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Saturday, 19 January 2019

Asia-Pacific Awards

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Read a detailed, free-to-view write-up of each Award winner

To see the full digital edition of the PFI Yearbook 2015, please click here .

To purchase printed copies or a PDF of this report, please email gloria.balbastro@thomsonreuters.com

Asia-Pacific Bank of the Year

BTMU

Bank of Tokyo- Mitsubishi UFJ, a member of the huge MUFG group, has continued to build on its leading project finance capabilities across the region. The team of 76 across Asia-Pacific (ex-Japan) is one of the region’s largest teams. In Japan itself, it has more than 50 people in its project and structured finance team.

The regional teams both have had great success across its advisory and lending businesses. Almost 30 deals have been arranged or financed during the first nine months of the year.

The bank has about 35 professionals in Singapore and eight in Hong Kong. The regional office, based in Singapore, is led by Colin Chen, who has five teams reporting to him. They are the infrastructure team led by Chong Teck Wei, real estate finance led by Lionel Lim, natural resources led by Diana Gan, oil and gas led by Peter Gavan, and power, which is currently led by Chen himself.

In Australia, the establishment of the Australian structured finance office in 2012, combining the strong lending franchise with the advisory team purchased from RBS, has now borne fruit; and the team is growing, with 17 professionals in Sydney and 16 in Melbourne. Its lending team is headed by Robert MacIsacc and the advisory team is led by Geoff Daley.

Highlights for the Singapore and Hong Kong teams include the 320MW Sarulla geothermal project in Indonesia, where BTMU was an MLA for the US$1.1bn facility; the 289MW Nam Ngiep Hydropower Project in Laos, where BTMU was an MLA for the US$643m loan; and the Donggi Senoro LNG project in Indonesia, where BTMU was an MLA for the US$1.5bn facility. The latest deal was a US$1.8bn portfolio financing package for 12 small power producers (SPPs) in Thailand.

The Australian team started the year with the closing of the acquisition (and simultaneous refinancing) of the A$218m Victorian Schools PPP and BTMU was an MLA on the US$12.5bn financing for the Roy Hill iron ore project.

In the PPP space, BTMU advised the successful Wellington Gateway Partnership consortium on the NZ1.1bn Transmission Gully PPP in New Zealand, the largest PPP to close in New Zealand. BTMU (led by Patrick Livingstone) was one of 9 MLAs for the A$3.7bn North West Rail Link (OTS) PPP sponsored by MTR, Leighton and Plenary, and one of the MLAs for the Northern Beaches Hospital PPP.

Refinancings have been a major BTMU activity for the bank this year and it was an MLA for the A$745m refinancing of the Peninsula Link PPP, the A$700m refinancing for Basslink, the A$870m refinancing for GE’s Worsley Cogeneration plant, the A$745m refinancing for the Dampier Bunbury Natural Gas Pipeline, an A$1,200m refinancing facility for Sydney Airport, the A$635m refinancing for Broadcast Australia and the US$500m refinancing for the Clermont Coal Mine.

Asia-Pacific Deal of the Year

Roy Hill

The A$7.8bn of US and Australian dollar debt financing of the Roy Hill iron ore project in Western Australia has set a new precedent for export credit agency (ECA) and bank financing, with the five ECAs and 19 banks agreeing to provide funding for a resources project without a completion guarantee from the sponsors.

It was a brave decision, especially in light of the dramatic fall in iron ore prices. Regardless of current circumstances, when the project reached financial close on the project financing it was by a large margin the largest global financing for a mining project this year. It is why PFI has awarded the Roy Hill project the Asia-Pacific Deal of the Year.

Roy Hill is 70% owned by Hancock Prospecting, with the rest split between Posco, Japan’s Marubeni and Taiwanese steelmaker China Steel. The project involves a new mine capable of producing 55m tonnes a year of iron ore.

The financing includes direct commercial bank financing of US$2.765bn, a corporate facility of A$600m, direct ECA funding of US$2.085bn and ECA covered finance of US$2.35bn. The door-to-door life is up to 11 years, with a seven-year repayment period after construction.

The direct bank finance tranche comprised an amortising construction facility of US$2.5bn, an amortising Rmb60m tranche from Bank of China and ICBC to buy construction equipment from China, and a US$200m sub facility to be used for hedging.

The corporate facility is split into a US$300m working capital tranche, a US$200m LC and a US$100m performance bond. The direct ECA tranche is split into US$900m from JIBC, US$550m from Kexim and US$635m from US Ex-Im. The covered portion of the bank finance saw Nexi provide US$700m, Kexim US$450m and KSure US$1.2bn.

The financial advisers were BNP Paribas and NAB. Legal counsel to the borrowers were Latham & Watkins, Corrs Chambers Wesgarth and Herbert Smith Freehills. The lenders counsel was Allen & Overy. The ECA co-ordinator was SMBC and the renminbi adviser was ICBC.

Asia-Pacific Power Deal of the Year

Sarulla

The growing demand for power in Asia could never be met as fast as the governments would want, but this year Indonesia has made significant strides with the financial closing of the US$1.6bn 320.8MW Sarulla geothermal power plant project, PFI’s Asia-Pacific Power Deal of the year.

The sponsors of the project should be admired for the mere fact of their persistence and faith in the deal, determined to see it built and generate power one day. Indeed, after a number of twists and turns, and after settling a number of issues, in particular that of the ownership of assets, the Sarulla project is finally on track.

The sponsors are Medco Energi Internasional (37.5%), Itochu Corporation (25%), Kyushu Electric Power Co (25%) and Ormat International (12.75%). They were actually the second preferred bidding team but the baton was offered to them after the first preferred team failed to meet requirements. And now, that seems to have been the right decision.

Sarulla is a challenging project, as is any such huge geothermal project for that matter. Thus, the signing of the US$1.17bn debt is an important milestone in the geothermal power sector in Indonesia, which has some 29,000MW of geothermal resources. This is the first Indonesian greenfield geothermal project achieving financial close since Wayang Windu in 1997, providing a template for future financings.

The 20-year debt facility is a combination of a JBIC direct loan (US$492m), commercial bank loans that benefit from an extended political risk guarantee provided by JBIC (US$329m), an ADB direct loan funded from its ordinary capital resources (US$250m), plus two concessional climate funds that ADB administers – Clean Technology Fund (US$80m) and the Canadian Climate Fund for Private Sector in Asia (US$20m). The syndicate of commercial banks comprise Bank of Tokyo-Mitsubishi UFJ, ING Bank, Société Générale, Sumitomo Mitsui Banking Corporation, Mizuho Bank and National Australia Bank.

The financial advisers were Delphos International and Mizuho Bank. Legal advisers for the sponsors were Baker McKenzie, Milbank Tweed and Hadiputranto Hadinoto & Partners (local counsel). The lenders had Latham & Watkins and Ali Budiardjo Nugroho Reksodiputro (local counsel). The other advisers were Schlumberger (technical adviser), Marsh (insurance adviser for the sponsors), AON (insurance adviser for the lenders), MM and ERM (E&SH adviser for the sponsors) and Environ (E&SH for the lenders).

Asia-Pacific Renewables Deal of the Year

Burgos

More and more countries are encouraging the development of clean energy and in the Philippines, developers are getting into wind and solar projects. Starting the trend for wind farms is the 150MW Burgos wind farm project, PFI’s Asia-Pacific Renewables Deal of the Year.

Burgos is a ground breaking project, being the first wind farm project financing in the Philippines to reach financial close. It is also the first to be banked under the country’s new feed-in tariff regime.

The project is being developed by Energy Development Corporation (EDC), the largest producer of geothermal energy in the Philippines. Formerly owned by Philippine National Oil Co (a state corporation), the company was privatised and is now part of the Lopez group.

EDC sought a non-recourse facility after it had initially provided equity, with construction having started in 2013. It raised a total of US$315m in debt, comprising both US dollars and pesos, in order to be in line with its payment obligations and the financing was structured to accommodate the government’s supporting feed-in tariff schedule, which was applicable after construction was complete.

A key element of the non-recourse financing was the involvement of Denmark’s export credit agency, Eksport Kredit Fonden (EKF), which was tied to the provision of the turbines, and its involvement has attracted international lenders to join the 15-year loan.

The deal was signed despite the absence of an off-take agreement at that time, giving it an element of merchant or corporate risk. This, however, indicates growing confidence and an increasingly sophisticated view, being taken by both international and local lenders, of the Philippine market.

The Philippine government currently has allocated 200MW for wind power generation in the country, but with Burgos taking up 150MW already the government is now mulling increased allocations and a second round of bidding.

The banks in the deal are ANZ, BDO Unibank, DZ Bank, ING Bank, Land Bank of the Philippines, Maybank, NordLB, Philippine National Bank and Security Bank. ANZ was financial adviser and co-ordinating agent while PNB Capital and SB Capital were local peso loan arrangers.

The legal counsels were Herbert Smith Freehills and Puno & Puno for the sponsors, and Clifford Chance and Picazo Law for the lenders, while Eksport Kredit Fonden had Kromann Reumert.

Asia-Pacific Petrochemical Deal of the Year

Panca Amara Utama

The Indonesian government has been re-orienting its energy production to serve not only export markets but also its growing domestic consumption. One of the projects fulfilling the government’s objectives is the development of a greenfield ammonia production plant by Panca Amara Utama (PAU), PFI’s Asia-Pacific Petrochemical Deal of the Year.

The new plant, which has a capacity of 700,000 metric tons and will cost US$800m to build, is the largest ammonia plant to be built in the country, and is part of the Indonesian government’s plan to prioritise local manufacturing of the country’s natural resources into industrial products.

The natural gas will be processed to produce ammonia, the main raw material for producing urea fertiliser and other chemical products. It forms the integral domestic component of the Donggi Senoro LNG (DSLNG) facility, another greenfield project, which is designed to produce 2mtpa of LNG for export and shares a gas supply pipeline with the PAU project.

PAU is a landmark deal in Indonesia for being the first ammonia plant in Sulawesi and the only ammonia project in the region to specifically target the Asia-Pacific market. It is also the first locally sponsored private ammonia plant in the country.

PAU plant was funded through a US$509m debt package, the first non-recourse facility for a fertiliser plant. It consists of a 12-year US$94m A loan, which is IFC’s largest greenfield project over the last decade, and 10-year US$415m IFC B loan. The commercial banks are ANZ, HSBC, Korea Development Bank, OCBC, Standard Chartered Bank, SMBC, and United Overseas Bank.

IFC’s role is quite significant in the project as it is also taking an equity position in PAU in the form of a subordinated loan to Surya Esa Perkasa (SEP), which controls about 60% of PAU shares. SEP has agreed with IFC to pledge its stake in Panca Amara of 10% of the outstanding shares and another 50% stake indirectly via PT Sepchem. Sponsor SEP is the second-largest owner and operator of domestic liquefied petroleum gas refineries in Indonesia.

The lenders’ legal adviser was Mayer Brown while Rajah & Tann advised the sponsors. The insurance consultant was INDECS while model auditor was Grant Thornton. Other consultants were GCA (reserves consultant), Jacobs (technical consultant) and Nexant (market consultant). The project will be built by a consortium of Japan’s Toyo Engineering Corp and Indonesia’s PT Inti Karya Persada Tehnik.

Asia-Pacific PPP Deal of the Year

Transmission Gully

New Zealand has been picking up the pace in PPP projects and its latest scheme, the NZ$1bn Transmission Gully motorway PPP in Wellington, is the first state road PF funding project in the country’s history. The project has a 25-year concession and the government will use availability payments to service the debt. It has been selected as the Asia-Pacific PPP Deal of the Year.

Wellington Gateway Partnerships (WGP) was selected as the preferred bidder for the NZ$1.1bn road PPP in Wellington last December. WGP comprises Leighton Contractors, HEB Construction Ltd, InfraRed Infrastructure General Partner Ltd, BTMU and Accident Compensation Corporation (ACC).

WGP will finance, design and construct the project, and then operate and maintain the 27km Transmission Gully Motorway from 2020. WGP is funding the seven-year, NZ$1bn loan through BTMU, CBA, BNZ/NAB, UOB and Scotia. BTMU is the adviser.

The majority of the debt commitments (NZ$915m) were provided by a group of international banks through a construction facility and a debt service reserve facility, each with a seven-year tenor.

One of the sponsors, the Accident Compensation Corporation, had a keen interest to provide long-tenor NZ dollar debt to the project. This reflects the ACC’s long-term liability profile, providing comprehensive accident insurance across New Zealand, which it wants to match with long-term assets.

BTMU and ACC structured a long tenor (29 year) NZ$125m debt instrument, which ranks pari passu with senior debt (subject to voting conflict provisions reflecting ACC’s dual roles as senior lender and equity investor).

The inclusion of this debt piece reduces the refinancing risk for the project, and provides a template for additional tranches of long-tenor debt to be included in the project at later refinancing points. The 29-year loan is fixed-rate, which required agreement with NZ Treasury to establish a forward curve, as there are no observable rates in NZ dollars for instruments of that tenor.

Around NZ$130m of equity will be contributed by the equity investors, with the majority of equity LC-backed and injected towards the back end of construction for financing efficiency. However, the ACC’s contribution was made at financial close by way of a convertible note instrument, due to its inability (under its enabling legislation) to raise a letter of credit to secure its equity.

Asia-Pacific Infrastructure Deal of the Year

Port of Newcastle

The A$1.75bn privatisation of the Port of Newcastle north of Sydney in 2014 marked another milestone in the state government infrastructure privatisation pipeline that has become the major source of project financing.

The Port of Newcastle deal was also significant in that it marked the first time a Chinese government company bid for and won a government-owned asset. This success has now seen several Chinese government entities enter the bidding for the Port of Melbourne and the poles and wires infrastructure assets that will be up for sale next year. It is why the Port of Newcastle has been chosen as the Asia-Pacific Infrastructure Deal of the Year.

The Port of Newcastle sale was won by Hastings Fund Management and China Merchants Group with a price paid that represents 27x earnings. The port if the world’s biggest coal export terminal with around 2,200 vessels a year carrying more than 150mtpa.

The deal was interesting in that with the inclusion of an infrastructure fund as a sponsor the A$1.75bn acquisition prices was split 50:50 between debt and equity.

RBC Capital acted as sole financial adviser and arranged the A$875bn debt through ANZ, Commonwealth Bank of Australia, DBS Bank, HSBC and Westpac Banking Corp.

The A$800m term loan for the acquisition is split into an A$480m three-year tranche that pays a margin of 150bp over BBSY, and an A$320m five-year tranche priced at 180bp over BBSY. The fees are 10bp per annum or 30bp for the three-year tranche and 50bp for the five-year tranche. There is also an A$60m capital expenditure revolving tranche and an A$15m working capital revolving tranche.

According to RBC, the financing package had A$150m more of committed debt facilities than the other bidders and this, along with the equity, helped win the bidding. KWM advised the lenders.

Asia-Pacific Transport Deal of the Year

North West Rail

The A$3.7bn operations, trains and systems (OTS) contract on the A$8.3bn North West Rail project in Sydney is the largest transport PPP ever awarded in NSW and is one of only two projects this year that managed to reach both contractual and financial close within the same week. The project has been selected as the Asia-Pacific Transport Deal of the Year.

The OTS contract is the last of three contracts in relation to the NWRL project, intended to be the first stage of a new rapid transit network being built to cater for the city’s growth as part of Sydney’s Rail Future – the NSW Government’s plan to modernise Sydney’s trains.

The NRT consortium will design, build, finance, operate and maintain the 36km rapid transit train service. A typical availability-payment model will be used, with service payments from the state payable once operations commence following completion of construction, and the state taking patronage risk. Further income from limited commercial opportunities will also be possible.

The Northwest Rapid Transit consortium comprises MTR Corporation, John Holland, Leighton Contractors, UGL Rail Services and Plenary Group, which acted as financial sponsor and capital arranger.

The project’s total private capital is over A$1.8bn, including a 7.5-year senior debt facility of approximately A$1.55bn. The financing was structured using a securitised licence structure, an additional layer of documentation but with which parties are now familiar, its use well-established by precedent transactions.

Equity was contributed by way of deferred equity, subject to appropriate equity support being provided for uncalled equity amounts. Consistent with precedent transactions, equity contributions are able to be accelerated following certain events, including an event of default under the financing documents.

The remainder of the financing is to be provided by the NSW Government by way of a State Construction Contribution (SCC). Sized at 50% of the total delivery phase project costs (including financing fees and interest during construction) as at financial close, the SCC will consist of monthly construction payments during the delivery phase.

This will only be available for utilisation, however, upon certain conditions having first been satisfied, including a minimum contribution of equity having been provided and the construction of the project having advanced to a certain level.

Equity financing will come from three of NRT’s consortium members, MTR Corporation (20%), Leighton Contractors (10%) and Plenary Group (10%), and will also include equity investments from Palisade Investment Partners (20%), Partners Group (20%) and Marubeni Corporation (20%).

Debt was provided by three of Australia’s major banks – ANZ, NAB and Westpac, as well as international banks Standard Chartered, BTMU, ING, HSBC, Mizuho and OCBC. NRT was advised by Ashurst Australia, while the bank group was advised by a team from Allens. Clayton Utz advised the NSW Government.

 

 

 

 

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