It was pointed out to me in the comments on my earlier Transco Bid Speculation post that the concession is for 25 years! That makes a difference in my calculations.
Here’s a pdf of the new model and here’s the spreadsheet online.
The numbers went out the roof at first. But this Reuters article from yesterday indicates that the owners will have to pony up about $850 over the first five years in capital expenditures in addition to the bid price. So … I netted $170M (1/5th of $850M) out of the $800M and $500M EBITDA assumptions from my earlier model and re-ran for 25 years.
The results now show that the scenario that best holds together (i.e. yields returns of about 18% and still falls in the estimated range being floated around) is one presuming $500M EBITDA (reduced by $170M capex) at a bid price of about $4.5-$4.6 billion.
So …. this tells me that maybe (just maybe, if these numbers are any good, and they probably aren’t) we’ll see prices in the upper range of the estimated $3.5-$4.6 billion; not in the lower range as my previous model indicated.