Creating value through partnership Focus Georgia Conference April 25-27, 2007

2 Creating value through partnership General Market Analysis n PPP market is hyper-competitive. n States are struggling to “open up the pipeline.” n Procurements are sophisticated and challenging for both sides. n Demand for improvement transit grows. n Toll tolerance increasing versus higher taxes. n Social enhancements delivered by PPP deals important to highlight. n Foreign ownership remains an issue, though fading. n Gas prices/fuel economy/environmental debate- watch closely. n Unfriendly Congress needs attention from industry. n Next Highway Bill talks starting; industry must activate. n Myths often outweigh truths on PPP.

3 Creating value through partnership US Infrastructure Investment Market n Investors (financial, institutional) getting more involved: Private placements Unwrapped products Derivative products such as interest rate swaps Subordinated debt

4 Creating value through partnership US Infrastructure Investment Market n Development of secondary market: Financial investors likely become more willing to take construction risks on Greenfield projects. Those willing to take some of these early risks will eventually sell down to operators and financial investors as the asset matures. Frees up the capital from the original investors to take more projects.

5 Creating value through partnership US Infrastructure Investment Market n PPP’s will contain new schemes to capture partnership advantages: Availability payment. Shadow tolling. Innovative product where private sector’s knowledge is fully used. High efficiency in the construction phase when the contractor can focus on production instead of working based on the contract with variation orders, claims, time delay, and cost overruns. Life-cycle thinking with the total cost over the full concession period in focus instead of keeping the upfront investment to a minimum.

6 Creating value through partnership Partnership n Stronger emphasis on partnership. Public and private sector partners working together to realize project goals. n Better “educated” clients. n More American contractors as equity investors in PPP transactions. Benefits development of the industry n Private sector capital available from more sources. Establishment of infrastructure funds. Increased interest from institutional investors for direct investments. n Willingness to consider different payment structures. Availability payment; Port of Miami Tunnel n Greater general acceptance of PPP as viable alternative. n Higher frequency of Brownfield auctions to raise capital for Greenfield projects or funding for improving existing assets.

7 Creating value through partnership Focus Georgia Conference Karl H. Reichelt Executive Vice President Skanska Infrastructure Development 99 Canal Center Plaza, Suite 125 Alexandria, VA USA