from the prospectus...1.8How are these risks being dealt...

from the prospectus...

1.8

How are these risks being dealt with?

Under the Project Deed, RiverCity Motorway Group has accepted responsibility (as against the Council) for almost all of the risks arising from the Tunnel, and it indemnifies the Council from almost all liabilities arising from the construction and operation of the Tunnel.

RiverCity Motorway Group receives very few warranties, and only some finite and specific promises from the Council in relation to any aspect of the Tunnel.

However:

? RiverCity Motorway Group has entered into contracts with subcontractors, which pass on most (but not all) of the construction risks and some of the operating risks to those subcontractors; and

? if some specific risks occur (called Possible MAE Events) which have a material adverse effect, RiverCity Motorway Group is entitled to negotiate with the Council to amend the terms of the Project to restore its fi nancial position.

8.2.1

Investors will bear the risk that the Tunnel?s traffic volumes and revenue may be adversely affected by various factors including...

[factors listed]

However if, during the Concession Period, any of the principal traffic connections to the Tunnel (such as Pacific Motorway or Lutwyche Road) are closed, then RiverCity Motorway Group may have rights under the material
adverse effect regime.

8.6.2 Occurrence of various ?Possible MAE Events?

The Project Deed defines certain events as being Possible MAE Events (see Section 10.5.2). If such an event occurs, and if it has a material adverse effect on RiverCity Motorway Group, RiverCity Motorway Group may negotiate changes to the Project to restore its previous ability to pay the Senior Debt and to pay a return to Investors (but only up to the Base Case Equity Return).

Investors bear the risk that RiverCity Motorway Group may need to incur expense to remedy or overcome the effects of a Possible MAE Event, but its negotiations with Council may lead to compensation through increased tolls or a longer Concession Period, but this may not provide it with the immediate funding required.

The loss that RiverCity Motorway Group suffers must have a ?material adverse effect? before it may negotiate changes to the Project following the occurrence of a Possible MAE Event. Investors bear the risk of losses up to that level. What is considered ?material? to RiverCity Motorway Group may vary in a particular context or at a particular time.

10.5.2

Material adverse effect regime

Certain matters are capable of having a material adverse effect on the Project. These are called ?Possible MAE Events?. The main ones are if:

? any of the principal traffic connections is closed (other than for safety and other permitted reasons). These connections are the Pacific Motorway, Ipswich Road, Shafston Avenue, Inner City Bypass and Lutwyche Road;

? a competing tunnel is opened between Woolloongabba and Bowen Hills;

? a native title claim prevents or changes the operation of the Tunnel;

? an uninsurable force majeure event occurs;

? a discriminatory change occurs in State law (including local laws by Council);

? amendment of head leases of the site granted by the State to Council;

? Council does not pursue the enforcement of offences under the Transport Infrastructure Act 1994 (Qld) in a similar manner to Council?s recovery procedures for enforcing parking offences at the date of the Project Deed;

? the Concessionaires are required to provide security measures, in response to a published ?extreme threat? of terrorist action, for more than 30 days at a time;

? a challenge to the planning approval for the Project results in a change in the way the Tunnel may be operated;

? a change in air filtration requirements occurs, by a change of Commonwealth or State law; or

? a change occurs in the terms of the planning approval for the Project.

If either of these last two events occurs during the Construction Period, it will be treated as a modification to the Tunnel requested by Council, and Council must pay the direct modification costs incurred by the Concessionaires.

The change may also be a Possible MAE Event, if after that payment is made, the Concessionaires have nevertheless suffered a material adverse effect.

If a Possible MAE Event has occurred, which has a material adverse effect on the ability of the Concessionaires to:

? repay the Senior Debt on the due dates; and

? pay the Investors the return they were previously receiving (up to the Base Case Equity Return), then the Concessionaires may open negotiations with the Council to determine changes to the terms of the Project which restore the Concessionaires to their previous position, but not exceeding the Base Case Equity Return.

In other words, if Investors were previously receiving a return greater than the Base Case Equity Return, the negotiations will not seek to restore that ?excess? return.

The options for consideration will include changes to the Project terms, such as the length of the Concession Period and the level of tolls. A contribution by Council will only be considered if the other options cannot reasonably be used to achieve the relevant objective.

doesn't seem to cover poor forecasting