CHICAGO - The Illinois State Toll Highway Authority will recommend to its board next week that Public Sector Group be named financial adviser for $2.4 billion of new toll roads approved last month by the General Assembly.

Authority officials said yesterday they will make the recommendation on Thursday, and expect the board of directors to approve it.

Public Sector Group, whose principal is Phillip Peloquin, was the financial adviser on a $387 million refunding the authority sold in March. Authority officials said it was the success of that deal that won the firm a recommendation this time around.

"[Peloquin] has a tremendous amount of knowledge and a lot of expertise," said Nicholas Jannite, the authority's finance manager.

Jannite said the authority decided to hire a financial adviser to help sort financing scenarios and take advantage of current low interest rates, even though it does not expect to issue any bonds until 1994. "We want to use [Peloquin] to discuss or analyze the possibilities," Jannite said.

Robert Hickman, the authority's executive director, said if the board approves Public Sector Group's appointment, the firm would not automatically be the financial adviser on all four issues the authority expects to sell. But he said the firm "would have a leg up" on participating in the issues.

Peloquin, a former investment banker at Merrill Lynch & Co., could not be reached for comment. He began the Chicago-based financial advisory firm in 1991. Last year, the firm ranked 18th nationwide among financial advisers, with four issues totaling $1.5 billion.

The Illinois General Assembly passed a resolution last month authorizing the authority to extend toll roads in the northeastern part of the state. The authorization involves four projects:

* An 18-mile northeastern extension of Illinois Route 53 into Lake County at an estimated cost of $650 million.

* Another 24-mile extension of the road north to the Wisconsin border at an estimated cost of $720 million.

* A 12.5-mile southern extension of the North-South Tollway near to Joliet at an estimated cost of $525 million.

* Another 16-mile extension of the tollway south near to Peotone at an estimated cost of $570 million.

Jannite pointed out that engineering, environmental, and traffic studies, as well as acquisition of right-of-way, need to be done before the authority can develop detailed plans for building the roads.

But on a preliminary basis, Jannite said the authority anticipates starting with the first leg of the extension of the North-South Tollway south, followed by the first leg of the Route 53 extension north. He said the authority does not expect to break ground for the first project until 1995, but that the need for some financing is expected in 1994.

Jannite said he believes the authority will have one bond issue for each project, meaning a total of four bond issues. The bonds would be backed by toll revenues from the authority's existing toll roads.

It is nuclear whether the authority will sell the bonds on a competitive or negotiated basis. Jannite said that at least since 1986 the authority has not sold a competitive deal or issued a request for proposals for underwriters.

Hickman said it would be up to the board to make the decision for a competitive or negotiated sale. But he said the authority would probably send out a request for proposals for underwriters.

Donaldson, Lufkin & Jenrette Securities Corp. was the senior manager for the authority's last two debt issues, the March refunding and $442 million of revenue bonds sold last fall to pay for widening the Tri-State Tollway in northeastern Illinois. The new-money issue was the authority's first since 1987.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.