• Economic Infrastructure Masthead

      

    In light of the challenging debt markets, many banks are pulling out of continental infrastructure projects. Lloyds Bank, however, remains a key presence for these projects as highlighted by its refinancing role of the APRR road network in France.

    Economic infrastructure financings in Europe have been increasingly difficult to complete in recent years as a result of challenging debt markets on the continent.

     

    However, shorter term deals involving robust projects with future potential for bond market take-outs have remained attractive, on account of the their limited risk and potential for ancillary banking mandates.

     

    The refinancing of Autoroutes Paris-Rhin-Rhône (APRR) and Eiffarie, the operating and holding companies respectively for Europe’s fourth largest toll road network, was one such transaction supported by Lloyds Bank’s Infrastructure and Energy Finance team.

    Keeping France moving

    The 2,264km APRR network connects Paris and Lyon via the A5, A6 and A39 autoroutes, whilst serving Northern Europe, Switzerland and Southern Europe, including Italy and the Iberian peninsula via the Rhône Valley or the Massif Central mountain range.

     

    In February 2006, a consortium comprising Eiffage SA and Macquarie European Infrastructure Fund (Eiffarie) reached financial close on its €6.9bn investment for 74.7 per cent of APRR, including 70.2 per cent acquired from the French Government.

     

    The acquisition was supported by €3.8bn of holding company debt and a €1.8bn revolving credit facility.

     

    Engineering stability

    Eiffarie has progressively increased its hold in APRR and currently owns 98.93 per cent of the business.

     

    Since the original acquisition, traffic has grown steadily on the network, rising by 1.6 per cent in 2011, compared to the previous year. EBITDA for 2011 grew 5.5 per cent to reach €1,398.6m.

     

    In the second half of 2010, Eiffarie began planning to refinance APRR’s acquisition and historic debt, which was set to mature in February 2013.

     

    Since the start of 2011, it issued a series of bonds that raised €2.5bn and reduced its debt requirement to €3.5bn in readiness to approach the banking market.

     

    Driving the refinancing

    In February 2012, Lloyds Bank acted as Tier 1 MLA and co-ordination bank of Eiffarie and APRR’s €3.484bn debt refinancing package, which was split between Holdco (€2.7650bn term loan) and Opco (€719.5m revolving credit facility).

     

    Lloyds Bank was selected as a tier one funder on account of its strong existing relationships with Eiffarie – having supported the original acquisition of APRR – and its experience in structuring highly complex economic infrastructure transactions.

     

    The deal funded in challenging debt market conditions, given wider liquidity challenges linked to Eurozone uncertainty. Taking into account the ticket size, the transaction required a large syndicate of 16 banks, which included non-EU institutions.

     

    Capital in motion

    The bank backed the transaction as part of its strategy to fund European projects with sponsors that have UK-connectivity. Macquarie, for example, wholly owns the operating company of the UK’s M6 toll road.

     

    The deal will support the development of ancillary relationships for Lloyds Bank, which, given APRR’s track record and investment grade status, has the opportunity to secure bookrunner roles on the company’s future bond issuances.

     

    Mike Chappell, Managing Director & Head of Infrastructure and Energy Finance, says: “While this refinancing took time to realise and required a larger banking syndicate than may have been necessary a couple of years ago, its success is indicative of APRR’s stable financial performance, investment grade status and committed sponsors.

     

    “We worked closely with the businesses, sponsors and wider syndicate to structure the complex five year term deal, for which we drew on a range of expertise from across the bank.”

     

    “The transaction was a strong fit for us, given our commitment to supporting UK-connected sponsors and eagerness to churn our capital through backing shorter term financings.”

     

    Thomas Gelot, Senior Vice President, Macquarie Infrastructure and Real Assets, commented: “Lloyds Bank demonstrated a very high level of commitment and support throughout a very complex process, always acting in a very transparent way. Lloyds also delivered a superior service in the DCM component of the overall refinancing.”

     

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9/17/2019 4:04:43 PM