Astris acted as mandated Financial Advisor to French construction majors Bouygues Travaux Publics and Vinci in connection with one of the largest and longest financings ever raised for a toll road project in the Caribbean region
Astris Finance is pleased to announce the successful closing of a USD285 m financing package for Transjamaican Highway Limited (“the Project Company”), a Jamaican project company co-owned by French infrastructure majors Bouygues Travaux Publics and Vinci (together, “the Project Sponsors”). TJH operates the Highway 2000 toll road in Jamaica, an essential segment of the country’s road infrastructure, linking the capital Kingston to the Western regions of Sandy Bay and May Pen (“the Project”). The Project is undertaken under a concession contract between TJH and the National Road Operating and Constructing Company (NROCC), a Jamaican state agency. The concession contract was awarded in 2001 following an international bidding contest, and expires in 2036. The first section of the road, known as Phase 1A, opened to traffic in 2003.
The financing takes the form of an 18-year amortizing, limited recourse loan underwritten by a syndicate of multilateral and bilateral agencies including the European Investment Bank (EIB); the Inter-American Development Bank (IDB); the International Finance Corporation (IFC), a member of the World Bank group; and Société de Promotion et de Participation pour la Coopération Economique (Proparco), a member of the Agence Française de Développement group. Participations in the syndicate are as follows: EIB (27%), IDB (27%), IFC (27%), Proparco (19%). The financing package also includes a fresh capital injection of USD 7m from IFC and Proparco.
Proceeds of the financing will be used to refinance the bond issued in 2001 to finance Phase 1A, partly maturing in February 2011, as well as to finance the expansion of the Project towards the city of May Pen, with the construction of an additional 10km 2x2-lane segment known as Phase 1B. Construction works are expected to last 19 months, with Phase 1B due to open to traffic in September 2012. Construction works are carried out by Bouygues Travaux Publics’ local branch, Bouygues TP Jamaica. The road is operated by Jamaican Infrastructure Operator, a joint venture between Vinci and Bouygues Travaux Publics.
Astris Finance acted as exclusive Financial Advisor to the Project Company, and assisted the Project Sponsors throughout the structuring, placement, due-diligence and closing processes for both the debt and equity financing. Astris Finance also led the restructuring of the original participation of NROCC in TJH to permit the entry of new shareholders in the capital of the Project Company.
The financing package enabled TJH to refinance 100% of its existing debt at unparalleled conditions. Furthermore, TJH is now able to pursue the expansion of the Project with the construction of Phase 1B, an integral part of the Government’s plans for the development of essential infrastructure to foster growth and generate employment in a country severely impacted by the financial crisis since 2008.
Jamaica was hit particularly hard by the global credit and macroeconomic crisis. The Jamaican Government launched a restructuring of its sovereign debt after agreeing to enter into a Stand-By Arrangement with the International Monetary Fund in late 2009. This context made it all the more challenging to secure financing for a private project of that scale with traffic risk, at a time when most traditional sources of funding were severely restricted or virtually shut off.
Fabrice Henry, Managing Director at Astris Finance notes: “This financing was of critical importance to our clients, considering the bond refinancing deadline. Conducting the structuring and placement of this financing, and supporting the Sponsors in negotiations with the Government of Jamaica for the restructuring of NROCC’s participation in THJ, proved to be a lengthy and complex undertaking. The financing itself presented multiple challenges, most notably the management of traffic risk during project construction – as a sizeable share of the USD 285m financing plan would be derived from the operation of Phase 1A. The innovative structuring of contingent liquidity lines made the lenders comfortable with the traffic risk during construction, while preserving the limited recourse nature of the deal.”
John Graham, IDB’s senior investment officer in charge of the deal at the IDB, explained: “We called upon the long-term appetite of the EIB, IFC, Proparco and the IDB, and worked with Astris and the Sponsors to integrate a number of features from the world of commercial banking including step-up pricing, cash sweeps and mandatory prepayments if cash is available. The end result gives TJH maximum flexibility during the initial years of the financing but also includes the proper incentives to return to the private capital markets when construction is complete and market conditions are more favorable.”
Franck Peyron, CEO of TJH, added: “We are extremely satisfied with the outcome. This extraordinary achievement is the result of a lot of team work between the lenders, the Government, the Sponsors, Astris and TJH. In particular, this financing would not have been possible without the professionalism and flexibility of the NROCC team. Their active participation was critical to arriving at a structure that was workable for all parties.”
For Fabrice Henry, “this project demonstrates exactly what Astris Finance has to offer: tailor-made, optimized financing solutions for the most complex infrastructure projects in emerging markets.” Following the successful financial closing of the Boulevard Turístico Atlántico (BTA) Toll Road in the Dominican Republic in 2010, the Transjamaican Highway Ltd financing is the second toll road deal in the Caribbean that Astris Finance has closed in the past 12 months.