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M-30 Ring-Road Project Financial Structure MAY 2007.

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Presentation on theme: "M-30 Ring-Road Project Financial Structure MAY 2007."— Presentation transcript:

1 M-30 Ring-Road Project Financial Structure MAY 2007

2 Project description Company structure Financial structure Quality Service Model Benefits 2 INDEX

3 3 Project Description 3 The Project: Remodelling of the roads and the area occupied by M- 30 ring-road. Road surface refurbishment. Mainly intersections Reroute major sections through tunnels under the city areas Allow the surface areas to be redeveloped into green park areas Expected Benefits Accident rate will fall significantly (aprox 45%) Fuel consumption will reduce by 2.5 million liters per year. 708 million hours of travel time will be saved over the next 30 years Greenhouse gas emissions (CO2) will be reduced progressively from a 35,000 tons drop in 2007 to 64,800 tons in 2037

4 44 Phase 1 works Tunnels M-30 Sections of the works Refurbishment of the intersection between the M30 (nudo de la Paloma) and the Pio XII and Burgos Avenues. 2. Refurbishment of Calle Costa Rica and Plaza de J.M. Soler and their intersections with the M Refurbishment of the M30 intersection with the Avenida de América (A-2). 4. Improvement of the intersection between the eje M-23 – ODonnell and M Improvement of the intersection between M30 and the A Left lane of the intersection between Paseo de Santa Maria de la Cabeza and the A- 3 from the south by pass of the M Right lane of the intersection between Paseo de Santa Maria de la Cabeza and the A- 3 from the south by pass of the M Connection between calle Embajadores and M40 ring road. 9. Burial underground of Avenida de Portugal from Paseo de Extremadura to M Burial iunderground of the crossroad of Puente del Rey – Avenida de Portugal between Puente de Segovia and Marqués de Monistrol Avenue Burial underground of M30 from Puente de Segovia to Puente de San Isidro Burial undergound of M30 from Puente de Segovia to Puente de Praga Burial underground of M30 from Puente de Praga and Nudo Sur. 12. Service route for the M30 in the northwest area and addition of three lanes in the intersection with M30 west area. 14. Construction of a new access to the Avenida de la Ilustración with the Colmenar M-607 road. Project Description River Porject Bypass

5 5 Company Structure I 5 Company evolution Initially, Madrid Calle 30 SA was a 100% public company (direct management) Constitution date: 21 st May 2004 Initial Capital: 70 million, fully founded by the Madrid City Council 23 rd December 2004: Municipal agreement that transform the company into a public/private economy (indirect management) Benefits of the Model PPP Greater capacity of financing Lower financial cost Contractual schedule fulfilment. Infrastructure deadline and the commencement of the M&O process both on time. PPP – Public Private Partnership

6 6 Company Structure II 6 Public Tender offer for the M&O of the public service for the refurbishment, conservation and operation of the urban road M-30 by a public/private economy company. Private Partner incorporación date: 12 th September 2005 Private Partner Additions: Hold 20% of MC30 shares Provide a subordinated loan Know-How of services performance included in the M-30 integral management agreement Gains: Management payments Dividends for capital participation Subordinate loan interests Duration 35 years from the constitution date. There is a put/call option on the 20 th year

7 7 Company Structure III 7 Equity Senior Debt Interest & Loan repayment Subordinated Debt Monthly payments of Operating & Management Performance Payments Interest & subordinated loan repayment Dividends ConstructionCompanies Monthly construction payments Bank Syndicate

8 8 Company Structure IV 8 General agreement between MC30 and Madrid City Council. Service Agreement between MC30 and the privately-owned company EMESA Construction&Design Contracts between the MC30 and the Contractors Shareholders agreement between Madrid City Council and the EMESA (private partner) on regards the equity participation on MC30. Financing agreements between the banks and MC30. Additional interest rate coverage contracts. Subordinated debt from EMESA to MC30. Contractual Structure

9 9 Financial Structure I 9 Ratio Senior Debt / Own Resources80/20 Ratio Share Capital / Subordinated Debt80/20 Ratio Municipality / Private Partner 80/20 Own Resources 20% Debt 80% Share Capital 80% Subordinated Debt 20% Madrid City Council 80% Private partner 20% FINANCING SOURCES 100% (100) (16) (4) (12,8) (3,2) Facility A = Mill. Term 30 years, Grace period 5 years, Average loan life 24 years Guarantee: Basic Payment Facility B = Mill. Term 20 years, Grace period 3 years, Average loan life 14 years Guarantee: Additional payment plus the rest of the Basic payment 456 Mill. 114 Mill Mill. 570 Mill. TRIPLE 80/20

10 Financial Structure II Additionally, it was defined a contractual relation between Equity / Investment cost = 16% Subordinated Debt 114,0 mill 127,3 mill 13,3 mill Construction Cost 2.850,0 mill 3.180,0 mill 330,0 mill Equity amount 456,0 mill 509,0 mill 53,0 mill Initial Financial Model Final Financial Model Differences Temporary financial recourses Senior Debt (B) ( ) 75,0 mill 75,0 mill VAT Loan ( ) 155,0 mill 155,0 mill 10

11 11 Financial Structure II 11 Investment – Tunnel construction cost3.180,00 Financial cost – Capitalized interest 318,97 Operational Cost 105,26 Taxes 0,00 Other Costs 1,00 USES 3.606,23 Equity 509,00 Subordinated Debt (A+B) 202,24 VAT Loan 0,00 Senior Debt2.500,00 Annual Payments (M&O) 516,09 SOURCES 3.727,33 Repayment Facility B 102,81 Free Cash-Flow 31/December/ ,30

12 12 Financial Structure II 12 Equity (80%) Equity (20%) Senrio Debt Subordinated Debt Monthly payments By Operating & Management Performance Payments ConstructionCompanies mill (sin IVA) Sindicato Bancario Monthly works payments 266,7 mill 24,1 mill 2.500,0 mill 407,2 mill 101,8 mill 202,3 mill

13 13 Quality Service I 13 Madrid Calle 30 is the company responsible for developing the Operation and Management services of Madrid ring-road M-30 Conditions of service implementation Fulfilment of the technical and quality standards fixed by the Administration and assumed by the Company in the bid proposal. It was NEVER considered by the Madrid City Council the Direct toll or the Shadow toll as an alternative concessional model. Payments: The administration annual payment is split in two components: Basic Payment (95,98 millions of 2005) Initially fixed (at contract date) and constant. Annually updated by CPI Can be considered as a Minimum Guaranteed Revenue Guarantee the payment of part of the Debt Service (Facility A) to the financial institutions Additional Payment (170,70 millions of 2005) The amount directly depends on service level (technical and quality standards) Can present discounts according to the results of the M&O program audit

14 14 Quality Service II 14 Risk and Venture: It´s fully accepted by the company Madrid Calle 30 SA Basic payment is always guaranteed. Minimize part of the financial risk allowing MC30 to obtain better conditions (lower interest rates in Facility A) Standards levels Achieved: 100% of the Additional payment. No deductions are applied Not achieved: Deductions are applied. The % discount over the Additional payment amount will be directly related to the audit result. Higher levels achieved: No higher payments. In this situation, there is no back-to-back criteria. Lower performance Contractual performance Higher performance Contractual Service Levels Deductions are applied 100% of Additional Payment

15 15 Quality Service III 15 Annual Remuneration 266,68 (Values in Millions Euros of 2005) Basic Payment 95,98 Additional Payment 170,70

16 16 Quality Service IV 16 Indicator Definition: Percentage of incident, accidents and emergencies dealt with on time in relationship to the total number within an audit period. Indicator value according to contractual standards levels: 100 % ACCIDENT and EMERGENCY Management Bi-annual audits to determine the service level given by MC30

17 17 Model Benefits - Conclusions 17 The Administration obtains an important reduction in the total project cost. The management of the M30 road its shared with the Privet Partner. From the general interest, the know-how and the resources provided by the PP increase the benefits achieved by the project. The bi-annual testing quality and availability parameters, allow the Administration to directly supervise the private performance. Transfer of construction risk and service capacity to the public/private economy company.

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