The Flemish region’s landmark €1.5 billion schools public-private partnership (PPP) – which packages the design, build, financing and maintenance (DBFM) of 211 schools under a single contract – has reached financial close more than a year after it was awarded.
A consortium of Fortis Real Estate and BNP Paribas Fortis won the 30-year contract in late May 2009 but reaching financial close was complicated by the logistics of conducting due diligence on the dozen or so construction companies that have been sub-contracted to build the 211 schools.
In the end, AG Insurance (€100 million), BNP Paribas Fortis (€250 million), Dexia (€125 million), KBC (€125 million) and SMBC (€100 million) are providing a €700 million, 6.5-year construction facility with margins priced around the 300 basis points mark.
That senior debt facility will be refinanced by a 30-year, €1.5 billion long-term loan provided by BNP Paribas Fortis and guaranteed by the Flemish government. This means that in a worse-case scenario, the Flemish government would have to fund the rest of the deal from its balance sheet.
Fortis Real Estate said in a statement that it expects all schools to be completed by 2016. The majority of the schools (around 180) are greenfields. The 30-year contract will receive availability payments from the Flemish authorities – public contributions paid in exchange for making the assets available in good condition.