The Project AWSA, had won an exclusive concession to build and operate the proposed A2 Motorway A 934 million Project BOT model to build and operate a 254 km Motorway. Part of the Polish Governments program of upgrading and expanding the countrys transportation infrastructure. The challenge of this project was its size, traffic forecast, financial projection & significant experience in structuring project of this size. Poland and the Toll Motorways Act 1994
A natural land bridge between Eastern and
Western Europe Government approved construction of toll motorways(2,600km) Authorized the government to grant concessions on a competitive tender basis Also authorized the government to guarantee financing The Concession Agreement In 1997, AWSA awarded 30 years BOT concession agreement. AWSA was owned by 10 Polish firms with diversified commercial interests AWSA was obligated to finish Phase 1 within 6.25 years after financial close Land leased by Government Local permit by AWSA Compensation to AWSA if permit gets delay due to government authorities. The government had the right to terminate the concession (on deadline & payment) Design, Construction and Financing Fixed-price design and construction contract. (16 million and 622 million respectively) 15% advance payment, remaining on monthly basis) Government was responsible to construct feeder & parallel/by-pass roads Liquidated damages for each day of delay by contractors Operation 10-year renewable contract to operate and maintain. Routine maintenance - Operating Company Heavy maintenance AWSA Revenue from tolls, petrol stations, roadside restaurants, and eventually hotels Concession agreement contained commitments by the government to generate satisfactory traffic volume. Insurance Arrangements During construction, all risk coverage for property damage up to the full design and construction cost US$ 667 million, declining to US$100 million per event post completion Insurance for lost profits due to delay in completion set at 30 days' projected gross revenues After completion, business interruption insurance would cover revenue losses for up to 12 months Third-party liability insurance was US$ 50 million Financing Plan 934 million - Total estimated cost Financing plan was based on a model created by Deutsche Bank 1.5 DSCR to be maintain Source of Fund Subordinated debt and Commercial Banks Zero coupon bonds equity Senior secured project Three tranches AWSA shareholders loan 266 million (face 242 million 235 million amount at 800 million) Financing Plan cont. Loan rate = spread over 6-month LIBOR (180 bp to 235 bp)
Cash "waterfall" mechanism
1. Current operating expenses 2. Capital expenditure and maintenance reserve accounts 3. Current interest and principal payments on senior debt 4. Senior debt service reserve account 5. All remaining cash to the zero coupon bond sinking fund
Senior debt contracts would be governed by U.K. common