The Carlyle Group : Major Upgrades Ahead for Connecticut Highway Service Areas; Public-Private Partnership Planning New Look, New Services for 23 Locations; Job Creation and State of the Art Facilities

November 19, 2009
#2009-056
Major Upgrades Ahead for Connecticut Highway Service Areas; Public-Private Partnership Planning New Look, New Services for 23 Locations; Job Creation and State of the Art Facilities

Milford, CT – Project Service LLC, a joint venture formed by Doctor’s Associates, Inc., the parent company of SUBWAY Restaurants; Subcon, Inc.; and global private equity firm The Carlyle Group, today announced that it has entered into a 35-year public-private partnership with the State of Connecticut to redevelop, operate and maintain Connecticut’s 23 highway service areas across the state. Project Service and its tenants expect to invest approximately $178 million in improvements and upgrades to the service areas and create approximately 340 jobs. In total, the State is expected to receive approximately $500 million in economic benefit from the redevelopment.

The public-private partnership will generate major improvements for Connecticut’s highway service areas on Interstates 95 and 395 and Route 15 (The Wilbur Cross and Merritt Parkways). The current facilities were built in the 1940s and 1950s, and with the exception of a few renovations, have had no significant capital improvements in the past twenty-five years.

The redevelopment will include major rebuilds and renovations for the existing service areas, and increase service offerings to travelers. The first major redevelopment is expected to be completed in 2011. The restaurant and service offerings will include for the first time SUBWAY, Dunkin’ Donuts and a variety of other local restaurants and shops, supplementing existing brands such as McDonald’s. Improved fuel services and convenience stores will be operated by Alliance Energy, LLC, based out of Lexington, Massachusetts.

Paul D. Landino, President of Subcon and Subway’s Development Agent for the Connecticut and New York region, who also serves as President and CEO of Project Service, said, “Connecticut is the home of SUBWAY. This is a great opportunity to give something to our neighbors while also providing travelers to our state a good first impression. Following redevelopment, travelers will enjoy family-oriented facilities, expanded restaurant offerings, and clean and renovated service areas, redeveloped with a pleasing New England architectural theme.”

Barry Gold, Managing Director and Co-head of Carlyle’s Infrastructure team, said, “We are pleased to form this innovative partnership with the State of Connecticut. Travelers will get better, cleaner facilities and the state benefits from having a well capitalized, proven partner and more jobs for Connecticut residents.”

Connecticut Governor M. Jodi Rell called it “an unprecedented commitment to economic development, jobs and meeting the needs of the traveling public.”

Job Creation – 340 New Positions

The redevelopment project will result in significant economic stimulus for Connecticut through the construction of new facilities and local job creation. The facilities will continue to employ the approximately 750 positions that are currently employed. During redevelopment, approximately 100 new construction jobs are projected to be created. After redevelopment, the new food and retail businesses are expected to employ as many as 200 new full and part time positions and 40 custodial positions.

Committed Local Team

In response to an RFP issued by the Connecticut Department of Transportation on July 18, 2008, Doctor’s Associates, Inc., Subcon, Inc. and Carlyle submitted a response developed by a team comprising several Connecticut/New England businesses. In addition to SUBWAY, which is based in Milford, CT, key team members include Middletown, CT-based Centerplan Companies, the developer and construction manager; Meriden, CT-based BL Companies, the architectural and engineering firm; and Branford, CT-based OR&L Facility Services Company, the facilities management and maintenance contractor; and members of SEIU Local 32BJ for custodial resources. According to the union’s District Chairperson Kurt Westby, “We are proud to be part of this important project, which will benefit our state and create good jobs for our members.”

How A Public-Private Partnership Works

A Public Private Partnership is an innovate approach to bringing improved infrastructure to the public via private sector funding. In this project, Project Service will pay for 100% of the improvements to the service areas in exchange for a right to redevelop, operate and maintain the facilities for 35 years. The state will continue to own the facilities through the term of the agreement, and at the end of 35 years, the state will resume responsibility for the operations and maintenance of the facilities. In addition to funding the improvements and continued capital reinvestment, Project Service will make annual payments to the State in the form of minimum payments and revenue sharing. These ongoing payments serve to align the interests of the private and public sectors, so that both parties benefit when the operations of the facilities improve. Together with the approximately $178 million in improvements and upgrades to the service areas, the State is expected to receive approximately $500 million in economic benefit from the redevelopment.

* * * * *

Doctor’s Associates, Inc.

Doctor’s Associates, Inc. is the parent company of the SUBWAY® restaurant chain. Subway was founded in 1965 by Fred DeLuca, then a 17-year-old college freshman, and family friend Dr. Peter Buck. Subway's first restaurant, called Pete's Super Submarines, opened in Bridgeport, Connecticut on August 28, 1965. The first franchised SUBWAY® unit opened in 1974 in Wallingford, Connecticut. From those modest beginnings, the SUBWAY® today is the largest franchising company in the world, and employs more than 700 people at its Milford, Connecticut headquarters.

Worldwide, there are now more than 30,000 restaurants in 87 countries and territories with $11.3 billion in 2007 sales revenue. SUBWAY® franchises employ more than 150,000 men and women throughout the system including 2,000 in Connecticut.

Subcon, Inc. / Paul D. Landino

Subcon, Inc. is the development company for Subway restaurants in the Connecticut and New York regions. Paul D. Landino is the President of Subcon, Inc. and also serves as President and CEO of Project Service LLC. Mr. Landino is a New Haven native and brings 33 years of business experience to lead the Project Service team. As a Subway Development Agent and Franchise Owner since 1976, Mr. Landino has developed more than 450 Subway locations that employ more than 4,000 people in Connecticut and parts of New York, inclusive of New York City.

# # #