Financial close for Aberdeen Western Peripheral Route PPP
Connect Roads consortium has reached financial close on the Aberdeen Western Peripheral Route/Balmedie-Tipperty PPP road scheme in the North East of Scotland.
In June 2014 the Connect Roads consortium, now known as Aberdeen Roads Limited, comprising Balfour Beatty Investments, Carillion Private Finance and Galliford Try was selected as preferred bidder to design, build, finance and operate the £550 million (US$863.8 million) road PPP project.
Each company will invest up to £20 million (US31.4 million), which is one third of the sponsor's investment requirement. Steve Marshall, Executive Chairman of Balfour Beatty, commented:
"This project demonstrates the value of combining our investment, construction and maintenance capabilities to deliver value for our customers. We look forward to working with Transport Scotland, Aberdeen City Council and Aberdeenshire Council to deliver this long-awaited scheme.
The project was closed under a unique financing structure with £600 million of funding being sourced from a combination of senior secured fixed-rate bonds of Allianz Global Investors, European Investment Bank (EIB) debt, a tranche of senior commercial debt provided by Bank of Tokyo-Mitsubishi (BTMU) and equity bridge facilities provided by Royal Bank of Canada (RBC) and Barclays. The bonds amount to £190 million and are listed on the Luxembourg Stock Exchange. The EIB is providing £270 million and BTMU £80 million in senior bank debt and £60 million equity bridge facilities making this one of the largest and most complex UK roads projects to close involving bond financing.
Adrian Jones, Director of Infrastructure Debt at Allianz Global Investors, said:
"The AWPR perfectly fits the project profile we look for when making investments on behalf of our clients - an essential highly rated asset created through a transparent, rigorous and socially responsible non-profit distributing procurement model.
"We are particularly pleased to be funding part of this important Scottish infrastructure project through our recently established UK Infrastructure Debt Fund. The fund allows smaller pension fund investors, including both private and public sector UK pension schemes, to participate in UK infrastructure alongside the larger international investors on our infrastructure debt platform. High-quality projects such as AWPR are the best advert for the opportunities open to UK pension funds to source stable long-term cashflows for their members while promoting growth in the real economy."
Cabinet Secretary Minister Keith Brown, stated:
"I'm delighted the deal to deliver the Aberdeen bypass construction is now sealed. While the overall estimated scheme costs remain at £745 million, the contract value, which is around £550 million in net present value terms, is almost £220 million less than the pre-tender estimate and amounts to a reduction in payments over the life of the contract of approximately £26.5 million per year. The capital cost of construction also came in under the £472 million estimate, (cost at 2012), by £11 million on a like for like basis."
"Following the procurement process - the shortest ever for a project of this size and complexity - we are also bringing forward the scheduled completion dates for the Craibstone and Dyce Junctions by autumn 2016 and the Balmedie to Tipperty section by spring 2017, following requests from our stakeholders and subsequent discussions with the contractor."
Construction will be undertaken by Balfour Beatty's UK construction business, Carillion and Galliford Try in an equal joint venture. Once the construction is complete, the trunk road assets will be managed by Aberdeen Roads Limited and maintained by Balfour Beatty on its behalf for 30 years.
The project includes designing and constructing 58 kilometres of new dual carriageway. The contract also includes constructing 40 kilometres of new side roads, 30 kilometres of access tracks and new structures including 12 junctions, two river crossings at the River Dee and River Don, an underbridge for crossing the Aberdeen to Inverness Railway, four major pipeline crossings and three wildlife bridges in addition to more than 100 other structures.
The project was procured under the Scottish Government's Non-Profit Distributing (NPD) model.
The Aberdeen Western Peripheral Route is a key component of the planned Modern Transport System and Regional Transport Strategy to provide improved and integrated transport in the North East of Scotland. Of strategic important for the immediate area and Scotland as a whole, the project will help tackle congestion and increase accessibility.
Other transport PPP projects that achieved financial closure in the UK during this year are:
