The acquisition is subject to a number of conditions and is expected to complete in early 2017. Consideration of up to EUR87m will be paid to the vendors at completion.
The Project is a 40-year toll-road concession to design, build, finance, operate and maintain an upgraded 104km section of the A63 highway between Salles and Saint-Geours-de-Maremne, in southwest France. Phase 1 of the works was successfully delivered in April 2013, five months ahead of plan. Phase 2 was completed in November 2013, seven months ahead of plan. The Project’s senior debt was refinanced with long-term debt in June 2015.
Linking Bordeaux and the Spanish border via Bayonne, the Project forms part of the Atlantic Corridor, one of the Core Network Corridors identified by the European Commission as part of the Trans-European Networks transportation policy initiative (TEN-T). The key objective of TEN-T is to support the smooth functioning of the European Union’s internal market. In the case of the Project, this involved upgrading the existing A63 highway to motorway standards.
The Project represents the Company’s fourth investment in France, and its first in a demand-based project, where revenues are linked to usage volumes and toll pricing. Toll collection commenced in April 2013 and revenue performance has been consistent with forecasts made when the Project reached financial close in 2010, despite headwinds in the European economy. The Investment Adviser, InfraRed Capital Partners, is an experienced investor in toll-road assets and has managed a separate interest in the Project from its inception and therefore has detailed knowledge of the Project.
With completion of the acquisition not due until early 2017, the HICL Group’s net funding requirement of approximately £7m remains unchanged.
Tony Roper, Director, InfraRed Capital Partners Limited, said:
“Having reviewed a number of toll road opportunities in recent years, we are very pleased to have signed the agreement to acquire an interest in the A63 motorway project in France. It has performed well since financial close, with construction completion ahead of schedule and revenues in line with forecasts. With a 35-year concession life remaining, strong inflation-linkage and a successful refinancing in 2015 that secured long-term funding, the project is well-placed to deliver attractive returns.”
