BBGI SICAV has signed an agreement with a subsidiary of SNC-Lavalin Group to invest in an investment vehicle (Partnership) which will hold substantial equity interests in five PPP projects in Canada.
Furthermore, as part of the transaction and through the Partnership, BBGI will benefit from a vend-in (pipeline) agreement that provides the Partnership a right of first offer with respect to the potential future acquisition, of select interests in SNC-Lavalin's pipeline of Canadian availability-based PPP projects currently under construction, which is expected to create additional investment opportunities once the assets become operational.
To facilitate the holding of the five project interests and such future acquisitions, a Partnership has been established in which BBGI and SNC-Lavalin will hold 80 per cent. and 20 per cent. partnership interests, respectively, while a subsidiary of SNC-Lavalin will act as the Partnership GP.
At closing of the initial seed assets, the Partnership will acquire holdings in the following operational assets currently held by SNC-Lavalin:
The acquisition of the interests in the four operational seed assets described above is expected to close in the coming months. As a second stage, and subject to a number of project-specific conditions precedent being satisfied, it is expected that the Partnership will acquire a holding in the McGill University Health Centre (MUHC) currently held by SNC-Lavalin.
The agreed total cash consideration payable by the company for the five initial project interests is expected to be approximately CAD208 million, which will be funded from the company's existing cash resources and drawings under its extended credit facility.
In addition, BBGI has also announced that it has increased the total commitment amount available under its existing credit facility with ING Bank and KfW IPEX-Bank from £110 million (US$142 million) to £180 million (US$232 million), which will leave approximately £155 million (US$200 million) available to be drawn. The margin on the £70 million commitment increase will be unchanged at 185 bps.
Duncan Ball, Co-CEO said:
"We are delighted to enter into this partnership with SNC-Lavalin that will give us the opportunity to invest alongside SNC-Lavalin in five high quality PPP projects and future potential to invest in its highly desirable pipeline of development-stage PPP projects. SNC-Lavalin has been a leader in the PPP market in Canada for many years and we are excited to be able to invest in the projects it develops."
Frank Schramm, Co-CEO added:
"This transaction is being made on accretive terms. All of the investments in our portfolio remain low risk, availability-based projects and this transaction follows our purist approach to investing in PPP/PFI projects."
BMO Capital Markets is acting as exclusive financial adviser to SNC-Lavalin. Norton Rose Fulbright Canada LLP is acting as counsel to SNC-Lavalin and SNC-Lavalin Infrastructure Partners.