Public-Private Partnership: €275 million financing closed for new subway line in Milan
On 2007 December 12, Dexia-Crediop, Mediobanca, Société Générale Corporate & Investment Banking and WestLB AG – Milan Branch, acting as joint MLAs and Bookrunners, have underwritten a €275m project financing debt for the construction and operation of Line 5 in Milan, Italy.
The project represents the first underground line public-private partnership scheme in Italy and is a benchmark for future project financing in the infrastructure sector.
The total project cost will be €550 million, funded through a combination of public and private funds. The €297million public contribution will be provided by the City of Milan, and the state government. The remaining project cost will be financed by the four banks and Metro 5 shareholders.
The €275 million total project finance debt will be made of five facilities, including a term-loan, a VAT facility, a standby facility, a working-capital facility and an anticipation of public contribution facility. The term-loan has a tenor of 23 years. Interest rate risk for the project has been fully secured by the four MLAs upon closing.
Allen & Overy law firm has legally advised the MLAs, while Lovells and Studio Annoni Segato has assisted Metro 5 SpA.
The new 5.6km line will join Garibaldi station and Bignami, in Northern Milan, with nine stations: Porta Garibaldi, Isola, Zara, Marche, Istria, Cà Grande, Bicocca, Ponale and Bignami. The project is envisaged as an undergound light rail which will utilize a driverless, fully automated system.
Operation of Line 5 is planned in two phases: Phase one, from Zara to Bignami, is expected to be operational from 1 March 2011, and, phase two, from Zara to Garibaldi, station is expected to be operational in the successive 14 months (i.e. on or before 1 May 2012).
Forecasted target traffic volume amounts to 29 million passengers per year.