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Noteworthy

MRO:
Synergy was financial advisor to Integrated Transportation Company (ITC) on its recently completed 30% stake acquisition in the newly spun-off Maintenance, Repair and Overhaul (“MRO”) business of Saudi Arabian Airlines. The transaction was completed a year and a half after the official bid in April 2012, and was structured as a 100% acquisition financing on project finance basis. Synergy provided pre-bid business plan development, valuation, structuring and documentation support, and was involved in structuring and negotiating the financing for the transaction and assisting ITC in its negotiations with Saudi Arabian Airlines through financial close. Synergy continues to support ITC in developing a detailed business plan for the acquired entity. HSBC acted as MLA for the financing, Jones Day was sponsors’ legal counsel and Baker & McKenzie was lenders’ counsel.
 
AED 240 million debt financing for Park Water Limited
Park Water Limited, wholly owned subsidiary of Metito Utilities Limited, and Dubai Islamic Bank, the largest Islamic bank in the UAE, signed a 10 year Islamic Financing Agreement for AED 240 million in May, 2015. The transaction represented Metito’s first Islamic Finance Agreement and DIB’s debut partnership with a private company in the water and wastewater industry. Synergy Consulting acted as the financial advisor to Metito on the transaction and played a key role in making this transaction possible and finalized in a record time. PWL has concession rights for 56,000 m3/day wastewater project in Dubai Investment Park. The project consists of treating raw sewage and delivers treated water for irrigation purpose. The concession agreement was executed in 1999 and term expires in 2037. The concession grantor for the project is Dubai Investment Park Development Company (DIPDC), subsidiary Dubai Investments. The transaction marks an important step in expanding Islamic finance into sectors and institutions previously catered to by the conventional form of banking. Metito’s significant experience in the water sector, DIB’s clear understanding of Islamic financing and project’s operating track record were the key drivers for the successful closure of the transaction. .
 
10 MW solar PV Project in Jordan achieves FC :
Arabia One for Clean Energy Investments PSC, a 10 MW solar Photovoltaic (PV) project in Jordan, is one of Jordan’s first utility scale solar PV project that achieved financial closure on 19th May 2015. With an estimated project cost of USD 28 million, the project is funded by International Finance Corporation (IFC) and Finnish Fund for Industrial Corporation (Finnfund). The project sponsors are Arabia Trading & Consulting Co. Ltd (Jordan), Ennera Energy and Mobility Solutions (Spain), and Hanwha Engineering and Construction Corporation (Republic of Korea). Arabia One was one of the seven (7) projects under IFC’s award winning financing scheme in which all projects were offered similar financing package. However, with Synergy’s efforts at various stages of financing, Arabia One managed to achieve certain customized financing solutions for itself within a standardized financing framework, thus enhancing the value for its shareholders. The Project is scheduled to achieve COD during February 2016.
 
50 MW solar PV project in Jordan awarded through competitive bidding
Synergy supported the consortium of Saudi Oger Ltd (KSA) and Arabia Trading & Consulting Co. Ltd (Jordan) in securing L2 position in the first ever renewable power competitive bid in Jordan. The bid results were declared in May 2015. Under this bid based on reverse auction mechanism, Ministry of Energy and Mineral Resources of Jordan is expected to award solar PV projects of 50 MW capacity to each of the four (4) shortlisted bidders. The consortium supported by Synergy emerged as the second lowest bidder quoting a tariff of US Cents 6.49/kWh - the tariff is one of the lowest solar PV tariff quoted in the MENA region to-the-date. Synergy successfully executed end-to-end financing mandate (from debt syndication to first drawdown) under previous Round 1 projects; this experience was utilized in Stage II bid for providing inputs in reducing capital and operating costs, increasing competitiveness and bankability of EPC and O&M contracts, optimizing the transaction structure to enhance shareholder returns, and sourcing the most competitive financing for the Project. Synergy introduced certain IPP bid practices of larger projects in this solar bid to further enhance its competitiveness Synergy is currently working towards the financial closure of the project.
 
AED 192 MM debt financing for Dubai Parks District Cooling Project
Tabreed Parks Investment LLC (TPI), a wholly owned subsidiary of National Central Cooling Company PJSC (“Tabreed”), signed an AED 192 MM long term project financing facility with Emirates NBD for the Dubai Parks District Cooling Project. Tabreed’s DC plant at Dubai Parks is now nearing completion and will be commissioned in time for park’s opening. Synergy Consulting acted as transaction advisor to Tabreed and played a pivotal role in end-to-end execution of this transaction. Earlier, TPI was awarded a long term concession (30 years) on BOOT basis to provide 33,000 TR (extendable by 13,000 TR) cooling to Phase 1 of Dubai Parks and Resorts development at Jebel Ali, Dubai. The Concession Grantor for the project is Dubai Parks and Resorts PJSC, a subsidiary of Meeras Holding. Being the first greenfield DC project in Dubai to be financed under limited recourse financing structure, this debt facility with Emirates NBD is a landmark and sets way for similar future projects. Tabreed’s leadership position and strong operating track record in UAE DC market and robust project contractual structure were key drivers for the successful closure of this transaction.

 

 
Synergy client Miahona wins the WEX Global Award for Innovation in the Category titled - Finance for Potable Water BOOT Project for KKIA-Riyadh, KSA

Deal Description:

King Khaled International Airport (KKIA) is one of the four international airports in the Kingdom of Saudi Arabia. Located 35 km north of Riyadh, the airport represents the air gate and the beating heart of the capital of the Kingdom of Saudi Arabia and centre of the national air transportation system.

KKIA has an existing potable water facility of 11,000 m3/day, which has reached the end of its useful life. This coupled with expansion of the airport; the need to upgrade and expand the potable water system was recognized.

General Authority of Civil Aviation (GACA) is the national institution responsible for aviation and related matters in the Kingdom of Saudi Arabia, and the operator of four international and 23 domestic airports. In 2014, GACA entered in to discussions with Miahona to (a) rehabilitate and operate the Existing Potable Water Assets, (b) develop on a BOOT basis a new 25,000 m3/day potable water facility, new deep wells, and associated infrastructure at the Airport and operate and maintain the same for a concession term of 30 years. After numerous rounds of discussions, the project was awarded to Miahona in July 2014. GACA issued Letter of Intent to Miahona to commence negotiations for the Concession Agreement. Additionally, GACA awarded Miahona the operation and maintenance of the existing potable water treatment plant effective 1st August 2014 till the  the commencement of operations of the new potable water treatment plant.

The Project includes a separate Special Purpose Vehicle (SPV) which is financed utilizing (a) long term non-recourse debt and (b) equity bridge loan facilities. The contractual framework of the Project  complies with standard contractual provisions, applicable for projects utilizing non-recourse financing.

Rationale for the Award Nomination:

First PPP Transaction without Ministry of Finance (MoF) support

1.       This is the first PPP transaction undertaken by GACA with non-recourse financing without additional support from Ministry of Finance 

2.       Lenders relied on (a) an understanding of GACA’s budget allocation and payment procedures and (b) additional budget and payment related Representations and Warranties from GACA

Setting Precedence for privatisation of airport utilities and other government utilities

1.       The transaction sets the way forward for privatization of utilities at airports in the Saudi Arabia and GCC region

2.       The transaction sets a precedence for GACA and other government entities to undertake PPP transaction without additional support from MoF

3.       GACA has initiated discussions with developers for privatisation of other utilities at its various airports in Kingdom of Saudi Arabia

Strategic nature of asset and criticality of service

1.       King Khaled International Airport is a strategic asset for GACA and Kingdom of Saudi Arabia

2.       District Cooling service is an essential utility and a pre-requisite for airport operations

3.       The strategic nature of the asset and criticality of service leveraged to provide comfort to lenders on importance of the Project

Seamless transfer of Assets ensuring no interruption of service

1.       The Project Company developed procedures ensuring neither rehabilitation works of Existing Assets nor development of the New Assets impacted service at the airport

2.       Key aspects the procedures addressed are (a) transfer of operation and maintenance of Existing Assets to the Project Company (from the Existing O&M Contractor); (b) rehabilitation of Existing Assets (c) construction of new assets and phasing out of Existing Assets (at the start of operations for the new assets)

 
 
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