Brisa team wins €1.65bn Portuguese high-speed rail deal

The project marks the Portuguese road concessionaire’s first investment in high-speed rail. Over half of the funding for the 40-year design, build, finance and maintain contract will come from the Portuguese government and subsidies from the European Union. Commercial banks will also provide a 27-year, €90 million loan.

A consortium led by toll road operator Brisa won the first stretch of the Lisbon-Madrid high-speed rail line, worth about €1.65 billion. The rail award is a first for Brisa, which up until now has only been operating roads, mainly in Portugal. Financial close is scheduled for the end of January.

Over half of the funding for the 40-year design, build, finance and maintain contract, or €840 million, will come from the Portuguese government and subsidies from the European Union.

On top of that, the European Investment Bank will contribute €600 million toward an €690 million debt package. Half the contribution will be exposed to project risk while the other half will be guaranteed by the Portuguese state.

High speed rail:
gaining momentum
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Commercial banks are set to provide the remaining €90 million in the form of a 27-year loan with no cash sweep, a provisions which requires excess cash to be spent on debt service. Portuguese banks Caixa BI and Millennium BCP are putting together the final bank club, expected to include four or five banks from Spain, Portugal and France. Sponsor equity amounts to €120 million, with the final debt-to-equity ratio standing at 85:15.

The concessionaire will be repaid using availability payments from the Portuguese government, covering 95 percent of returns, with only 5 percent exposed to traffic risk. This makes the deal theoretically very safe and since the winner will only be responsible for the infrastructure business and not the train operation, Brisa said in a statement it expects an internal rate of more than 12 percent.

In addition to Brisa (16.3 percent), the winning team includes Soares da Costa (16.3 percent), Iridium (15.2 percent), Odebrecht (13 percent), Lena (13 percent), Zagop (5.6 percent), Caixa BI (4.5 percent) and Millennium BCP (4.5 percent).

They will have to build 165 kilometres of high-speed rail linking the cities of Poceirao and Caia, including 90 kilometres of a single track freight line.