Meridiam in one of last big PFI deals of 2011

The winning consortium, which also includes OFI Infravia and Vinci, has managed to raise £517m of debt and equity to close an extension to Nottingham’s tram network. A club of four commercial banks and the EIB are helping to fund the deal.

In what will surely turn out to be one of the last significant Private Finance Initiative (PFI) deals of the year, a consortium of developers and infrastructure fund managers has reached financial close on a £517 million (€618 million; $811 million) contract to expand Nottingham’s tram network by 17.5 kilometres.

The winning team – known as Tramlink Nottingham – is led by French fund manager Meridiam (30 percent) and also comprises OFI Infravia (20 percent) as well as Vinci Investments, Alstom, Keolis and Wellglade (12.5 percent each).

Banco Bilbao Vizcaya Argentaria (BBVA), Bank of Tokyo Mitsubishi, Credit Agricole and Royal Bank of Scotland (RBS) are providing £311.2 million of commercial debt. The latter breaks down into an 18-year, £211.2 million tranche – paying 280 basis points over the first seven years and 290 basis points over the remaining 11 years – and a three-year, £100 million bridge loan paying 280 basis points. 

The European Investment Bank is rounding off the debt package with an 18-year, £110 million loan, leaving the consortium members to write a £96 million equity cheque. That translates into a debt-to-equity ratio of 80:20. To view the asset’s complete profile, click here to access Infrastructure Investor Assets, Infrastructure Investor’s companion database. 

Phase two of the Nottingham tram network carries a 23-year concession contract and should be up and running by the end of 2014. Tramlink Nottingham had been selected as the preferred bidder for the extension contract in March. The first part of the network cost around £200 million to build and has been operational since 2004. It was also awarded to the private sector under a 30-year plus PFI contract.