Latin America: Goldman Sachs hired to structure Argentine road financing

13 July 2018 - 12:00 am UTC

An Argentine-Portuguese consortium has appointed Goldman Sachs to structure the financing for the 15-year, USD 1bn Circuito Corredor Sur highway PPP in Argentina, Inframation has learned.

Argentine construction firms Rovella Carranza and JCR and Portuguese firm Mota-Engil Latin America, which comprise the consortium, are also working with law firms Skadden, Arps, Slate, Meagher & Flom in New York and Cabanellas Etchebarne Kelly Abogados in Buenos Aires, according to two sources familiar.

Clifford Chance is the international legal counsel to Goldman Sachs while Bruchou, Fernández Madero & Lombardi (BFM&L) is the bank’s local legal advisor.

On 18 June, Argentina’s road agency Vialidad Nacional awarded the team the contract for the 247km Circuito Corredor Sur, a project that includes the Ricchieri and the Ezeiza Cañuelas highways, as well as parts of routes 3 and 205, in Buenos Aires province.

The consortium had submitted bids for two road PPPs out of the six projects on offer.  

Rovella Carranza owns 33.34% of the SPV, while JCR and Mota-Engil Latin American own 33.33% each.

Financial close is targeted to occur in the next five to six months. The winning consortium will take possession of the PPP concession on 1 August.

The SPV is considering an international bond issuance to provide the long-term financing for the project, the first source familiar told Inframation. At the same time, sponsors are also negotiating bridge loans to secure short-term financing for working capital as they need to start infrastructure works before financial close. 

The SPV will contribute approximately USD 77m in equity. 

The source said that the consortium is also studying the possibility of submitting an offer in a second phase of the country’s road PPP program, which would include an additional six road projects requiring nearly USD 5bn in investment. 

Corridor E and F
Another winning consortium comprising Argentina’s Helport, Panedile and Eleprint and Spain’s Copasa is also considering the launch of an international bond to finance two highway PPP projects worth a combined USD 1.6bn, Inframation understands. This second consortium won the contracts for Corridor E and F. 

Corridor E includes sections of Route 9 and 11 between Buenos Aires, Cordoba and Resistencia, while Corridor F includes Route 9 and Route 33 linking Buenos Aires, Rosario and Santiago del Estero.

Helport owns 55% of the project SPVs, while Panedile owns 30%, Copasa, 10% and Eleprint, 5%.

The Helport-Panedile-Copasa-Eleprint consortium is negotiating bridge loans with international and local banks for the two projects. KPMG is acting as financial advisor for the procurement and structuring of the financing.

Marcelo Ceballos, director of deal advisory at KPMG Argentina, confirmed that the firm is working with the consortium but declined to provide further details.

He added that the launch of an international bond would first require the stabilization of the domestic financial market.

The consortium is not currently planning to submit bids for the second phase, according to a source familiar with that team. 

Ceballos and a local banker told Inframation that most of the consortiums on the road PPPs would seek to launch an international project bond to secure long-term financing, supported by bridge loans from local banks. “In the case of traditional syndicated loans, I see structures including between three and five banks due to the capex of the projects,” the banker added.

He also said that local banks will provide guarantees required by the PPP contracts such as principal works and principal services guarantees. Each of these guarantees are equal to 3% of the investment payments estimated for the main works.

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