FDSeminar Financiering na Basel III Paul Lievens - Jan De Nul

Project Bonds: Problem or solution?
FDSeminar Financiering – Financiering na Basel III
Case study: A11 Brugge-Knokke Highway
A Case study: A11 Brugge-Knokke Highway
Thursday, November 27th 2014
FDSeminar Financiering – Financiering na Basel III Thursday, November 27th 2014 11
Paul Lievens - CFO Jan De Nul Group

Table of contents
1. Jan De Nul Group in short
2. A11 Brugge-Knokke Highway
2.1 Academic Thoughts or Reality?
2.2 The A11 Project Case
2.2.1 Key investment Highlights
2.2.2 Contractual Structure
2.2.3 Key Parties & References
2.3 The A11 Story line: From preferred Bidder till Contractual and Financial Close
2.3.1 Starting point in 2012: From BAFO to Preferred Bidder
2.3.2 The chosen option: September 2013
2.3.3 The spring 2014 Implementation
2.4 The Morning after - Conclusions

1 Jan De Nul Group in short

Jan De Nul is a Diversified World Leader
Jan De Nul Group is a world leading dredging and maritime
construction company. The bulk of its dredging operations relate to
land reclamation, capital dredging, maintenance dredging and offshore
energy related works. Moreover, the Group is also a leading
construction company in Belgium, where it specializes in
infrastructure works and technically complex realizations. A third pole
relates to the in-house developed expertise in treatment of polluted
soils (Envisan) and Brownfield Development (PSR).
Finally, the Group has undertaken important works in the offshore wind-
Farm construction industry.

Jan De Nul is a Diversified World Leader
The Group enjoys a very balanced and diversified geographical mix,
not being exposed to the performances of any one region. Recently the
Group executed following notable works:
Dredging works in Oman, Australia, Brazil and Vietnam;
Offshore works in Norway, United Kingdom and Russia;
Civil Works in Panama and Belgium;
Environmental works in Romania, France and Belgium;
Wind-Farm construction in Sweden and Belgium.

Turnover by segment
2,114 mio €
2,110 mio €
Dredging and Marine Works
Offshore
Civil Works
Environmental Works
2,124 mio €

Turnover by region

JDN Demonstrates Sound Financials
 The Group has funded its EUR 2,3Bn (2007-2013) expansion
investments for more than 70% by operational cash generation.
Therefore, the financials and credit metrics today, at the end of the
Capex programme are very healthy.
 The shareholders of this family owned Group have consistently
retained the generated profits in the Group, strengthening the
balance sheet to a Solvency of more than 50%, a sector-wide high.
 EBITDA remains in the range of 20/25% of turnover.

Turnover
million euro
2,500
2,000
1,500
1,000
500
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Total Consolidated Turnover
Dredging Works
Civil & Environmental Works

Key Figures
2013 2012 2011 2010 2009
Turnover 2,123,853,739 2,114,200,407 2,109,890,068 1,800,695,893 2,103,222,108
EBITDA 550,470,269 510,085,492 458,368,010 373,623,521 492,845,910
Depreciation 310,563,339 293,824,332 239,256,315 256,281,313 174,257,682
EBIT 239,906,931 216,261,160 219,111,695 117,342,208 318,588,228
Financial Result -81,855,104 -33,111,591 12,803,555 24,911,514 -20,931,142
Extraordinary Result -4,826,806 -633,913 -3,230,665 7,155,538 -2,909,678
RESULT FOR THE YEAR 123,301,975 116,173,106 200,799,655 112,691,953 253,227,964
Fixed Assets 2,204,826,838 2,353,080,776 2,383,606,109 2,156,634,428 1,773,808,973
Capital & Reserves 2,078,252,461 1,994,939,389 1,876,207,745 1,748,744,180 1,611,197,621
Subordinated creditors 112,667,884 112,667,884 75,167,884
EQUITY 2,190,920,345 2,107,607,273 1,951,375,629 1,748,744,180 1,611,197,621
EBITDA/Turnover 26% 24% 22% 21% 23%
EBIT/Turnover 11% 10% 10% 7% 15%
Result for the year/Turnover 6% 5% 10% 6% 12%
Solvency (equity based) 58% 56% 51% 50% 48%
FDSeminar Financiering – Financiering na Basel III Thursday, November 27th 2014 110 0

EBITDA Evolution
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
600
500
400
300
200
100
0
EBITDA Evolution
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
EBITDA
EBIT
EBITDA / Turnover

Solvency Position
835
983
53%
1286
47% 48%
1377
50%
1611 1749
1951
2108
2191
57%
55%
51%
56%
58%
70%
60%
50%
40%
30%
20%
10%
0%
2500
2000
1500
1000
500
0
2005 2006 2007 2008 2009 2010 2011 2012 2013
EUR millions
Equity
Solvency

Long term funding alternatives
Public Bond
5 - 7 years
Schuldscheine
EU and/or US Private Placement
5 – 15 years
€800
€700
€600
€500
€400
€300
€200
€100
€0
€ 400 m
CP program
BCP
Short
term
€ 550m
Syndicated
Loan
Syndicated
Loan
3 years /
portion
5 years
Subordinated debt &
Preferences shares
Lease
0 2 4 6 8 10 12 14 16
Tenor (years)
Size (€ m)

The quest for long term commercial credit
 PPP and DBFM
 Export Finance Toolbox

2. A11 Brugge-Knokke Highway
2.1 Academic Thoughts or Reality?

Quotes
1) Allen & Overy – The future of Credit
2013 Publication
“Project and asset finance, once the sole domain of banks and monoline
wrapped bonds, has started to look to the capital markets to seek funding. This
started in the form of banks financing their project and asset finance inventory
through securitising or repackaging their project and asset finance assets, but
has now extended to borrowers seeking direct (re)financing from the capital
markets – the so-called =project bonds=.”
“Ironically, this is likely to require increased levels of state support for the
underlying projects either through direct financial support or more
accommodating underlying contractual and regulatory regimes.”

Quotes
2) The Economist
March 22nd 2014
“ A long and winding road”
“European lenders, which used to dominate infrastructure financing, are now
busy repairing their dented balance-sheets.”
“Basel 3 rules are steering banks away from the long term loans required by
infrastructure projects. The one exception is Japanese banks, which have
stronger balance-sheets and are keen to put money to work.”
“Banks are not only wary of making long-term loans, they are also reluctant to
take as much risk as before.”

However
 The transition from banks to investors is not seamless
 Insurers and pension funds often dislike greenfield projects
What about construction delays and cost overruns
Profitability of the assets
 The end of bank financing for infrastructure projects has been
predicted in the past and banks are (again?) still making (more?)
loans
 Actual momentum has been created through
 High activity in the corporate bond market
 Historically low yield on quality sovereign debt
What if sovereign yields should increase sharply (for example a
reversal of quantitative easening)
 ...

2.2 The A11 Project Case

Project location

2.2.1 Key Investment Highlights
Strategic Project
– The A11 is part of the Trans-European Transport Network (“TEN-T”), and part of the Flemish ‘missing link’ package of PPP road projects
– It will connect Bruges and Knokke and improve access to the port of Zeebrugge
– The term of the concession is 33.5 years, with expected 3.5 years of construction and a subsequent 30 years operational phase starting at
the issuance of the Availability Certificate
– The project incorporates nearly 90 civil engineering structures, including twin bascule bridges, two viaducts and three tunnels.
Solid Contractual
Framework
– Grantor is the Flemish Region (AA/Aa2) through its Agency for Roads and Traffic and the department of Mobility and Public Works.
– Further, the Flemish Region is a shareholder in the Project through Via Invest NV, a collaboration between the Flemish Region (49%) and
PMV (51%), a government-owned independent investment company. Via Invest will hold 39% of the shares in the Project
– The Concession Agreement follows established market standards in the Benelux market. It shows standard construction and maintenance
obligations, which are subcontracted on a full back-to-back basis
Robust and
Predictable
Financial Profile
– Pure availability-based revenue mechanism. Transaction is not exposed to demand or traffic risk
– Equity sponsors with a long term investment approach
– Credit profile enhanced by an unfunded standby letter of credit (so-called Project Bond Credit Enhancement instrument) provided by the
European Investment Bank
– Rating of A3 assigned by Moody´s
Defined and
Predictable Cost
Structure
– Fixed-price fixed-term lump-sum turnkey construction contract, back-to-back with DBFM Agreement and supported by a strong construction
performance security package.
– Construction scope qualifies as medium complexity with limited, yet appropriately mitigated technical challenges
– Operations and maintenance contract is on a firm (indexed) basis, back-to-back with DBFM Agreement and supported by a strong security
package. O&M Contractor comprises the same parties as the construction contractor thus, ensuring minimal interface between construction
and maintenance
Experienced
sponsor group with
strong local
footprint
– First class sponsors group, well-skilled, resourced and experienced, with proven track record
– Strong local presence of the sponsors in Belgium and established cooperation with Via-Invest resulting from ongoing road projects (“Kempen
north-south missing link” with Jan De Nul and Aswebo; “R4 Gent” with TDP PARTNERS

2.2.2 Contractual structure of the project
Ownership structure of VIA BRUGGE N.V.
TDP 50%
Jan de Nul NV 39%
Van Laere NV 3%
Franki Construct 2%
Aswebo NV 3%
Aclagro NV 3%
Bond holders
EIB
+/-€566m Limited recourse
20% of Senior Debt
dropping to 10%
post completion
1 DBFM Agreement
100% ownership
Holding Company
VIA BRUGGE N.V.
€1.6m Equity
Individual private
shareolders
2a
€43.2m Sub Debt
€2.3m Equity
2
Subordinated debt
Via A11 N.V.
Project Company
Subordinated debt
THV EPC (Construction JV) 8 THV MTC (Maintenance JV)
3
Senior Bonds
5
2 Equity 2a Sub Debt
6 EPC Contract
6 7
3
Subordinated debt
7 Maintenance Contract 8
2
€30.4m Sub Debt
2a
1 Flemish Region
Senior Notes (ltd recourse
To the Issuer
Interface & Coordination
Contract
5
Subordinated
PBCE Instrument
VIA INVEST

Jan De Nul N.V.
The company
– Jan De Nul Group ranks at the top of the international dredging
industry as well as being one of the largest civil engineering and
environmental contractors with a total turnover in 2011 of EUR
2.1bn and a total workforce worldwide of 6,000 employees
– Jan De Nul Group executes dredging and reclamation projects
from start to finish: capital dredging and maintenance works in
ports, deepening of channels, rock or sand bank dredging in
open sea, specialized dredging services for the offshore
industry, beach replenishment, rock revetment, etc.
– Civil works are also an important part of the Group activities. All
key activities, from design to execution, are carried out by its
own engineers and equipment, whether it concerns buildings,
wastewater treatment plants, sewerage or pipe works, quay
walls, tunnels, bridges, railways, roads or locks
– Beside the design and build of projects, Jan De Nul Group has
also acquired the necessary knowledge to execute PPP projects
such as the current execution of the Kempen north-south
missing link
– Through its environmental subsidiary Envisan, the Group is
experienced in all fields of environmental technology: soil and
groundwater rehabilitation, remediation of polluted soils and
environmental dredging, processing of waste and alternative raw
materials
– Jan De Nul Group operates in compliance with several certified
management systems: ISO 9001, ISO 14001, OHSAS 18001
and VCA
Financials JAN DE NUL N.V. (in EUR ‘000)
2013 2012 2011
Sales 1,233,447 1,058,452 1,081,393
EBITDA 168,485 106,058 77,141
EBIT 139,292 60,794 28,993
Net
result 22,795 114,838 83,147
Equity 1,016,955 994,159 884,358
Total
assets 1,503,985 1,366,142 1,338,088
Realised / ongoing projects
Financials JDN GROUP (in EUR ‘000)
Sales 2,123,854 2,114,200 2,109,890
EBITDA 550,470 510,085 458,368
EBIT 239,907 216,261 219,112
Net
result 123,302 116,173 200,800
Equity 2,078,252 1,994,939 1,876,208
Total
assets 3,799,230 3,781,745 3,830,452
– Belgian Projects:
– New Railway Connection Schuman-Josaphat in Brussels (EUR
210m)
– D&B of the Water Treatment Plant of Brussels North (EUR 235m)
– Construction of the Interchange in Lummen (EUR 43m)
– Second lock Waaslandhaven (EUR 272m)
– Kempen North-South Missing Link (EUR 180m)
– DBM Amoras sludge treatment plant (EUR 118m)
– Ivoz-Ramet lock (EUR 43m)
– International Projects:
– D&B Manifa (USD 1,000m)
2013 2012 2011

Franki Construct N.V.
The company
– Franki Construct is a Belgian construction company specialized
in civil engineering, industrial buildings, environmental projects,
tunnel constructions, office & apartment buildings and
renovation works
– Franki Construct is an 85% subsidiary of Belgian Willemen
Group
– The Willemen Group comprises several companies active in the
building sector, from suppliers and contractors to project
developers. These companies complement each other to
guarantee the clients a tailored solution.
– The Group is active in several areas of the building industry: civil
engineering, industrial construction, residential and general
utilities construction.
– Next to its general contracting activity, the Willemen Group has
specific subcontractors within its own organisation, such as pile
foundations, roofing, sanitary installations, HVAC and raised
floors
– The group's solid base is in Belgium, and it is challenged by
many possibilities abroad. Currently the group is active in
several Central and Eastern European countries
– Willemen Group employs over 2.000 people and creates indirect
employment for many more people
– All branch offices together realize impressive projects
representing all together an annual turnover of EUR 400m
– DBM Westerschelde tunnel (EUR 775m)
– PPP project Brabo 1 (EUR 124m)
– Railway tunnel under central station of Antwerp (EUR 50.4m)
– Pedeviaduct for railway traffic, Antwerp (EUR 42m)

Aswebo N.V.
The company
– Aswebo is a Belgian major road construction contractor, which
also operates its own concrete and asphalt production facilities
– The 4 asphalt facilities are in Brugge, Gent, Lummen and Villers-le
Bouillet
– The Aswebo group also holds 50% of the shares of Kumpen, a
Belgian construction company located in Hasselt
– In May 2011, Willemen Group acquired the Aswebo Group
situated in Gent
PPP (DBM) projects
– “Kempen north-south missing link” (EUR 180m)
Maintenance of highways
– Asphalt pavements:
– A17 Aalbeke-Roeselare in 2012 (EUR 4.9m)
– A18 Middelkerke-Nieuwpoort in 2012 (EUR 1.9m)
– E314 resurface of rutting in 2012 (EUR 2.9m)
– Reinforced concrete pavement:
– E34/N49 Moerbeke-Zelzate in 2012 (EUR 13m)
– E313 in 2012 (EUR 15m)
– E17 Kruishoutem in 2010 (EUR 18m)
Sewerage Works:
– N50 Oostkamp in 2011 (EUR 4.5m)
– N8 Kortrijk in 2010 (EUR 7m)
– Diksmuide Heernisse 2010 (EUR 5.6m)
Civil and road projects:
– Beernem-Oostkamp railway tunnel in 2012 (EUR 11m)
– Gent-St-Pieters-Landegem in 2011 (EUR 5.4m)
– R0 Renovation viaduct Vilvoorde in 2011 (EUR 6.5m)
– Zeebrugge inner port in 2011 (EUR 3.5m)
Industrial projects (ports, industrial areas, etc):
– Zeebrugge Bastenakenkade in 2011 (EUR 3.6m)
– Evolis Kortrijk in 2010 (EUR 4m)
– PSA Bruges in 2010 (EUR 6.7m)

Aclagro N.V.
The company
– Aclagro is an independent, privately owned company and an
integrated group consisting of four divisions: infrastructure, soil
and demolition work, soil sanitization and water purification and
recycling and soil remediation. Besides those activities, the
group also started an activity of brownfield-development
– As a contractor Aclagro concentrates on four core activities:
infra, earth and demolition work, soil sanitization and
groundwater purification and finally recycling and soil
remediation.
– A complete vertical integration combined with an extensive
machine fleet and the present human capital, makes the group
unique in its strength, speed and quality of implementation
– The activities of the ‘Infra’ division are grouped into 5 main
activities:
– Road construction and infrastructure works
– Collector and sewerage work
– Railway work
– Hydraulic engineering work
– Civil engineering
– Aclagro has grown into an established figure in road
construction with an excellent track record. Amongst others, they
work for cities, municipalities, the Flemish community, the
provinces, private customers, Aquafin, TMVW, de Lijn, port
companies and inter-municipality groups
– Their operating area for ‘Infra’ covers the provinces East
Flanders, West Flanders and Antwerp
– Aclagro operates in compliance with several certified
management systems: ISO 9001, ISO 14001 and OHSAS
18001. Aclagro is also certified for specific standards: BELAC
07-05, a quality management standard for asbestos removal and
Achilles (groep 1, 2 & 4), a certificate for ‘Soil and groundwater
sanitization
– City renovation project in Ghent: Tondelier (formerly known as
the ‘Gasmetersite’). The PPP-contract was signed end of March
2012 and comprises the infrastructure works and city
development of a 70.000 m² former industrial site in the city
centre of Ghent. The new project comprised the Construction of
500 houses and some public buildings
– Road & sewarage work for 2nd bridge over Schelde, Temse (€ 2
m)
– Construction of a rotary junction at Bellevue site in Ghent (€ 2
m)
– Infrastructure works for the golf course “Hof ter Hille”, Koksijde
(€ 11 m)
– Road construction works at Flanders Expo Gent (€ 5,3 m)
– Renovation of the city center of Gistel (€ 5,8 m)

TDP PARTNERS
The company
– TDP Partners is an unlisted investment fund incorporated in 2007
– The focus is predominantly on investments in early stage
infrastructure and selective real estate assets where there is a
degree of construction and development risk, including primary
Public Private Partnerships
– The fund invests in companies, projects and infrastructure related
assets in sectors such as transport and logistics infrastructure,
utilities, social and healthcare infrastructure, communication
networks, etc.
– The fund invests in equity or equity-linked instruments
– The fund has a term of 12 years
– The return and exit of investors will be realized through interim
cash distributions and capital gains on the investment portfolio
– The fund predominantly targets investments in the Benelux, but
can also invest in the neighbouring countries together with a
Benelux industrial or financial sponsor
– The manager of the fund is Inframan, a joint venture between
Gimv, a listed Belgium investment company, and Belfius Bank
and Insurance
– Investors typically include insurance companies (Ethias), pension
funds (Pensio-B), financial institutions (Belfius, VDK) and (semi)
public entities (SRIW, Vlaams Toekomstfonds, Vlaams Zorgfonds)
Realised / ongoing investments
Belgian investments and projects:
– Brabo 1 (tramway in Antwerp) with Heijmans and Franki
– Via Invest R4 Ghent Ring Road
– Marche-en-Famenne prison with Eiffage
Other European investments and projects(a):
– Optimep, four penitentiary facilities in France, through a JV with
Eiffage
– DUO2 project and Komfort project through a JV with Ballast
Nedam in Netherlands
(a) Investments in France and the Netherlands out of DG Infra Yield, not DG Infra+

Algemene Aannemingen Van Laere N.V
The company
– Van Laere was founded in 1938
– Throughout the years it grew into a multidisciplinary group with
activities in Belgium, Luxemburg, the Netherlands and France
and is a subsidiary of Ackermans & van Haaren diversified
group, which is quoted on the Belgian stock exchange
– General Contractor Van Laere is active in the construction of
office buildings, hotels, utility buildings, civil - and hydraulic
engineering and environmental projects of a different kind
– The company is highly experienced in the construction and
engineering of civil works. Van Laere was involved in the
construction of several civil works such as (immersed) tunnels,
bridges and quay walls
– Van Laere is one of the most experienced engineers and
constructor of parking buildings and underground parking lots in
Belgium. The construction activities at the various building sites
are supported by its central services and workshops, established
mainly in Burcht
– The expertise and experience of the more than 480 employees
(Group) is a guarantee for good quality. Van Laere has its own
technical equipments to execute the works and is certified ISO
9001 and VCA
– DFMO Liefkenshoektunnel, Antwerp (Tunnel) (EUR 166m)
– Piet Heintunnel, Amsterdam (Tunnel) (EUR 119m)
– Deurganckdok, Antwerp (Quay Walls) (EUR 167m)
– Asdam, a drilled railway tunnel, Antwerp (Tunnel) (EUR 69m)
– Albert II-dock and Wielingendock, Zeebrugge (Quay Walls)
(EUR 50m)
– Brabant Zuid (open ramp length +/- 1 km, for the construction of
new motorway A16. The ramp is to be constructed in the
framework of the HSL between Antwerp and Amsterdam) (EUR
27m)
– Brabant Noord (construction of 4 bridges over A16 and IC track
for local roads, construction of 2 bridges over Mark River for the
new A16) (EUR 20m)
– Quay Wall B2, Kanaaldok, Antwerp (EUR 20m)
– Civil constructions for the railway, Hoeilaert (EUR 32m)
– Civil works for the railway, Braine l’Alleud (EUR 40m)

Nominated subcontractors and advisers to the Consortium
Nominated subcontractors
Subcontractors on an exclusive and on a back-to-back basis:
– Victor Buyck Steel Construction (twin bascule bridges):
– VBSC is an internationally renowned, Belgian based steelwork
contractor with production plants in Belgium and Malaysia
– VBSC offers steelwork services from early design and
engineering stages on to final erection of the steel
construction, including fabrication, corrosion protection and
transport
– The company has experience from PPP- and DB(FM)-projects
such as the North-South Kempen Missing Link (PPP/DBFM)
and the Boulevard Bridge (D&B) in Belgium, the TGV East
Viaduc Jaulny in France, and the Prins Claus Bridge and
Demka Rail Bridge in the Netherlands
– In 2011, VBSC had sales of EUR 76m
– Fabricom GDF Suez (electro-mechanical works):
– Fabricom specialises in technical installations and services
for, amongst others, infrastructure markets
– Fabricom’s expertise covers a wide and varied range of
technical disciplines, including electrical, instrumentation,
mechanical, industrial piping, automation, and maintenance,
as well as specialist applications
– The company is 100% Belgian and is part of the Benelux
Business Unit of GDF SUEZ Energy Service
– Fabricom has been involved in PPP projects Diabolo, Brabo 1
and North-South Kempen Missing Link
– In 2011, Fabricom had a turnover of EUR 653m
Advisers Bankers
Technical and architectural:
– Grontmij (engineering)
– Zwarts & Jansma Architects
– Bureau Bas Smets (landscaping)
– Schlaich Bergermann und Partner (integrated bridges and
viaducts)
– Iv-Infra (RAMS analysis)
– Steers Davies Gleave
Financial, legal and insurance:
– Deloitte
– Stibbe
– Vanbreda
– NautaDutilh
- Deutsche Bank
- Belfius
- Bayerische Landesbank

2.3 From preferred Bidder Phase to Contractual and Financial Close

From preferred Bidder Phase to Contractual and Financial Close
 The A11 Project was launched in the period when long term banking
financing became overwhelming scarce
 Two financial bids, in parallel, had to be forwarded in the BAFO phase
 Via Brugge Consortium was awarded the status of ‘Preferred Bidder’
in December 2012, following the BAFO submission of October 2012
 Besides an operational action plan (design evaluations, building permit,
introduction,...) an important part of the scope of works was addressed
to the choice of the most appropriate funding structure i.e the bank
financing versus the capital market option

2.3.1 Starting point
[≤ 12/2012]
From BAFO to Preferred Bidder Phase
Alternatives, fairly far developed 12/2012
Bank Financing
 Bank commitments including EIB Long
term Financing
 Developed Term Sheets
And
Bond Financing
 Indicative rating issued (Moody’s)
 PBCE Term sheet
 Contractors Support Package
 Intercreditor Principles developed with
EIB
 Mandated Banks (joint Lead Managers
and Bookrunners)
[>dec 2012]
Alternatives further developed till 9/2013
Bank Financing
Extensions Term sheet and tuning
Or
Bond Financing
 Final & detailed Bond Placement Plan:
 Tuning term sheet PBCE
 Rating Confirmation
 Contractors Support Package
Developed
 Intercreditor Principles tuned
 Tuned roles of Mandated Banks
Choice
of
the
option
to
be
lifted

2.3.1 Starting point
Challenges:
Long lasting and demanding process
“Bankers Motivation”
EIB “dual” structure
Workload on existing advisors
Need for different approaches and future (new and supplementary)
advisors

2.3.2 The Chosen option: September 2013
 Assessment Phase led to a decision for a public listed fully
underwritten Bond option
 This solution also allowed for a deferred drawdown mechanism

2.3.2 The Chosen option: September 2013
Underwritten Bond Option Public Bond Option Bank Option
Key benefits • Full certainty on pricing of the
bonds prior to contract award
• Maximum execution certainty
(and less complex execution
compared to Public Bond
Option)
• Avoidance of negative cost of
carry due to deferred drawdown
mechanism
• Market pricing achievable as a result of public bookbuilding process • Certainty on pricing of bank
facilities
• Low execution risk; standard
credit documentation
Key risks/
downsides
• Underwritten bond spread
may not be the optimum
achievable price when
compared to a public issue that
gets placed when markets are
strong (largely offset by
absence of negative cost of
carry)
• Higher costs for EPC
contractor related to stronger
security package
• More extensive credit
documentation compared to
bank financing
• Potential for market movements between now and financial close to cause
widening of spreads. Pricing on the bonds only firm once bookbuilding is
finalised (not prior to contract award)
• Negative cost of carry (can partially be addressed through GIC and
potential better pricing)
• Higher costs for EPC contractor related to stronger security package
• More extensive credit documentation vs bank financing
• Longer lead time
• Banks might discuss
remuneration fees for further
extension

2.3.3 The implementation Phase
 New parties to the deal
 Legal Bond Advisors: - (Advisor to the Banks)
- ( (Advisor to the consortium)
- (Advisor to EIB)
in Global coordination with existing legal parties: -
-
-
and Financial ( , )
and Technical Advisors ( )
 First set of documents was delivered in a time slot of 10-12 weeks
before Christmas 2013
(PMV)

2.3.3 The implementation Phase (2)
 Decision making processes needs to be strongly aligned between all
involved parties and their related governance
 In a second stage some hurdles arised
 EIB as a tainted investor within Belgian Legislation
 Domestic legislation in different European countries “acted” differently
on deferred drawdown mechanism of the board
 Gap of timing between financial & contractual close already reduced to
a bare minimum posed some challenges on swap risks
 This led to a second documentation round

PMV Flemish
Region
51%
Via-Invest NV
MTC: [45%] [15%] [10%] [15%] [15%]
45%
15% 10% 15% 15%
EPC:
39% 39% 3% 2% 3% 3%
Via Brugge NV
Aclagro
NV
Franki
Construct
NV
A.A. Van
Laere NV
TDP
PARTNERS
Ondernemin
gen Jan De
Nul NV
Aswebo
NV
Shareholders Lenders (Loan agreement)
39% 61%
Via A11 NV
DBFM Agreement
THV EPC Via Brugge
THV MTC Via Brugge
EPC Contract (Design&Build)
MTC Contract (O&M)
49%
Interface Agreement
PBCE Provider
[EIB]
PBCE Agreement
LC (min 20% - 10% in
ops)
Shareholders Agreement HoldCo
Principal /
Paying Agent
Bond
Custodian
Security
Trustee
Account
Bank
Project
Agent
Paying Agency Agreement
Bond Trust Deed
Bond Custody Agreement
Common Terms Agreement
Security Trust and Intercreditor Deed (Shareholder Lenders – PBCE Provider – Bond
Purchasers – Issuer – Shareholders – Security Trust – Bond Trustee)
Project Agent Agreement
Inframan
NV
11%
Shareholders Agreement ProjectCo
Bond Trustee
Bond
holders
Clearing
System
Bond Purchase Agreement
Bond Purchasers
EIB - Allianz
Master Definitions Agreement (all parties except THV EPC – THV MTC)
Paym
ents
Paym
ents
Direct Agreements (DBFM Direct Agreement,
EPC and MTC Direct Agreement)
Account Bank Agreement

2.4 The Morning after - Conclusions

The Morning after and... Conclusions
+ -
Yes, we dit it !!
 Truly alternative for bank financing
 Deferred payment feature makes a Project
bond “act” as a bank loan
 Documentation is heavy but standarised in
an Anglo-Saxon approach
 Organisation of documentation process can better –
a too large number of parties
 Agent roles remain vague and cross domain
responsibilities unclear
 Reporting needs are more important
 Minimum project size, given overhead cost, seems
to need a minimum threshold of 250/300 mio €
 “National Discretions” from local Regulators
 Learning market
 Tender documents should be aligned when alternative funding is looked for

FDSeminar Financiering na Basel III Paul Lievens - Jan De Nul

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