Feb 14, 2017

The Bank will finance up to 50% of the value of the project’s eligible items in TJLP- the Brazilian Long Term Interest Rate, it being possible to increase this participation by up to 80% at market rate, preferably via the issuance of infrastructure bonds. Credit is conditioned to requirements of governance and monitoring by an independent company certifying the adequate progress of the project.

The Brazilian National Development Bank (BNDES) on Thursday, 2/14, published the detailed funding conditions for the concession of Lote Rodovia dos Calçados (Itaporanga-Franca) that will be bid by the Agência Reguladora de Serviços Públicos Delegados de Transporte do Estado de São Paulo (ARTESP), according to a public notice published on November 22nd, 2016.

BNDES can finance up to 50% of the value of the project’s eligible items in TJLP, it being possible to increase this participation to up to 80% at a market rate, preferably via the issuance of infrastructure bonds. At least 20% of the project will have to be supported by equity.

The resources will be destined for the expansion and improvement of the road system, implementation of information systems and acquisition of equipment, included in the 1st Cycle of Investments, carried out in the first eight years of the concession. Values relating to the concession fee payments, expropriations and special conservation actions are not eligible for support, with the exception of the 1st cycle of resurfacing and recovery of special works of art located in the segment of the road system named “Existent”.

Total tenor will be up to 15 years for TJLP tranche and up to 10 years a market rate tranche if this support is not provided via the issuance of infrastructure bonds. The value of the credit will be determined according to the payment capacity of the project provided that a minimum Debt-Service Coverage Ratio (DSCR) of 1.30 of the project is observed, which will be annually assessed. Guarantee package shall be determined based on the technical-economic analysis of the enterprise and shareholders, and may be shared with other creditors exclusively for funding investments of the project.

Governance requirements – As previously disclosed, BNDES will include provisions of governance in its funding contract, in particular for regulating related-party transactions (RPT).

For values that have been previously established by BNDES, the RPT will be subject to approval by the Board of Directors (BoD) of the concessionaire, with the exclusion of members with potentially conflicting interests. When analyzing each RPT the BoD must assess price and quantitative indicators and consider proposals from at least three enterprises with similar technical ability.

The Bank will also include in its loan contract the obligation of hiring a managing/certifier company, which will act on behalf of the creditors, including bondholders, especially in the production of reports about the reasonableness of CAPEX (capital expenditure), the physical progress of the work, the reasonableness of hiring service providers, the fulfilment of payment obligations of the concession fee, enterprise risk management, and the technical analysis of events that result in pleas to the granting authority.

BNDES highlights that the funding conditions are available for all potential investors of the referred international competition and do not necessarily imply the right of obtaining the funding by the future winner of the bid.

The concession holder is entitled to apply for the credit from BNDES, which will assess the cadastral and credit risk situation of the applicant and of potential guarantors as well as all legal, economic, and environmental aspects of the presented project. Detailed conditions are available on BNDES’ website.

Conditions for airports and the Florínea-Igarapava system – On Tuesday, 14/2 BNDES published updates on the financing conditions of the Third Round of Airport Concessions and for the granting of the Florínea-Igarapava Road System to be auctioned by the Federal Government and the government of the state of São Paulo.

The possibility of broadening BNDES’s participation to up to 80% of eligible items, using market conditions, preferably via the issuance of infrastructure bonds was incorporated into the conditions which had been previously disclosed. In addition, the Bank has defined that the maximum period for the funding shares at market cost will be 10 years if this support is not carried out via the issuance of infrastructure bonds.

Concerning the Florínea-Igarapava Road System, the investments of “Special Conservation” regarding the 1st cycle of resurfacing and restoration of Special Works of Art[VdBF1]  of the “Existent” system become eligible for funding. The updated conditions for the Third Round of Airport Concessions and for the Florínea-Igarapava system are available at BNDES’s website.