has not yet occurred, and the company's figures are present values calculated on stated assumptions rather than cash amounts. The group release was authorised by chief executive Michelle Jablko and the finance company release by company secretary Fiona Last. The next confirmed date is the 12 July 2027 financial close deadline.