US$21 billion present-value payments set for I-24 Choice Lanes

US$21 billion present value replaces the headline comparison

Transurban Group (ASX:TCL) has put a sharper price tag on its I-24 Southeast Choice Lanes concession in Nashville: US$21 billion in present-value payments to the Tennessee Department of Transportation, or TDOT. That is the comparable value behind the US$24.8 billion figure published when the project was awarded, which combined present-value and nominal amounts under the tender process.

The clarification arrives after commercial close between TDOT and the DriveTN Consortium. The US$21 billion figure represents the present value of all payments proposed to TDOT, calculated as at 12 July 2027 using a blended discount rate of 5.2%. The figures remain subject to the amounts available at financial close.

Construction payments will arrive before toll revenue

Payments are weighted heavily towards the construction period. Transurban says approximately US$7.7 billion will be paid to TDOT between 2027 and 2033 on a nominal basis, with payments peaking at roughly US$1.1 billion a year. The schedule then moves into operating-period payments extending from 2036 through 2085, with the largest present-value amounts falling in the later decades of the concession.

The financing structure permits maximum leverage of 75% debt to 25% equity under the TIFIA term sheet, a procurement requirement for the project. Transurban says its equity share is expected to be funded progressively from existing balance sheet capacity, while the final gearing and capital structure will be determined at financial close.

TDOT can take a larger share if returns outperform

The US$21 billion payment figure does not include a separate revenue-sharing mechanism. TDOT receives no share until the concession’s accumulated revenues exceed the base-case level, after which its share rises in bands linked to additional internal rates of return. TDOT’s share starts at 12.5% for the first 200 basis points above the base case, rises to 25% for the next 200 basis points, then 50% for the next band and 75% beyond 600 basis points.

A second mechanism applies to per-mile toll revenue above US$3.20 in 2025 dollars. TDOT receives 50% of toll revenue in the US$3.20 to US$4.80 band, 75% between US$4.80 and US$6.40, and 90% above US$6.40. Those provisions limit the extent to which stronger-than-base-case project performance would flow exclusively to the concession consortium, although the filing does not quantify the potential effect on Transurban’s returns.

Financial close remains the next funding test

The immediate issue for Transurban is not a change to the awarded concession, but the conversion of its headline value into a detailed financing obligation. Financial close is due by 12 July 2027, and the company still needs to finalise project gearing, its equity contribution and the TIFIA-backed funding structure. The scale and timing of the construction payments will make those decisions material to the group’s balance sheet capacity during the build phase.