• Hamilton LRT

• Unsolicited Proposal Discussion

• Financial Summary

Private and Confidential

 Financial Analysis – Summary
Fengate is exploring a number of scenarios to assess the economic impact to the City, citing technical
assumptions from a recent cost study and financial assumptions from recent comparable PPP precedents

Case Description
1 Base Case ▪ 85% of CapEx publicly funded; 15% privately funded (short-term bank, long-term bonds and equity)
2 Private Financing Case ▪ Project funded by private capital only (long-term bonds and equity)
3 Government Subsidy Case ▪ $2.4 billion subsidy from the provincial and federal governments funded at substantial completion
4 CIB Loan Case ▪ 1/3 of CapEx funded by a loan from the Canada Infrastructure Bank
5 Farebox Collection Case ▪ Equity investors participate in fare revenue
6 Land Development Case ▪ $250 million of development entitlements are monetized and used to fund CapEx
7 Extended Project Term ▪ Operating term is extended by an additional 10 years to 40 years
8 Combined Case ▪ Combines all assumptions under Cases 2-7 above

Private Government CIB Loan Farebox Land Extended Combined

Base Case Finance Case Subsidy Case Case Collection Development Project Term Case
1 2 3 4 5 6 7 8
(1) (2)
Net Present Value $3.5 bn $3.8 bn $3.5 bn $3.4 bn $3.6 bn $3.8 bn $3.9 bn $3.7 bn(3)
Yr. 1 Capital Payment $28.7 mm $216.3 mm $62.8 mm $192.8 mm $204.3 mm $200.4 mm $189.6 mm $43.6 mm
Yr. 1 O&M Payment $23.9 mm $23.9 mm $23.9 mm $23.9 mm $23.9 mm $23.9 mm $23.9 mm $23.9 mm
Yr. 1 Lifecycle Payment $5.3 mm $5.3 mm $5.3 mm $5.3 mm $5.3 mm $5.3 mm $5.3 mm $5.3 mm

Notes: (1) Assumes a discount rate of 4.0%. (2) NPV is $3.4 billion across the initial 30-year period. (3) NPV is $3.5 billion across the initial 30-year period. 2

Private and Confidential

Financial Analysis – Base Case 1

Case Description Sources During Construction $ mm %

▪ Assumes Project has a similar funding structure as Government Payments $2,772.5 85.0%
Hurontario LRT whereby 85% of costs are funded by public
Development Monetization - -
funds (via construction progress payments and a
substantial completion payment) and the remaining 15% is Canada Infrastructure Bank Loan - -
funded by private capital
Short-Term Debt $905.3 27.8%
▪ Short-term bank debt, long-term bond and equity capital
are used to fund capital expenditures over the five-year Repayment of Short-Term Debt ($905.3) (27.8%)
construction period Long-Term Debt $440.4 13.5%
▪ Long-term bond has an all-in interest rate of ~3.35% and Long-Term Equity $48.9 1.5%
standard PPP gearing ratio of 90%
Total $3,261.8 100.0%
▪ Assumed pre-tax equity IRR of 11.0%

Project Economics Uses During Construction $ mm %

Net Present Value (at 4.0%) $3.5 billion Construction Costs $3,019.2 92.6%
Year One Capital Payment $28.7 million Mobilization Costs $12.6 0.4%
Year One O&M Payment $23.9 million Transaction Costs $30.0 0.9%
Year One Life Cycle Payment $5.3 million Financing Costs $176.4 5.4%
SPV Costs $23.5 0.7%
Total $3,261.8 100.0%

Private and Confidential

Financial Analysis – Private Funding Case 2

Case Description Sources During Construction $ mm %

▪ Assumes Project is financed entirely by private capital (i.e. Government Subsidy - -
no progress payments from the City or the provincial
Development Monetization - -
and/or federal government during construction)
Canada Infrastructure Bank Loan - -
Short-Term Debt - -
Repayment of Short-Term Debt - -
Long-Term Debt $3,320.4 90.0%
Long-Term Equity $368.5 10.0%
Total $3,688.8 100.0%

Project Economics Uses During Construction $ mm %

Net Present Value (at 4.0%) $3.8 billion Construction Costs $3,019.2 81.8%
Year One Capital Payment $216.3 million Mobilization Costs $12.6 0.3%
Year One O&M Payment $23.9 million Transaction Costs $30.0 0.8%
Year One Life Cycle Payment $5.3 million Financing Costs $603.5 16.4%
SPV Costs $23.5 0.6%
Total $3,688.8 100.0%

Private and Confidential

Financial Analysis – Government Subsidy Case 3

Case Description Sources During Construction $ mm %

▪ Fengate understands there is an opportunity for the Project Government Subsidy $2,400.0 69.1%
to secure funding from the provincial and/or federal
Development Monetization - -
government
Canada Infrastructure Bank Loan - -
▪ Assumes $1.2 billion is received from each of the provincial
and federal governments, injected into the Project at Short-Term Debt $2,400.0 69.1%
substantial completion
Repayment of Short-Term Debt ($2,400.0) (69.1%)
▪ Funding solution includes a short-term construction facility
which is paid off by the above completion payment Long-Term Debt $964.5 27.8%
Long-Term Equity $107.0 3.1%
Total $3,471.5 100.0%

Project Economics Uses During Construction $ mm %

Net Present Value (at 4.0%) $3.5 billion Construction Costs $3,019.2 87.0%
Year One Capital Payment $62.8 million Mobilization Costs $12.6 0.4%
Year One O&M Payment $23.9 million Transaction Costs $30.0 0.9%
Year One Life Cycle Payment $5.3 million Financing Costs $386.2 11.1%
SPV Costs $23.5 0.7%
Total $3,471.5 100.0%

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Financial Analysis – Canada Infrastructure Bank Loan 4

Case Description Sources During Construction $ mm %

▪ CIB is mandated to invest $35 billion into infrastructure Government Subsidy - -
projects, of which $5 billion is earmarked for public transit
Development Monetization - -
systems
Canada Infrastructure Bank Loan $1,177.0 33.3%
▪ Fengate understands CIB can only commit up to one-third
of the capital structure based on initial discussions Short-Term Debt - -
▪ Assumes CIB loan is provided at an all-in rate of 1.0% and Repayment of Short-Term Debt - -
amortized over the first 15 years of the operating period
(rate increases to 3.5% if demand risk is present) Long-Term Debt $2,002.0 56.7%

▪ In 2018, CIB provided a $1.28 billion senior secured loan Long-Term Equity $352.1 10.0%
with a 15-year term to the Réseau Express Métropolitain Total $3,531.2 100.0%
project in Montreal

Project Economics Uses During Construction $ mm %

Net Present Value (at 4.0%) $3.4 billion Construction Costs $3,019.2 85.5%
Year One Capital Payment $192.8 million Mobilization Costs $12.6 0.4%
Year One O&M Payment $23.9 million Transaction Costs $30.0 0.8%
Year One Life Cycle Payment $5.3 million Financing Costs $445.9 12.6%
SPV Costs $23.5 0.7%
Total $3,531.2 100.0%

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Financial Analysis – Farebox Collection Case 5

Case Description Sources During Construction $ mm %

▪ Assumes equity investors are entitled to fare revenue Government Subsidy - -
generated by the LRT, thereby reducing the City’s capital
Development Monetization - -
payments
Canada Infrastructure Bank Loan - -
▪ High-level assumptions include annual ridership of 9.2
million (held flat) and an average fare of $2.00 which Short-Term Debt - -
increases at 1.0% per year
Repayment of Short-Term Debt - -
▪ Equity IRR target increased to 14.0% to compensate
investors for taking additional demand risk Long-Term Debt $3,322.5 90.0%
Long-Term Equity $368.3 10.0%
Total $3,690.8 100.0%

Project Economics Uses During Construction $ mm %

Net Present Value (at 4.0%) $3.6 billion Construction Costs $3,019.2 81.8%
Year One Capital Payment $204.3 million Mobilization Costs $12.6 0.3%
Year One O&M Payment $23.9 million Transaction Costs $30.0 0.8%
Year One Life Cycle Payment $5.3 million Financing Costs $605.5 16.4%
SPV Costs $23.5 0.6%
Total $3,690.8 100.0%

Private and Confidential

Financial Analysis – Land Development 6

Case Description Sources During Construction $ mm %

▪ Assumes $250 million of development entitlements along Government Subsidy - -
the LRT line are monetized during the construction period
Development Monetization $250.0 6.8%
and injected into the Project at substantial completion
Canada Infrastructure Bank Loan - -
Short-Term Debt $250.0 6.8%
Repayment of Short-Term Debt ($250.0) (6.8%)
Long-Term Debt $3,075.9 83.9%
Long-Term Equity $341.3 9.3%
Total $3,667.2 100.0%

Project Economics Uses During Construction $ mm %

Net Present Value (at 4.0%) $3.8 billion Construction Costs $3,019.2 82.3%
Year One Capital Payment $200.4 million Mobilization Costs $12.6 0.3%
Year One O&M Payment $23.9 million Transaction Costs $30.0 0.8%
Year One Life Cycle Payment $5.3 million Financing Costs $581.9 15.9%
SPV Costs $23.5 0.6%
Total $3,667.2 100.0%

Private and Confidential

Financial Analysis – Extended Project Term Case 7

Case Description Sources During Construction $ mm %

▪ Assumes operating term is extended an additional 10 years Government Subsidy - -
▪ Over the initial 30-year period, the Project’s NPV is $3.4 Development Monetization - -
billion
Canada Infrastructure Bank Loan - -
Short-Term Debt - -
Repayment of Short-Term Debt - -
Long-Term Debt $3,305.3 90.0%
Long-Term Equity $367.1 10.0%
Total $3,672.4 100.0%

Project Economics Uses During Construction $ mm %

Net Present Value (at 4.0%) $3.9 billion Construction Costs $3,019.2 82.2%
Year One Capital Payment $189.6 million Mobilization Costs $12.6 0.3%
Year One O&M Payment $23.9 million Transaction Costs $30.0 0.8%
Year One Life Cycle Payment $5.3 million Financing Costs $587.1 16.0%
SPV Costs $23.5 0.6%
Total $3,672.4 100.0%

Private and Confidential

Financial Analysis – All Cases Combined 8

Case Description Sources During Construction $ mm %

▪ Takes into account all assumptions in prior cases, including Government Subsidy $2,400.0 69.4%
receipt of government subsidy, monetization of
Development Monetization $250.0 7.2%
development opportunities, equity participating in fare
revenue, CIB loan and an extended operating term Canada Infrastructure Bank Loan $728.3 21.1%
▪ Equity IRR target increased to 14.0% to compensate Short-Term Debt $2,650.0 76.6%
investors for taking additional demand risk
Repayment of Short-Term Debt ($2,650.0) (76.6%)
▪ Assumes CIB loan is provided at an all-in rate of 3.5% and
amortized over the first 15 years of the operating period Long-Term Debt - -

▪ Over the initial 30-year period, the Project’s NPV is $3.5 Long-Term Equity $81.0 2.3%
billion Total $3,459.2 100.0%

Project Economics Uses During Construction $ mm %

Net Present Value (at 4.0%) $3.7 billion Construction Costs $3,019.2 87.3%
Year One Capital Payment $43.6 million Mobilization Costs $12.6 0.4%
Year One O&M Payment $23.9 million Transaction Costs $30.0 0.9%
Year One Life Cycle Payment $5.3 million Financing Costs $373.9 10.8%
SPV Costs $23.5 0.7%
Total $3,459.2 100.0%

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Contact Us

George Theodoropoulos CANADA

Managing Partner Toronto:
Office: 416-224-4436 77 King Street W, Suite 4230
Email: george.theodoropoulos@fengate.com Toronto, ON, M5K 1H1

Mac Bell Oakville:

Managing Director 2275 Upper Middle Road E, Suite 700
Office: 416-224-4440 Oakville, ON, L6H 0C3
Email: mac.bell@fengate.com

Jensen Clarke
UNITED STATES
Director
Office: 416-224-4452 Houston:
Email: jensen.clarke@fengate.com 708 Main Street, Suite 08-103
Houston, TX, 77002

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