March 15 (Bloomberg) -- Macquarie Infrastructure Group and Cintra SA's joint $3.85 billion offer for Indiana's only toll road won final approval yesterday as state legislators voted for the lease as part of a 10-year highway plan.

The Australian and Spanish companies said they expect to close the transaction in June, when they will pay to take over operations of the Indiana Toll Road in exchange for all toll and concession revenue from the 157-mile (253-kilometer) highway for 75 years.

Republican Governor Mitch Daniels proposed taking bids on the toll road from private operators as a way to help pay for his 10-year, $10.6 billion statewide road construction plan, which he says will create thousands of jobs. The Indiana legislature cast the final vote in favor of the proposal about 15 minutes before the midnight deadline when the session ended, after settling differences over the plan.

``Public life presents few, if any opportunities to take one decisive action that changes the future in a measurable way, and improves the lives of thousands,'' said Daniels, a former Eli Lilly & Co. executive who was President George W. Bush's first budget director, in a letter to legislators being sent today. ``Your vote for the `Major Moves Roads and Jobs' plan was, undeniably, one of those rare events.''

The Republican-controlled House of Representatives and Senate passed earlier versions of the bills, even as almost all of the Democrats and several Republican senators voted against the plans. The vote last night was 51 to 48 in the House of Representatives and 31 to 19 in the Senate.

Cash Source

The transaction marks the largest amount ever to be paid to a U.S. state or municipality for an asset, and comes as governments are scrambling for ways to raise money for roads other than raising taxes, said David Schulz, who heads the Infrastructure Technology Institute at Northwestern University in Evanston, Illinois.

``Every toll facility in the country is looking at this,'' said Schulz, the city of Chicago's budget director in 1983 and 1984. ``Cities and states are strapped for funds, and the anti- tax sentiment is increasing almost daily, particularly with the motor-fuel price run up last year.''

The Indiana highway, nicknamed ``the Main Street of the Midwest,'' spans from Ohio to Chicago, and is part of the east- west Interstate 90 that runs between Boston and Seattle.

It would be the second existing toll road in the U.S. to be leased to private operators, after the city of Chicago last year sold its only toll road, the 7.8-mile Chicago Skyway, to Cintra- Macquarie.

Virginia, Texas

While less than 30 of the 5,244 miles of U.S. toll roads are currently run by private operators, there are some $25 billion of private investments proposed or committed for new and existing toll roads in six states including Virginia, Texas and Oregon, according to a report by the Los Angeles-based Reason Foundation, which advocates for such privatization.

Sydney-based Macquarie Infrastructure Group, the world's largest developer of toll roads, and Madrid-based Cintra Concesiones de Infraestructuras de Transporte SA are among a handful of companies seeking to build and operate toll roads in the U.S. and profit from raising tolls and installing electronic toll collection to cut costs.

In both Indiana and Chicago, Cintra-Macquarie offered about 40 times the annual revenue of the roads. The Indiana Toll Road carries more than 50 million vehicles a year and generated $95.6 million of revenue in the 12 months ended June 30, according to Indiana Department of Transportation data.

Investment banks are also looking to broker such deals. Goldman Sachs Group Inc., last year's No. 1 mergers arranger, stands to collect about $20 million in fees as Indiana's adviser, according to state documents.

New York-based Goldman is working on similar transactions being considered in other regions such as St. Louis and Houston.

Differences Resolved

Jay Kenworthy, a spokesman for the Indiana Senate Republicans, said the major sticking point in negotiations was the route of a new road that would run from Indianapolis south to Evansville, and whether it would be a toll road built and operated by private companies as Daniels has proposed.

The compromise legislation would maintain most of the current route of the proposed extension of Interstate 69, leaving open the possibility of rerouting the road in Indianapolis. It allows for a private operator to put tolls on most of the road, except for the 40-mile stretch south of Indianapolis.

The legislation also provides a toll freeze for all passenger vehicles on the Indiana Toll Road until electronic tolling is put in place, which Cintra-Macquarie must install by 2008. After that, a discounted rate would be available to residents who use electronic tolling.

To contact the reporter on this story: Eddie Baeb in Chicago at ebaeb@bloomberg.net.

Last Updated: March 15, 2006 00:42 EST