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Case Study: Algarve SCUT (Monoline Insured Shadow Toll motorway). Pedro Eiras Antunes EIB – European Investment Bank IADB, 8-9 December 2005. SCUT Algarve Concession.
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Case Study: Algarve SCUT(Monoline Insured Shadow Toll motorway) Pedro Eiras Antunes EIB – European Investment Bank IADB, 8-9 December 2005
SCUT AlgarveConcession • Design, construction/widening, O&M and financing (DBFO) over 30-yrs of 129 km de motorway and associated infrastructure along the Algarve Coast, from Castro Marim (near the Guadiana River) to the city of Lagos in West. • It comprises taking responsibility for O&M of 83 kms of existing motorway, construction of 38 km of new motorway and installation three service areas, O&M facilities and toll/monitoring equipment, for a total cost of EUR 300m.
SCUT Algarve Shareholding Structure THE PROJECT WAS AWARDED TO EUROSCUT, A CONSORTIUM LED BY FERROVIAL OF SPAIN, and the Concession was signed on 11/5/2000. EUROSCUT 79% 21%
COST up to EUR m % FINANCING Up to EUR m % Construction, including design and studies 213.9 69.3 Equity (including subordinated debt and shareholder’s advances) 45.3 14.7 Other initial investments, including expropriation 31.5 10.2 Funding of reserve accounts 16.9 5.5 Bond issue 126.5 41.0 Interest during construction 42.5 13.8 Senior EIB debt 130.0 42.2 Total eligible project cost 304.8 98.8 Other, non eligible cost 3.6 1.2 Other 6.6 2.1 Total 308.4 100 Total 308.4 100 EIB debt / Eligible project cost = 43% SCUT Algarve Project Cost and Financing
Toll payments during construction: From the assumption of responsibility and until the end of the four year at the latest, the concession holder received fixed payments per km per annum for sections in service. Tolls were designed to cover the cost of maintenance and operation up to a maximum of PTE 4m (EUR 20.000) per km per year). Shadow tolls during operation: From the date of entry into service and not later than the end of the four-year after signature of the concession, payments on the whole motorways are on the basis of variable shadow tolls different payments per vehicle kilometer for different bands of traffic, defined by an upper and a lower limit of vehicle kilometer per annum; vehicles classified into two categories, Light Vehicles (LVs) and Heavy Vehicles); three different traffic bands; above the third the shadow tolls will be zero; the upper limit of the third band may not exceed the equivalent of 38.000 vehicles per day; indexation is permitted up to a maximum of 90% of the consumer price index (CPI). payment mechanism allowing for deductions related to lane closures and safety performance. SCUT Algarve Revenues
SCUT ALGARVE Funding MAY 2000 JUNE 2001 Concession award INITIAL FUNDING STRUCTURE REFINANCING (agreed up front with the Grantor) FINAL FUNDING STRUCTURE • EUR 230m • 21 yrs • syndicated bank loan from BSCH, HypoVerinsbank, ICO and WestLB • EUR 130, 25 (10) yrs EIB loan wrapped by a monoline insurer until maturity; • EUR 127m, 27 yrs market bond issue wrapped by a monoline insurer; • EUR 25m VAT revolving credit facility with BSCH and Hypo, over construction FIRST LONG-TERM INFRASTRUCTURE BOND DEAL IN CONTINENTAL EUROPE!
SCUT ALGARVE REFINANCING • UPSIDE AGREEMENT • (with reference to the Base Case): • As a result of the bond issue, the project IRR (based on the assumption of max traffic projected for Band 3) and the equity IRR would not surpass 10% and 8.5% respectively.
SCUT ALGARVE Contractual Structure GRANTOR PORTUGUESE STATE SHAREHOLDERS Common Terms Agreement Shareholders Agreement Concession Agreement BSCH, HYPO (VAT LOAN) BORROWER ALGARVE INTERNATIONAL BV MONOLINE INSURER XLCA CONCESSIONAIRE BEENFICIARY EUROSCUT Gtee. agreements EIB Facility Agreement EIB Inter Co. Loan Agreement BOND HOLDERS Direcrt Agreements: State Direct Agreement INSURANCE COs CONTRACTORS OIL COMPANIES Contractor Direct Agreement Insurance Contracts Construction Contract Sub-concession of Service Areas
