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Overview of the reasons why there is a change in how transportation are financed.

Overview of the reasons why there is a change in how transportation are financed. Chicago, May 14, 2007 Pedro A. Losada, Head of North American Project Finance. CINTRA – www.cintra.es. Transportation Infrastructure Developer Value creation through long term investments on toll roads

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Overview of the reasons why there is a change in how transportation are financed.

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  1. Overview of the reasons why there is a change in how transportation are financed. Chicago, May 14, 2007 Pedro A. Losada, Head of North American Project Finance

  2. CINTRA – www.cintra.es • Transportation Infrastructure Developer • Value creation through long term investments on toll roads • Since 1968 & for the long term – Bilbao Behobia • Listed in the Madrid (Spain) Stock Exchange • Market cap $ 9 bn • 62% of Cintra is held by Ferrovial (www.ferrovial.com) • 20 road concessions in actual portfolio • 2,500 miles • Asset value $12 bn; equity investment $2.3 bn • Canada, US, Spain, Chile, Ireland, Portugal and Greece • 62% average controlling stake • Remaining concession terms ranging from 11 to 99 years (weighted average 73 yrs) • Skilled project finance team • $12 bn in non-recourse private debt structured since 1987 • Wrapped and unwrapped bonds; bridge, mini-perm and long term bank loans

  3. 1 2 3 4 407 ETR Chicago Skyway TTC-35 SH 130 5&6 Indiana Toll Road Cintra in North America • First privatization of an infrastructure asset in the United States – USD 1.8 bn • First time a project sponsor also becomes a strategic partner for a State • SH 130 an investment around $1.3 bn • Second privatization of an infrastructure asset in the United States – USD 3.8 bn • Biggest private investment effort ever made in the highway industry (CAD 4 bn) (until the ITR deal in January 06)

  4. Options when financing PPPs

  5. Financing alternatives: possibilities • All financing alternatives available in the market have to be considered • 5 main financing alternatives: • Private Activity Bonds • Wrapped (by monolines) 144A bonds • Unwrapped bonds • Miniperm bank loan (5-10 years bullet or quasi-bullet) • Long term bank loan (25-30 years sculpted amortizing) • Whenever possible, access to Federal Funding Programs • TIFIA • All these alternatives implies shareholder’ s equity injection • Detailed analysis required on a case by case basis • seeking optimal financing conditions tailored for each project

  6. Financing alternatives: Bank vs Bonds • Main differences between bond and bank alternatives: • Tax-exempt bonds have and additional disadvantage for private developers: not being shareholders, makes not straightforward to them to capture all cash-flows and upsides.

  7. Financing alternatives: Cintra’s experience • Wrapped bonds: Autopista del Maipo (US-144A & Chile); Talca-Chillán (Chile); Collipulli-Temuco (Chile); Euroscut Algarve (Portugal): Chicago Skyway (US). • Unwrapped bonds: 407-ETR (Canada) • Miniperm bank loan: Chicago Skyway (US); Radial 4 (Spain); Ocaña-La Roda (Spain); Ausol (Spain). • Long term bank loan: Eurolink (Ireland); Temuco-RioBueno (Chile); Norte Litoral (Portugal); M-45 (Spain). • In addition, Cintra team has experience in financing airports and car parks (among others: Sydney Airport, Bristol Airport, Belfast City Airport).

  8. Main reasons of the change • High Market’s liquidity • Competitive financial covenants • Aggressive financial structures • Non breakage costs and no negative carry (Greenfields) • Quick transaction's execution • Reserves requirements • Refinancing risk • Access to new instruments available in the marketplace • Concession Term • Competitive process (Ag. Rating)

  9. Chicago Skyway case study

  10. Case study: Chicago Skyway • First existing toll road privatized in the US • 99-yr concession sold for $1.83 bn • 7.8 miles in length, 3 lanes in both directions • Connects to Indiana East-West Toll Road and Dan Ryan Expressway • Current tolls $2.5 per car, $1.20 per truck axle – no change since 1993 • Mostly cash-only tolling • Average Passenger Vehicles per day: 50,000 Chicago Skyway

  11. Case study: Chicago Skyway • 3 alternatives considered for structuring the financing: • tax-exempt bonds (using a non-profit vehicle), • wrapped bonds and • miniperm bank loan. • Up-front payment finance structured with a 9-year bank loan underwritten by BBVA, Calyon, Depfa and Santander: • Tranche A (acquisition price and transaction costs): $ 1,000 M; • Tranche B (liquidity facility): $ 110 M; • Tranche C (capex) of $ 80 M. • + $ 882 M Shareholders Equity • Key driver for the bank alternative: payment dateline • easy documentation and no need of rating agencies for the bank loan • Considering the possibility of refinancing the bank loan with a wrapped bond • Will probably allow increased leverage (reducing private equity amount)

  12. Case study: Chicago Skyway • Refinancing the Bank Loan trough a taxable Bond issue: • Rule 144A/Regulation S and Institutional “Acredited Investors” • Monoline wrapped by FSA • Joint Bookrunners Citigroup and Goldman Sachs • AAA Rating by S&P and Aaa by Moody’s. • US $ 1.4 Bn Bond Issue in the US market: • Serie A, US $ 439 M, 12 years Maturity of Current interest Bonds (Bullet) • Serie B, US $ 961 M, 21 years maturity of Capital Accretion Bonds (capital interest); • Interest Rate fully swapped until maturity • US $ 150M Subordinated Debt. A 30 years maturity loan underwrite by BBVA, CALYON and SCH • With this refinancing the shareholders recover 44% of the initial investment

  13. Questions… Questions… … thank you!www.cintra.es

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