Case Study: Beira Litoral Alta SCUT - European Investment Bank

1. Case Study: Beira Litoral Alta SCUT(Shadow Toll motorway) Pedro Eiras Antunes EIB – European Investment Bank IADB, 8-9 December 2005

2. SCUT Beira Litoral e Alta • 166 kms real toll motorway • 30 yrs DBFO concession • Technically challenging project • New construction • Duplicating existing road • New one way construction, keeping existing road for the opposite direction • O&M from start • EUR 1 147m total investment, of which EUR 693m in construction • Largest shadow toll motorway project in the world

3. SCUT Beira Litoral e Alta • Design, construction/widening, O&M and financing of 167 km de motorway and associated infrastructure along the existing East-West IP5 road, connecting the city of Aveiro (Central West Cost) with Vilar Formoso, on the Spanish Border. • It comprises 156 km of parallel widening or construction of new one-way or double carriageway road and 11 kms of existing motorway, transferred to the concessionaire free of charge.

4. Beira Litoral Alta Shareholding Structure THE PROJECT WAS AWARDED TO LUSOSCUT on 8/2/2001.

5. International tender date 24.Jul.98 Bid submission 16.Dez.98 Shortlist announcement 24.Mar.00 BAFO submission 31.Out.00 Adjudication 8. Fev.01 Contract signing / 29.Abr.01 financial close Beira Litoral Alta Milestones Preparation of proposals - 5 months evaluation - 15 months negotiation - 7 months evaluation - 3 months finalising - 3 months 33 months

6. Beira Litoral Alta External Advisors

7. Beira Litoral Alta Contractual Structure GRANTOR Portuguese State Concession Agreement COMMERCIAL BANKS Bank Guarantees SHAREHOLDERS EIB Finance Contracts Shareholders Agreement CONCESSIONAIRE CONTRACTORS INSURANCE COs FIN. MARKET OIL COMPANIES OPERATOR Insurance Contracts Construction Contract O%M Contract Sub-concession of Service Areas Hedging Agreement

8. 3 traffic bands – vehicles (TMDAE) x kms / year Differentiated tariffs for each band Traffic bands set to cover specific costs – allowing structured risk assumption: Band 1 (80% Base Case Traffic): Fixed O&M costs + Senior Debt Service Band 2 (95% Base Case Traffic): Variable O&M costs + Sub-Debt Service + Capital return Band 3 (120% Base Case Traffic): Upside capital Tariff indexation to CPI (90%) Traffic meters in every motorway segment Monitoring cameras at each access node, with online connection to the concessionaire and the road authority Beira Litoral Alta Payment mechanism

9. 24 Tolls 20 Band 1 Band 2 Band 3 16 12 8 4 8.000.000 Traffic Bands 7.000.000 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 6.000.000 5.000.000 4.000.000 Band 3 3.000.000 Band 2 Band 1 2.000.000 Traffic 1.000.000 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Beira Litoral Alta Tariffs and Traffic Bands

10. 35,000 Capex / Revenues Incurred and Cash (Inc. VAT) Capital Expenditure 30,000 Revenues Cash 25,000 Revenues Incurred 20,000 15,000 10,000 5,000 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Beira Litoral Alta Funding

11. COST up to EUR m % FINANCING Up to EUR m % Construction, including design and studies 693.4 60.5 Equity (including subordinated debt and shareholder’s advances) 102.0 8.9 Other initial investments, including expropriation 75.5 9.5 Other start-up costs, including fees and funding of debt service reserve 51.5 Senior Commercial debt 448.4 39.1 Interest during construction 164.9 14.4 Senior EIB debt 470.0 41.0 Total eligible project cost 985.3 83.3 1 020.4 89.1 Other, non eligible cost* 161.3 15.7 Internally generated CF 126.2 11.0 Total 1 146.6 100 Total 1 146.6 100 EIB debt / Eligible project cost = 48% * Inc. VAT, Working Capital Build-up and other non-eligible costs Beira Litoral Alta Project Cost and Financing

12. Beira Litoral Alta Funding • Equity: • EUR 102m capital fully paid by 2006 + a standby up to 10 (8) yrs EUR 20m floating rate subordinated facility, reimbursable on a cash sweep basis. Estimated IRR of 11-12%. • Working capital facility:up to EUR 15m available until 4 years after start of operations to cover potential start-up phase CF shortfalls.

13. Beira Litoral Alta Funding • Senior commercial bank debt: • EUR 448m, variable rate, 25 (6) yrs, available for 5-6 years. • Spread: 120-150 bps (construction phase); 110-130 bps thereafter, depending on level of debt service coverage ratios. • Up-front fee of 125 bp flat; commitment fee of 50 bp over availability period. • Fixed rate hedging for an initial period. • EIB debt: • EUR 470m, covering 49% of eligible cost, for 27 (7) years; disbursement period: 5.5 yrs, between Jun 2001 and Dec 2006. • Bank guarantees till maturity, with partial release from year 8, but not before 2.5 yrs after construction, subject to financial tests on the base case audited model. Guarantee commissions similar to bank spreads. • Interest rate: “forward fixed” from financial closing to maturity.

14. 60,000 Cash Flow Available for Debt Service / Senior Debt Service 40,000 20,000 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 -20,000 Debt Service -40,000 Cash Flow Available For Debt Service -60,000 Beira Litoral Alta Funding

15. Beira Litoral Alta Base Case Ratios ADSCR – annual debt service coverage ratio LLCR – loan life coverage ratio PLCR – project life coverage ratio

16. Beira Litoral Alta Risk Management

17. Beira Litoral Alta EIB Security Package

18. Loan anniversary % Released % Guaranteed 8.5 50% 50% 16.5 50% 0% Beira Litoral Alta Risk Management EIB pricing of unsecured exposure = 20 bps (0.20%) Release thresholds: Min ADSCR (ex cash) of 1.35 Min LLCR of 1.4

19. Beira Litoral Alta Quantitative Guarantee Release Criteria • not less than two years shall have elapsed since the Project Completion Date; • the ADSCR (without cash) is not less than 1.35:1 • Backward-Looking, for each of the two (in the case of the First Release Date) or each of the five (in the case of the Second Release Date) consecutive Calculation Periods each ending on 31 December, the final such period ending on the 31st December falling on or immediately prior to the Release Test Date; • Forward-Looking, for each of the five consecutive Calculation Periods commencing on the Calculation Date falling on or immediately following such Release Test Date and each ending on 31st December; and • the Loan Life Cover Ratio as at 31 December falling on or immediately prior to such Release Test Date is not less than 1.4:1.

20. Beira Litoral Alta General Guarantee Release Criteria • amounts released shared pari passu; • no default have occurred without waiver; • no material amendment to, or waiver of, any material provision of any Project Agreement or Finance Document other than one consented to or approved in writing in accordance with the terms of the Intercreditor Agreement; • no material amendment or modification to the Financial Model other than one consented to or approved in writing in accordance with the terms of the Intercreditor Agreement; • the Shareholders shall have complied fully with their obligations under the Equity Subscription Agreement, the Shareholders Support Agreement and the Traffic Support Agreement unless any failure has been waived; • the EIB Debt Service Reserve Account is fully funded in accordance with the Bank Facility Agreement; • Legal certification of compliance received from external lawyers.

21. EUR m 500 Total Nominal EIB 450 Outstanding 400 350 300 Bank Guaranteed 250 200 100.0% 150 90.0% 100 Project Risk 80.0% 50 0 70.0% 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 1 3 5 7 9 EIB Exposure as a % of Total Debt 60.0% 50.0% 40.0% 30.0% EIB Exposure as a 20.0% % of Project Risk 10.0% 0.0% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 Beira Litoral Alta Risk Management

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