Aus & NZ: Sydney Metro consortium prepares for AUD 3bn debt raise

03 September 2018 - 12:00 am UTC

Sydney Metro Northwest’s PPP is to tap banks for close to AUD 3bn (USD 2.1bn) in refinancing and for a new facility to partially extend the project, Inframation understands.

Several sources familiar with the matter said the Northwest Rapid Transit (NRT) consortium is seeking to refinance about AUD 1.6bn of debt in the Operations Trains and Systems PPP on the AUD 8.3bn northwest part of the metro. This is the first part of Sydney Metro due to begin operating by June next year.

The AUD 3.7bn PPP includes delivering eight new railway stations, car parking spaces and the driverless metro trains.

The consortium includes CIMIC’s CPB Contractors and UGL, Hong Kong’s MTR Corp, John Holland and Plenary Group.

The consortium and the government is also understood to be looking to raise another AUD 1.2bn to back an “augmentation” of the PPP over stage two of Sydney Metro – the AUD 11.5bn Sydney Metro City & Southwest, although CIMIC may not be part of the augmentation plan.

The augmentation is likely to include parts of the design, construction, testing, commissioning, integration and operations and maintenance of stage two.

The 30km City & Southwest part of the Metro has been funded so far by the state government.

But, under a “commitment deed” signed in December 2017, Transport for NSW, NRT, MTR, Plenary and Alstom agreed to conduct an “open market process” to establish PPP financing for the potential augmentation.

In the coming weeks NRT is expected to provide Transport for NSW with an updated augmentation proposal. 

But it is understood the debt lined up will not flow until the northwest line begins operating in the middle of 2019.

According to Inframation Deals, the original finance on the Sydney Metro Northwest was AUD 1.4bn. The facility reached financial close in September 2014 with a tenor of eight years until March 2022.

The banks in the original facility are a mix of mostly Australian and Asian banks. There was also a “change-in-law” loan of AUD 2.4bn from the NSW government to the project.

Sources familiar with the transaction said first round calls for bids went out to banks several months ago, with plenty of interest from local and offshore banks.

But it appears likely the original bank group will back the Northwest Metro and the new facility.

The Northwest and the City and Southwest parts of the metro have been procured separately. This has complicated the process of integrating the two lines which will become one once both projects are complete.

While the northern line is almost complete, major work only began this year on Metro City & Southwest and is not due to be completed until 2024.

Sydney Metro Northwest runs from the outer suburb of Rouse Hill to the northern suburban centre of Chatswood. City & Southwest will then run from Chatswood, under Sydney Harbour and the centre of Sydney and then out to Bankstown in the south-west.

A state election will be held in March 2019. The Opposition Labor party has said it will scrap the southwest part of the line which duplicates existing lines to Bankstown, and put any money saved there towards the proposed Metro West line from the city to Parramatta.

A spokesperson for Plenary declined to comment.

A Transport for NSW spokesperson said the “process is continuing as outlined previously”.

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