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Mersey bridge PFI reaches financial close

The £600m Mersey Gateway Bridge project features the first UK government guarantee in a greenfield PPP.

The Merseylink consortium has announced financial close for the £600 million (€726 million; $998 million) Mersey Gateway Private Finance Initiative (PFI) project.

The project involves a contract to design, build, finance, operate and maintain (DBFOM) a new six-lane tolled bridge over the River Mersey near Liverpool in the north-west of England.

Macquarie Capital, leader of the Merseylink consortium, acted as lead equity sponsor, financial advisor, debt arranger, mezzanine debt provider and construction liquidity facility provider. Interest rate swaps were provided by Macquarie’s Fixed Income Currencies and Commodities division and insurance by Macquarie Insurance Facility.

The consortium also includes Bilfinger Project Investments and FCC Construccion (equity co-sponsors); Samsung C&T, FCC Construccion and Kier Group (construction joint venture); Lafarge Tarmac (operations and maintenance contractor); and Sanef (tolling operator).

Senior debt financing was provided by five commercial banks: KoFC (Korea Finance Corporation); Lloyds; SMBC, KfW and Credit Agricole. The financing also included a £260 million public bond issuance wrapped by Infrastructure UK – making Mersey Gateway the first greenfield public-private partnership (PPP) to use Infrastructure UK’s guarantee scheme.

Procuring authority Halton Borough Council and the Merseylink consortium are claiming procurement savings of £250 million on the project, which first received government support back in 2006.

The savings – versus a government budget set in 2011 – have been made from “innovative construction techniques” such as making the main bridge deck from reinforced concrete rather than steel and bringing forward some aspects of the work, such as dealing with contaminated land along river banks, so it was completed ahead of financial close.

As well as the tolling of the new Gateway Bridge, the existing Silver Jubilee Bridge will also be tolled as part of the project. It is anticipated that journey times will be 10 minutes faster at peak times and that journey time reliability will be improved.

The new bridge will be constructed over the next three-and-a-half years with opening scheduled for autumn 2017.