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Dhahran Area District Cooling System

The Dhahran Area District Cooling System (the "Project") was conceived as a 27,000 refrigeration tons project (extendable to 32,000 TR) consisting of the Plant (chillers, water distribution piping system in Dhahran Area) and ETS (energy transfer station at load centres being client offices). The $135 million project was initiated by Saudi Arabian Oil Company (the Offtaker) on a BOO basis. Synergy Consulting Inc. ("Synergy") was appointed as lead and financial advisor by Saudi Tabreed (the "Client") to support their bid.

Over a period of 24 months, Synergy, acting in the capacity of complete Transaction Advisor, handled all aspects of the deal including commercial, financial, and to an extent, even the legal and technical aspects of the transaction. Synergy responsibilities started from the RFP stage, and continued till the bid was won by the Client, the Project achieved financial close, and till the first debt drawdown was successfully accomplished.

Synergy supported the Client in structuring the complete transaction which allowed the Project to be financed under long-term non recourse debt financing. During the RFP stage, Synergy worked with the Client in preparing the financial model, reviewing the RFP requirements, arranging commitment from a local Saudi bank, handling the bank's due diligence, leading the other project advisors, designing the bid strategy and then structuring the bid to make it eligible for long term financing. Based on the transaction structure put across by Synergy, the Client was able to propose a very competitive tariff structure which ensured that the offtaker invited the Client for further negotiations.

During the negotiations stage, since the Concession Agreement was redefined, Synergy was involved in structuring and drafting the Concession Agreement to ensure acceptance by the lenders and the Offtaker while ensuing the risks / obligations of the Client were handled equitably. This included numerous rounds of negotiations with all parties involved. Synergy also arranged for the debt financing from banque Saudi Fransi, a leading Saudi Bank and handled all parts of this exercise, including negotiations of the financing term sheet / debt pricing; preparing and finalizing the financial model; leading the due diligence process initiated by the lenders and conducted by the lender's legal and technical advisors; and finalization of the financing documents. During this stage, Synergy also supported the Client in negotiating and finalizing the EPC and O&M Contracts including aspects like lender's requirements in these documents; commercial structuring of EPC and O&M payments to ensure improved returns for the Client; and structuring of contractual obligations of each party under these contracts.

The Project achieved financial close in May 2010 after a 24 month effort. Synergy was able to support in securing a 20 year debt for the Project. This Project is the first District Cooling Project to achieve Financial Close under a Long-Term Limited-Recourse Debt Financing arrangement in the entire MENA region and has set an important milestone in the history of district cooling projects in MENA region. This Project is expected to act as a framework and guide for future District Cooling Projects in the MENA region.
Even after Financial Close, Synergy continues supporting the Client in meeting the condition precedent requirements under various agreements, discussions with lenders / its advisors for handling any bottlenecks in the debt drawdown process, adjustments to Project commercials (Tariff, EPC or O&M) due to changes in Project parameters under contractual obligations and strategic decisions.
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