PPP round-up

NORTH AMERICA

Four shortlisted for Pennsylvania bridges

Pennsylvania’s Department of Transportation (PennDOT) has invited four consortia to submit proposals for its Rapid Bridge Replacement project, which involves the replacement of at least 500 bridges within the state.

The four teams that will bid to develop, design, build, finance and maintain the portfolio of bridges are:

• Plenary Walsh Keystone Partners: teaming Plenary Group with The Walsh Group;

• Keystone Bridge Partners: comprising InfraRed Capital Partners and Kiewit;

• Commonwealth Bridge Partners: led by John Laing Investments and Fluor; and

• Pennsylvania Crossings: teaming Meridiam Infrastructure with AECOM.

In addition to providing financing for the project, the winning team will also operate and maintain the bridges for a yet-to-be-determined number of years under one contract, while the state will continue to own the bridges. PennDOT expects to select a preferred bidder this autumn.

Pennsylvania has identified 4,500 structurally-deficient bridges throughout the state. The Rapid Bridge Replacement project initially aimed to replace 200 to 300 bridges but in November 2013, Governor Corbett signed a transportation funding bill into law, making an additional $2.3 billion to $2.4 billion available for bridge and road repairs and upgrades. As a result, the project was expanded to include at least 500 bridges.

Port Authority disqualifies Aerosur from LaGuardia

Mexican airport operator Grupo Aeroportuario del Sureste (ASUR) was disqualified by the Port Authority of New York and New Jersey from bidding for the $3.6 billion redevelopment of LaGuardia Airport, one of three major airports in the New York metropolitan area.

As a result, the Aerostar consortium, of which ASUR is a 50 percent equity member, is no longer participating in the bidding process. The consortium’s other equity member is fund manager Highstar Capital.

While ASUR announced the disqualification, it did not disclose the reason for it. The Port Authority, which operates LaGuardia, declined to comment on the matter.

Aerostar was one of four shortlisted teams the Port Authority had selected in July 2013 that would compete to design, build, finance, operate and maintain the airport’s central terminal building (CTB).

The project involves demolishing the existing 835,000-square foot CTB and replacing it with a 1.3 million-square foot, 35-gate terminal building, according to the airport operator’s website. Its surrounding infrastructure, which includes frontage roads, aprons, utilities, a central heating and refrigeration plant and other support facilities, will also be replaced.

P3s considered for wireless waterway

The Port of Pittsburgh Commission (PPC), the government agency that manages the country’s third-busiest inland port, has asked private entities to provide feedback and input related to projects PPC is considering to further develop communications along the navigable inland waterways of Pennsylvania and the US.

PPC is already deploying, along with its non-profit subsidiary Pittsburgh Port Technology, Inc. (PPTi), an initial phase of Wireless Waterways (WW), a system that provides wireless communication along 100 river miles in the Keystone State, on the Ohio, Allegheny and Monongahela Rivers.

The initial phase of the WW project includes the following components:

• The Wireless Waterway Network – a hybrid broadband communications network covering about 100 river miles near Pittsburgh;

• An Interoperability Test Bed (ITB) along Pittsburgh’s downtown rivers which allows technology developers to interact with operational personnel regarding their technology development efforts and ideas;

• A Maritime Situational Awareness Portal, that provides environmental information, such as weather, depth and water quality; inland electronic nautical chart overlays; and vessel information; and

• Smart Lock – a virtual navigation tool patented by the commission.

Through this project, PPC aims to provide the river community with communications and software technologies to support towboat navigation, river terminals and their intermodal connectors, governmental record-keeping, water and sewer authorities, environmental monitoring entities, municipalities, and non-profits along the river.

EUROPE

Mersey bridge PFI reaches financial close

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 to use Infrastructure UK’s guarantee scheme.

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

DIF closes €40m French water project

DIF, the Amsterdam-based fund manager, has reached financial close on a wastewater concession project worth around €40 million.

The project includes the operation and maintenance of an existing 10.1-kilometre underground pipe which collects waste water and serves seven municipalities within the Toulon urban area in southern France. It also includes the refurbishment of a 6.4-kilometre section of the pipe.

The deal comprises a 20-year concession agreement which gives the project the right to collect a fixed payment per cubic meter of water used at each individual meter.

DIF’s third fund, DIF Infrastructure III – which closed on its raised hard cap of €800 million in April 2013 – has an 85 percent stake in the project with SADE CGTH, a subsidiary of French utility and water services company Veolia, holding 15 percent.

The deal represents DIF and Veolia’s second partnership in the water sector following the Delfluent water treatment public-private partnership in the Netherlands. DIF increased its stake in Delfluent from 8.0 percent to 43.5 percent in February 2013.

SADE CGTH will conduct refurbishment work on the Toulon project while another Veolia subsidiary, Compagnie des Eaux et de l’Ozone, will operate and maintain the asset. The project is expected to complete in January 2018.

AllianzGI invests €433m in Belgium motorway

Allianz Global Investors (AllianzGI) has invested €433 million in the senior debt of Belgium’s A11 motorway development, its eighth transaction since inception.

The investment, made on behalf of clients, will fund the construction of a 12-kilometre motorway connecting the Port of Zeebrugge with the E40 and E34 roads in western Flanders. The project has qualified as one of the six major “missing links” in the Flemish road network.

In addition to local developer Jan de Nul, the transaction counts DG Infra, the fund established by Belgian lender Belfius and private equity firm Gimv, as lead sponsor.

It is the first Belgian PPP to be wholly financed by a project bond, and the first greenfield project to be backed by the European Investment Bank’s Project Bond Credit Enhancement facility. The bond has a maturity of 31.5 years.

Financing is fully committed by Allianz Global Investors and the European Investment Bank at the beginning of the project. In another innovative development for a project bond, however, the funds will only be drawn over time during the construction phase.

The transaction brings the amount invested in infrastructure debt by AllianzGI, which established a dedicated team in September 2012, to more than €2 billion.


ASIA & ROW

Thailand cancels $62bn infrastructure bill

Thailand’s Constitutional Court voted against the government’s bill to seek 2 trillion baht (€44 billion; $62 billion) in loans for infrastructure development projects.

The result of the unanimous vote, at eight against zero, was announced by Charter court secretary Chaovana Traimat, who said the legislation was voided by the ruling. The judgement stated that the legislative procedure was ‘unconstitutional’ and ‘violated the Charter’s provision’.

The bill had been introduced by the ruling Pheu Thai party as a way to boost the country’s flagging economy. Bangkok posted a paltry 0.6 percent GDP growth in the last quarter of 2013, well below the 1.4 percent it reported in the period from June to September.

The ruling comes after months of political upheaval in Thailand. The government is now headed by the caretaker administration of Yingluck Shinawatra, after the opposition boycotted the results of the general election held in February.

The infrastructure bill largely focused on the construction of high-speed train lines to Chiang Mai, Rayong, Nong Khai and Padang Besar on the Malaysian border as well as highways and commuter networks in Bangkok.

The opposition had asked the court to decide whether it was legal for large infrastructure projects to benefit from emergency funds rather than being funded via the normal budgetary process.

Aussie infra market in need of reform

Judicious use of pricing mechanisms and strengthening transparency in the processes for project identification, selection, design and implementation could increase private investment in public infrastructure as well as result in savings of A$1 billion a year, according to Australia’s Productivity Commission (PC), the Australian government's independent research and advisory body on a range of economic, social and environmental issues.

The Commission’s recommendations include introducing road user pricing, the adoption by governments of better practice in procurement processes, governments using greater penalties for unlawful industrial disputes and leveraging their buying power for better industrial relations practices.

Industry Super Australia (ISA), an umbrella organisation representing superannuation funds, welcomed the PC’s findings saying the report signaled a “super breakthrough”.

In December 2013, ISA had proposed to the PC the adoption of its ‘inverted bid model’, which calls for separate tenders, as a way to encourage increased participation of long-term equity investors in greenfield infrastructure projects.

According to the model, the government would tender for the long-term owner-operator first, followed by separate bids for construction, operation and maintenance, and debt.

BBGI acquires third Aussie project

Bilfinger Berger Global Infrastructure (BBGI) completed the purchase of a 50 percent stake in the Northern Territories Secure Facility (NTSF).

Located on a greenfield site near Darwin, Northern Australia, the asset is a new 1,000-bed correctional facility with a concession term running until June 2044. BBGI is to receive availability payments from the Northern Territory government, rated Aa1 by Moody’s, during the period.

The facility’s construction is being undertaken by a joint venture between Australian developers Baulderstone (now a subsidiary of Lend Lease) and Sitzler. Honeywell will assume responsibility for the facility management upon completion of the works, while the Northern Territory government will provide custodial services. The project is expected to be operational in the second half of this year.

NTSF was a pipeline asset in the recent £145 million (€174 million; $241 million) capital raise completed by BBGI last December. The acquisition was funded using the fund’s existing cash resources.

NTSF marks the third asset bought by BBGI in Australia, after Royal Women’s Hospital and Victoria Prisons. The fund, which manages 28 assets, has a market capitalisation of £511 million.

BBGI was launched by German developer Bilfinger Berger in December 2011, raising £212 million on the London Stock Exchange.