Trans-Pacific subsea cable draws down term loan

The $350m project, which reached its financial close last year, is backed by a clutch of local investors including a Kiwi family office.

The Hawaiki submarine cable system, a trans-Pacific cable connecting Australia and New Zealand to the US, has made its first drawdown of a senior loan facility provided by French bank Natixis. 

Natixis, advised by law firm Allens, is acting as senior lender for the project and funding a portion of the system's construction costs through the senior loan facility. The bank declined to provide further details on the financing. The size of the term loan remains unclear.   

The first drawdown followed the coming into force of the supply contract on 31 March, according to a statement. 

Commenting after the first drawing, Jean-Pierre Gérémy, global head of telecom, structured & asset finance at Natixis described the transaction as “one of the first project financings for a carrier-neutral telecom subsea cable”. “Natixis has been able to develop a tailor-made innovative financial structure thanks to strong collaboration with Hawaiki and a deep understanding of the telecom sector,” he added.

The 14,000km project, owned and developed by Auckland-based Hawaiki Submarine Cable LP, is one of the world's first privately owned subsea cables that uses project finance methods to fund construction. Its construction phase commenced in March. 

Natixis was appointed last year as the equity advisor to help the company raise fund for the project from institutional and infrastructure investors. A few months later, the family investment vehicle of Sir Eion Edgar made an equity investment in the cable company. 

With an estimated cost of $350 million, the system will deliver more than 30 Terabits of capacity between Australia, New Zealand, Hawaii and the west coast of the US, making it the fastest and largest link between two end destinations.

In 2013, Hawaiki teamed up with regional economic development agency Northland to source local investors and promote the project through the Northland Regional Council's Investment and Growth Reserve.