Financials Close - All Checks and Balances in place
31 January 2007
Negotiations with lenders to fund their R3,1 billion commitment to the Gautrain project were finalised with the Bombela Concession Company (Pty) Ltd on 25 January 2007. Since Gautrain’s commercial close in September 2006, this milestone ends four months of further negotiations between Bombela and Rand Merchant Bank and Standard Bank of South Africa Limited – ensuring these financial institutions’ commitment to the Gautrain Rapid Rail Link Project.
As one of the largest project finance commercial bank packages arranged in the South African market, Standard Bank and Rand Merchant Bank are the joint lead arrangers. These two banks are also the underwriters and sole lenders to the Project for the R3.1 billion of commercial debt funding package for the project, consisting of senior, mezzanine and standby facilities. Nedbank has been appointed as Agent Bank to the lenders to manage the financial transactions and has been selected by the contractors to issue the project bonds.
Of the approximate project value of R25 billion, government is providing a grant of about R22 billion, with shareholders providing R500 million in equity and R150 million in standby equity. Performance guarantees and corporate liabilities provided by the contractors will amount to approximately R3.3 billion over the 54-month construction period.
“All of the checks and balances had to be in place before financial close. The gratifying outcome for all parties is that all conditions precedent have now been fully met,” says Project Leader Jack van der Merwe.
All of this makes the Gautrain project a true Public Private Partnership (PPP) as envisaged by the Gauteng Provincial Government. The financial close now achieved, seals the PPP as all partners are now on board to ensure delivery of the project.
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