LEGAL REPORT. Contents. GlobalReview 48 LeagueTables 49 ProjectList 52 Americas 55 AsiaPacific 57 EMEA 59

Transcription

1 18 November 2009 pfi 47 PROJECT FINANCE INTERNATIONAL 18 NOVEMBER 2009 ISSUE 421 LEGAL REPORT Contents GlobalReview 48 LeagueTables 49 List 52 Americas 55 AsiaPacific 57 EMEA 59

2 48 pfi 18 November Global Huntingfor projects Finance International s 2009 Legal Survey reveals a struggle for deals at the top, and a new leading place to do business. By Mark Kolmar. It is perhaps not surprising that the 12 months to September 2009 should have provided something of a shake-up to PFI's annual Legal Survey. Clifford Chance retains its place at the top, but much has changed beneath. Latham & Watkins has pushed its way into second, jointly with Linklaters, breaking the three-year hold that Clifford Chance, Allen & Overy and Linklaters have had on the top three. Allen & Overy drops to fourth. Volatility at the top has been encouraged by a vastly reduced deal count. The dominance of the top three is gone whereas last year first place was earned by double the number of mandates of fourth (28 vs 14), this year first place had just 11 to fourth place's nine. A total of 40 deals done by the top four is less than half last year's 87, whereas the 39 deals the rest of the top 10 completed this year was not far from last year's 46. The top 10 deals were worth US$40bn, compared with US$75bn last year. The bulk of Clifford Chance's 11 deals came in EMEA (seven), although it was second to Linklaters in that region adding three in the Americas and one in Asia- Pacific secured the top spot. Among its largest deals was the year's biggest, the US$5.25bn Panama Canal Expansion, as well as the US$1.85bn Adani Power 4 project in India, the US$1.6bn Morupule Power Station in Botswana and the US$1.5bn Pecem Thermal Plant in Brazil. In all of these, and in nine of its 11 deals, Clifford Chance acted for the lenders. Latham & Watkins' 10 deals were up on last year's seven. Again, deals in every region helped the firm up the table, with four in the Americas, four in EMEA and three in Asia-Pacific. Latham & Watkins racked up its 10-deal total primarily through mid-sized projects, with sponsors counsel on the US$3.73bn Ras Laffan LNG 2&3 in Qatar its only deal in the top 35. Other roles around the US$1bn mark were the lenders counsel on the US's Trans Allegheny Interstate Line (US$1.08bn) and Italy's Sorgenia CCGT (US$1.05bn), and sponsor's counsel on the Torresol Solar Thermal in Spain (US$994m). Linklaters secured a joint-second spot with its leading role in EMEA (eight deals), alongside two in Asia-Pacific. Its big-hitters were lenders counsel on the number two deal, the US$5.05bn Berlin-Brandenburg International Airport in Germany, sponsors counsel on the US$3.35bn Vodafone Essar Telecom Expansion in India, and lenders counsel on the US$2.01bn M25 widening project in the UK, with roles on a further five deals over US$1bn. Alongside the much lower percentage of deals for the top three, the big change in the top 10 was the emergence of Indian firms as major players, boosted by India s ban on international firms. Amarchand Mangaldas achieved fifth place with eight deals, having completed just one last year, and India Law Services reached seventh on the back of six deals, compared with two last year. Both took all their roles on the lenders' side, with Indian sponsors demonstrating a penchant for in-house counsel. The two firms' leading positions are an indicator of the remarkable importance of India as a source of projects in the past 12 months neither firm has a deal outside of the country in its count. Nineteen deals of the 90 deals on the list took place in India, including four of the top 10. Last year's list had only eight projects in India. The eight roles Amarchand Mangaldas took in Asia- Pacific matched EMEA's lead Linklaters; last year Clifford Chance topped the Asia-Pacific table with seven, while Allen & Overy took 23 to top the EMEA rankings. More than 20% of project finance's US$500m-plus deals being completed in one country between the catastrophic September 2008 and the ray-of-light September 2009 provides a clear message when things are tough, it pays to be in the right place at the right time (and being in a protected market certainly helps). Now, firms need to work out where the place to be is for 2010.

3 18 November 2009 pfi 49 The top ten deals were worth US$40bn, compared with US$75bn last year GLOBAL - SEPT 2008 TO SEPT 2009 Law firm Lender Sponsor Total Clifford Chance Latham & Watkins Linklaters Allen & Overy Amarchand Mangaldas Shearman & Sterling India Law Services Milbank Tweed White & Case Ashurst Chadbourne & Parke Dewey & LeBoeuf Allens Arthur Robinson Uría Menéndez Jones Day Luthra & Luthra Mallesons Stephen Jaques Morais Leitão, Galvão Teles, Soares da Silva Simpson, Thacher & Bartlett Vinson & Elkins Baker & McKenzie CMS Cameron McKenna DLA Piper Freshfields Garrigues Legance Norton Rose Paul Hastings Skadden Sullivan & Cromwell Vieira del Ameida ABNR Armstrongs B&B Legal Syndicate Bajaj Bracewell & Guiliani Chiomenti Clayton Utz Cleary Gottlieb Davis Dua Fasken Marlineau Felsberg Fulbright & Jaworski Dave & Girish Gowling Hakim Herbert Smith Hunton & Williams J Sagar Lindemann Schwennicke GLOBAL - SEPT 2008 TO SEPT 2009 Law firm Lender Sponsor Total Lovells Loyens & Loeff Macedo Vitorino Makarim & Taira Matthos Filho Mayer Brown Minchin & Kelly Morgan, Lewis & Bockius Ogilvy Renault Paul Weiss Pinsent Masons PLMJ Ravinale Reinhart Marville Torre Sandersons and Morgans Sayed & Sayed Siam Premier Simmons & Simmons Singhania Slaughter & May Suresh A Shroff Watson, Farley & Williams GLOBAL TOP TO 2009 Law firm Lender Sponsor Total Clifford Chance Allen & Overy Linklaters Milbank Tweed Hadley & McCloy Shearman & Sterling Latham & Watkins White & Case Skadden Arps Slate Meagher & Flom Allens Arthur Robinson Norton Rose

4 50 pfi 18 November Global AMERICAS - SEPT 2008 TO SEPT 2009 Law firm Lender Sponsor Total Dewey & LeBoeuf Chadbourne & Parke Latham & Watkins Shearman & Sterling Vinson & Elkins Clifford Chance Simpson, Thacher & Bartlett Allen & Overy Milbank Tweed Bracewell & Guiliani Cleary Gottlieb Davis Fasken Marlineau Felsberg Fulbright & Jaworski Gowling Matthos Filho Mayer Brown Morgan, Lewis & Bockius Norton Rose Ogilvy Renault Sullivan & Cromwell White & Case EMEA - SEPT 2008 TO SEPT 2009 Law firm Lender Sponsor Total Linklaters Clifford Chance Allen & Overy Ashurst Latham & Watkins White & Case Uría Menéndez Jones Day Morais Leitão, Galvão Teles, Soares da Silva Shearman & Sterling CMS Cameron McKenna DLA Piper Freshfields Garrigues Milbank Tweed Skadden Vieira del Ameida Legance Armstrongs Baker & McKenzie ASIA PACIFIC - SEPT 2008 TO SEPT 2009 Law firm Lender Sponsor Total Amarchand Mangaldas India Law Services Allens Arthur Robinson Luthra & Luthra Mallesons Stephen Jaques Latham & Watkins Linklaters Milbank Tweed Shearman & Sterling ABNR Allen & Overy B&B Legal Syndicate Bajaj Baker & McKenzie Chadbourne & Parke Clayton Utz Clifford Chance Dave & Girish Dua Hunton & Williams J Sagar Makarim & Taira Paul Hastings Paul Weiss Sandersons and Morgans Siam Premier Singhania Suresh A Shroff White & Case EMEA - SEPT 2008 TO SEPT 2009 CONTINUED Law firm Lender Sponsor Total Chiomenti Hakim Herbert Smith Lindemann Schwennicke Lovells Loyens & Loeff Macedo Vitorino Minchin & Kelly Norton Rose Paul Hastings Pinsent Masons PLMJ Ravinale Reinhart Marville Torre Sayed & Sayed Simmons & Simmons Slaughter & May Watson, Farley & Williams Vinson Elkins 1 0 1

5 18 November 2009 pfi 51 PROJECT LIST SEPT 2008 TO SEPT 2009 Country Value (US$m) Lenders Sponsors Subsidiary roles Sector Panama Canal Expansion Panama Clifford Chance Shearman & Sterling Transportation Berlin-Brandenburg Germany Linklaters Lindemann Schwennicke Transportation International Airport Dolphin Energy Gas Pipeline UAE Sullivan & Cromwell Shearman & Sterling Oil & Gas Victorian Desalination Australia Mallesons Stephen Jaques Clayton Utz/ Allens Arthur Corrs Chambers Westgarth PPP Robinson Mundra Ultra Mega India Chadbourne & Parke/ Amarchand J Sagar Power Power Plant Mangaldas Sasan Ultra Mega Power India Luthra & Luthra In-house Power Plant Ras Laffan LNG 2&3 Qatar Skadden Latham & Watkins Oil & Gas Vodafone Essar Telecom India India Law Services Linklaters S+R Associates/ Clifford Chance Wong/ Telecommunications Expansion Amarchand Mangaldash Porterbrook Acquisition United Kingdom Ashurst Milbank Tweed Linklaters, Norton Rose, Clifford Chance Transportation Dahej Petrochemical India Amarchand Mangaldas/ Suresh A Shroff Luthra & Luthra Petrochemicals Complex Minera Esperanza Chile Milbank Tweed Sullivan & Cromwell Mining Tanjung Jati B Expansion Indonesia Milbank Tweed/ ABNR Paul Weiss/ Makarim & Taira Baker & McKenzie-HHP Power Al Dur Independent Bahrain Shearman & Sterling Milbank Tweed Power Water and Power Highways Agency M25 United Kingdom Linklaters Ashurst Transportation Road Widening A2 Nowy Tomysl to Poland Allen & Overy Baker & McKenzie Clifford Chance Transportation Swiecko Phase 2 Adani Power Plant Phase India Clifford Chance/ White & Case/ Luthra In-house Power 4 & Luthra Sterlite Orissa Thermal India Amarchand Mangaldas Girish Dave Power Power R1 Motorway Slovak Rep White & Case Linklaters Transportation Morupule Power Station Botswana Clifford Chance/ Armstrongs Minchin & Kelly Power Expansion Arzew Fertiliser Algeria Reinhart Marville Torre White & Case Industry Interstate 595 Three United States Simpson Thatcher Dewey & LeBoeuf Hunton Williams/ Nossaman Transportation Reversible Toll Lanes Pecem Thermal Plant Brazil Felsberg & Associates/ Clifford Chance Allen & Overy/ Matthos Filho Power Convento (Enersis Wind Portugal Morais Leitão, Galvão Teles, Soares da Linklaters Clifford Chance Transportation Portfolio Acquisition) Silva Essar Jamnagar Coal- India Amarchand Mangaldas In-house Power based Power Gondia Power Plant India India Law Services In-house Power Yuzhno-Russkoye Gas Russia Linklaters Herbert Smith Oil & Gas Field Orissa Coal-based Power India Amarchand Mangaldas/ Dua In-house Power Angamos Thermo Plant Chile Shearman & Sterling Vinson & Elkins Power

6 52 pfi 18 November list PROJECT LIST SEPT 2008 TO SEPT 2009 Country Value (US$m) Lenders Sponsors Subsidiary roles Sector Douro Interior Road Portugal Allen & Overy/ Morais Leitão, Galvão PLMJ Jardim, Sampaio, Caldas Transportation Teles, Soares da Silva Astoria II Power Plant United States Dewey & LeBoeuf Chadbourne & Parke Power Autoroute 30 Canada Ogilvy Renault Growling/ Lafleur Henderson Transportation CLP Jhajjar Power Plant India Amarchand Mangaldas In-house Power Odin Coal-Fired Power Thailand Shearman & Sterling/ Siam Premier Hunton & Williams Power Plant Belwind Windfarm Belgium Allen & Overy Watson, Farley & Williams/ White & Case/ Clifford Chance Power Loyens & Loeff Raghunathpur Thermal India Amarchand Mangaldas/ Sandersons In-house Power Power Station and Morgans Liefkenshoek Rail Tunnel Belgium Clifford Chance Freshfields Allen & Overy Transportation Trans Allegheny United States Latham & Watkins Vinson & Elkins Power Interstate Line Olivento Kastrel Wind Spain Linklaters Ashurst Power Portfolio Acquisition Sorgenia CCGT Power Italy Latham & Watkins Chiomenti Power Plants Pebble Refinancing Portugal Morais Leitão, Galvão Teles, Linklaters Power Soares da Silva Jubilee Oil Field Ghana Clifford Chance Slaughter & May Oil & Gas (Kosmos Portion) Autema Refinancing Spain DLA Piper Ashurst Transportation Torresol Solar Thermal Spain Jones Day Latham & Watkins Power Plant Gdansk - Torun Toll Road Poland Allen & Overy CMS Cameron McKenna Transportation Autoestrada Transmontana Portugal Uría Menéndez Transportation Road Sao Paulo Metro Line 4 Brazil Mayer Brown Fulbright & Jaworski Transportation Sidhi Coal-based Power India Amarchand Mangaldas Power Litoral Oeste Road Portugal Uría Menéndez Vieira del Ameida Transportation Manzanillo LNG Mexico Milbank Tweed Allen & Overy Oil & Gas TCI Sanmar Chlor - Egypt White & Case Allen & Overy Petrochemicals Alkali Plant A5 Baden-Baden to Germany Clifford Chance Freshfields Transportation Offenburg Toll Road {A-Modell} Concessio Estacions Spain Uría Menéndez DLA Piper Transportation Aeroport L9 Tramo 1 Etesco Drill Ship Brazil Norton Rose Latham & Watkins Oil & Gas Mint LNG Carriers Angola Norton Rose Paul Hastings Oil & Gas (Angola LNG Shipping) Marco 4 Windfarm Spain Jones Day Jones Day Power

7 18 November 2009 pfi 53 PROJECT LIST SEPT 2008 TO SEPT 2009 Country Value (US$m) Lenders Sponsors Subsidiary roles Sector R4 Madrid Sur Inversora Spain DLA Piper Clifford Chance Transportation de Autopista Road Aker FPSO India Linklaters Oil & Gas Baixo Alentejo Road Portugal Simmons & Simmons Macedo Vitorino Sérvulo Transportation Rosa Power Plant India India Law Services In-house Power Phase 2 T-Power IPP Belgium Linklaters Clifford Chance/ White & Case Power Renomar Valencia 13 Spain Garrigues In-house Power Windfarm Lafarge Cement Syria Syria Shearman & Sterling/ Hakim Lovells/ Sayed & Sayed Ramzi Joreige Industry AGL Energy Refinancing Australia Allens Arthur Robinson In-house Power Unitech Telecom India Singhania Telecommunications Expansion San Severo Power Plant Italy Allen & Overy Legance Power (EnPlus CCGT) Gurgaon - Jaipur India India Law Services Transportation Expressway Worsley Cogeneration Australia Allens Arthur Robinson Mallesons Stephen Jaques Power and Steam Plants Jindal Orissa Thermal India Bajaj/ B&B Legal Syndicate Power Power Plant Delhi Airport Metro India India Law Services Transportation Express Theun Hinboun Laos Allen & Overy Latham & Watkins Power Expansion Turin Waste Incineration Italy Legance Ravinale Power to Energy Plant Alberta K-9 Schools Canada Fasken Marlineau Davis Borden Ladner Gervais Leisure & Property Baixo Tejo Road Portugal Uría Menéndez Vieira del Ameida Transportation Maritimes & Northeast United States Chadbourne & Parke Vinson & Elkins Oil & Gas Pipeline Phase IV Semi-submersible Mexico Clifford Chance Oil & Gas Platform II Elba Express Pipeline United States Chadbourne & Parke Bracewell & Guiliani Oil & Gas Central Termoelectrica Chile White & Case Cleary Gottlieb Power Andina Manchasol 2 Solar Spain Garrigues In-house Power Thermoelectric Plant Laing Viridor United Kingdom Clifford Chance Pinsent Masons Linklaters Waste & Recycling (Manchester) Waste Heartland Wind I United States Simpson, Thacher & Bartlett Dewey & LeBoeuf Power First Gas Power Philippines Shearman & Sterling Paul Hastings Oil & Gas Refinancing GenConn Energy United States Chadbourne & Parke Dewey & LeBoeuf Power Power Plants Infrastructure Investors United Kingdom CMS Cameron McKenna Ashurst Leisure & Property Acquisition Heartland Wind II United States Simpson, Thacher & Bartlett Dewey & LeBoeuf Power

8 54 pfi 18 November list PROJECT LIST SEPT 2008 TO SEPT 2009 Country Value (US$m) Lenders Sponsors Subsidiary roles Sector Milford I Wind United States Latham & Watkins Morgan, Lewis & Bockius Power Midland Cogeneration United States Latham & Watkins Shearman & Sterling Power Venture Sydney Airport Refinancing Australia Allens Arthur Robinson Mallesons Stephen Jaques Transportation Protelindo Tower Indonesia Latham & Watkins/ Baker & McKenzie Milbank Tweed Telecommunications Acquisition Mumbai Mass Rapid India India Law Services In-house Transportation Transit System Qatar Ship Acquisition Qatar Skadden Latham & Watkins Oil & Gas Reach the people who matter REUTERS PROJECT FINANCE INTERNATIONAL Every fortnight, the most senior industry figures read Finance International for authoritative, independent news, data and analysis. Americas PROJECT FINANCE INTERNATIONAL 1 October 2008/Issue 394/ A-30 shows market lives Southern Lights up Gencos show loan power OpenNet is the new Netco Pipe advisories flow nicely New Spanish PV tariff EMEA Features Asia Pacific Hybrid deals for Canadian P3 New French PPP legislation PLUS Middle East Report This creates an unrivalled opportunity for advertisers to reach the people who shape and drive the project finance industry and to associate their company with the leading source of global project finance intelligence. To discuss the various advertising and sponsorship opportunities within PFI, call Chris Keene on +44 (0) or chris.keene@thomsonreuters.com today.

9 18 November 2009 pfi 55 Americas Looking ahead to 2010 Patrick Harder, co-chair of Nossaman LLP's infrastructure practice group, says: "It has been a slow year." But Harder, whose group is a long-time leader in advising the public sector on public-private partnership programmes in the US, has some good reasons to think things are looking up. A wider group of states are seeking to launch new P3 programmes or relaunch stalled efforts. Among them are Georgia, North Carolina, South Carolina, Nevada, Arizona and California. As Harder sees it, successful transactions in Florida and continued progress in Texas have provided a model and "have garnered interest among other states who have watched those states leverage limited public funds into real infrastructure projects, now." A second driver in the coming trend to turn the eagerly awaited P3 revolution into realised transactions is the fiscal crisis looming among states across the nation, which is expected to keep budgets restrained even after the stimulus plan begins to wind down. David Horner, senior counsel in the projects practice of Allen & Overy, a former deputy assistant secretary for policy at the US Department of Transportation, and chief counsel of the Federal Transit Administration, notes that the enthusiasm for private infrastructure investments is not just growing at the state level, but at the municipal level as well. Horner's "PPP & Municipal Home Rule" report published by the law firm in mid-2009 explained how cities in states without P3 legislation were able to independently launch their own municipal P3 programmes following the example of Chicago, one of the most active jurisdictions for P3 transactions in recent years. With all of these new municipal and state entities looking at P3 transactions, the need for advice is growing. To meet that need, Frank M Rapoport, chair of the global infrastructure and public-private partnerships practice Law firms in the Americas are happy to be putting 2009 behind them and are hopeful that next year will see a rebound in project finance transactions. By Deirdre Fretz and Alan Gersten. at McKenna Long & Aldridge LLP, has taken a leading role in forming the Council of Finance Advisors (CPFA), a working group designed to provide recommendations and advocate for a centre of excellence on P3s. While Rapoport, Harder and their teams at their respective law firms are working as advisers to public sector partners looking to pursue P3 programmes, the need for firms to work with private sector partners and their bankers will also grow. Canadian law firm Davies acted as the legal counsel to the private consortium led by Bouygues and Meridiam, which has just closed the US$1bn Port of Miami Tunnel deal, one of the few P3 deals to close in the US this year. The law firm, which has long had a New York office, was tapped to work on the project in 2007 due to the work Davies had done in Canada with Bouygues' first equity partner in the deal. Davies' Toronto-based partner Greg Southam, who worked on the Miami deal, said that Davies expects to work on additional P3 deals in the US as Canadian project sponsors enter the US market. Other law firms with origins outside of the US, including Allen & Overy and Freshfields, have been active in the US P3 space, combining their US practice with legal expertise gained in P3 transactions in the UK and Europe. However, Harder expects US firms with strong project finance practices will continue to act as counsel to private partners in P3 deals, and may have a bigger leg up as more US-based project sponsors enter the field that has been dominated in the US by European players. In fact, George Miller, who recently joined Mayer Brown as a partner in the global projects and infrastructure groups in New York, noted that the firm was looking into expanding north into Canada, where Infrastructure Ontario has continued to provide a steady stream of work for the P3 community in the last year despite the credit crunch. While constraints in the credit markets have limited the number of deals that have

10 56 pfi 18 November Americas reached financial close over the past year, the number of new procurements has continued to grow. In Latin America, legal firms have ridden through a downturn in 2009 not as bad as in other parts of the world and expect an upturn in US firms foresee a lot of activity in public-private partnerships, capital-raisings, initial public offerings, equity deals and mergers and acquisitions, as well as agribusiness. "We've seen an explosion in the ability of Latin American companies to access substantial funding from the US capital markets," said Michael Fitzgerald, chairman of the global securities group and the Latin America practice group of Milbank Tweed Hadley & McCloy LLP. "Just four months ago, that window was completely shut," he added. Fitzgerald said US law firms had a lot of opportunity in Latin America. In 2010, the market would improve compared with The economy worldwide would be better, and there would be a lot of momentum. "It's a great spot to be," Fitzgerald said. But US firms are limited. For example, in Brazil, law firms can specialise in Latin American cross-border financing. US firms can't practise Brazilian law in Brazil. Mayer Brown can practise New York and English law because Stephen Hood, the partner who runs the Sao Paulo office, is from the UK. The US firms can handle cross-border aspects of the law with a Brazilian law firm. If a French law firm opened in Brazil, it could practice French law. In Brazil, the region's strongest economy, 2009 was a year of tremendous change. In 2007, the region enjoyed explosive growth, but in 2008 and 2009 basically nothing happened in securities until four months ago, when the economy improved, Fitzgerald said. In the past five years, growth has been in emerging markets such as Brazil and Mexico. Many international firms want to invest in companies in emerging markets because they can get a better return. The region has had a steady flow of project finance even in down periods. "The Chinese are scouring the earth looking for natural resources and spending billions of dollars in Latin America," Fitzgerald said. These are investments in infrastructure, which means work for lawyers. Milbank does not have an office in Brazil, but it is exploring opportunities. "We're opening offices cautiously," Fitzgerald said. Milbank works with three or four law firms in Sao Paulo in long-term relationships. Chadbourne & Parke, a major New York law firm, is applying for a licence to practise law as a foreign firm in Brazil. One promising area for legal work is bond offerings, because many companies are interested in refinancing at today's lower rates for corporate issues. That includes upper-tier companies such as Petrobras. Other companies are planning initial public offerings. In 2010, Fitzgerald also expects more mergers and acquisitions. Brazilian and US banks will be more willing to lend In Brazil, the region s strongest economy, 2009 was a year of tremendous change. next year as the economy improves, all of which will mean increased legal work. Private equity firms are interested in Brazil because they can get a better return, but these firms are investing "below the radar", Fitzgerald said. They don't want to take majority positions, preferring to invest and make a profit quietly. Sam Zell's private equity fund is one example, notwithstanding his problems with the Chicago Tribune. These private equity firms don't want to run the companies, just make a profit. Unlike the US, Mexico didn't have a banking crisis and has done better than the US. For 2010, Mexico will have a lot of project finance investments in toll roads. Already, the country has auctioned Farac I and II and plans to auction Farac III in December. There will be a lot of cross-border financing here as well. For example, Milbank represents Gennome, a Mexican firm that formed a US company, Televisa. This is a major Mexican multimedia conglomerate for the Spanishspeaking world. Much of its programming airs in the US and runs on Univision, with which it has an exclusive contract. The Hispanic market is the US is 15% and growing. The purchasing power of the US Hispanics is US$1trn, about the same as Mexico's GDP. Another good area for the law firm is Peru, Fitzgerald said. Milbank did a subordinated debt offering for BCP, a local bank, in November for US$300m. He sees good investment possibilities in this country. Chile is another good area. The country has a self-funding pension plan that provides enough funds so that Chile doesn't need much US financing. Thus, bank lending and project finance will involve ports and electricity companies. Other possibilities include Central American countries such as Panama and Costa Rica that have stable governments and investment opportunities including the expansion of the Panama Canal and electrical installations that are trying to hook up Central America to the South American electrical grid. Hood of Mayer Brown's Sao Paulo office said PPPs were still working in Latin America. The CRPAOs from Peru on the toll road concessions are a kind of P3. The toll roads were not developed enough and the government made payments. That's not like Europe, which has a different kind of P3 arrangement. The Sao Paulo line four was a P3. The IDB was involved, along with private banks and the government. Another P3 project could be the Sao Paulo ring road, which is going forward and could involve international firms. Telecom financing has become more prominent in Brazil. In April, Rio Telemar, which had bought Brasil Telecom, floated a US$750m bond issue. Telemar is working on another loan agreement that could be done before Christmas. Another fertile area for law firms is agribusiness. There is debt structuring going on for sugar and ethanol plants, and law firms are involved in these.

11 18 November 2009 pfi 57 Asia Pacific A downturn, but not for long financing activities in the Asia- Pacific region have definitely been affected by the global financial crisis, but the need for energy and infrastructure development will help it pull trough. By Minerva Lau and John Arbouw. The year 2009, especially the first six months, is so far looking to be one of the most sluggish periods seen in recent years. The global recession, an aftermath of the Lehman downfall, has definitely made an impact on project financing and on the activities of the legal community. International commercial lenders continue to suffer from liquidity issues and high funding costs mean that developers are prepared to put projects on hold until market sentiment improves. But it has not been total zero activity, as there remains a genuine need for energy and infrastructure projects. financing deals have continued to be completed, although in much smaller volume; and these have been largely funded by domestic banks with a growing proportion being provided by multilaterals and development banks. There has generally been less activity on the financing side, with many of the project finance deals that have proceeded relying on multilateral and governmental agency funding. ECA work is playing a big part in the current practices of law firms, and that means that those firms with good relationships with multilateral and governmental agencies, such as the ADB and JBIC, are in a much stronger position in Asia. The ADB has been more visible than before in projects in the Philippines and India, for example, while JBIC has even taken a new role as an equity partner. Local debt markets are also proving to be liquid and competitive. For projects that are financed in local currencies, and thus by local banks, international law firms may have to take a back seat. Nonetheless, most leading legal practices already have in place associate local firms that they can work with, or are in the process of enhancing that connection. India, for example, remains out of bounds for international law firms. It nonetheless has continued to roll out deal after deal throughout the year, although there was a slight pause in mid-year. But the local law firms are quite happy with the active market and with the closeddoor policy, which may not last very long. Leading the local scene and making their presence felt in the league tables are firms such as Amarchand Mangaldas, Luthra & Luthra, India Law Services and J Sagar. Linklaters seems to have happily allowed two partners in its Indian group to quit and join a major local referral partner, Talwar Thakore & Associates (TT&A). In addition, two of its managing associates will become partners at TT&A in Mumbai from April Linklaters managing partner Simon Davies said that the latest developments were "great news for our clients who are active in India and will further enhance our best-friends relationship with TT&A". And that kind of link may help the British firm get a footing in one of busiest PF markets right now. International law firms in Singapore, however, will always have a soft spot for Indonesia, just as those in Hong Kong will always have their eyes pinned on Greater China. With very limited PF deals so far, it is major stateowned entities such as PLN and Pertamina that have been actively raising funds, and firms such as Norton Rose have been fortunate. NR has been adviser to PLN, which has raised loans in billions of dollars for its Crash 1 programme, and now is planning for Crash 2. The power and natural resources sectors have continued to fare well during this period, boosted by strong appetite from countries such as Japan, China and India to source and invest in commodities internationally. "Those firms with historical expertise in these sectors will be much better placed. The technical and industry understanding required also creates a high barrier to entry for those firms that do not already have experience," noted Ashley Wright, also of Ashurst. Over at Latham & Watkins, the mood is different and the firm boasts of a hectic 2009, which not many can. "This has been my busiest year in my 22 years of practice," said Joseph Bevash, managing partner at the American firm. Among other things, the firm was kept busy with the S$4bn

12 58 pfi 18 November Asia Pacific (about US$2.8bn) acquisition financing for Power Senoko, which is expected to have been signed as of press day. It is also working on Indonesia's Paiton 3 power plant project, which once signed, could trigger more project financings. Law firms are also gearing up to cater for the growing interest in green energy, carbon credits and CDM. While certain firms may already have a good team of carbon experts, there are others that have seconded lawyers to their London or New York offices for "low carbon energy indoctrination" and there are those that have relocated their experts into the developing markets in the East. At the same time, firms will continue to be busy in M&A activities, especially in the mining sector, as demand for coal supply continues to surge. In general, every market is hot, said one lawyer, as there is pent-up demand for power in almost every city. The power sector will remain the bread and butter for most law firms in the region, and so will the natural resources sector oil, gas, petrochemicals and mining. In Australia, there is a slightly different beat. The past year may have seen fewer legal mandates for project finance deals but refinancings and recapitalisations have kept staff numbers and billing hours stable. The hardest hit areas for PF legal work were in the energy and resources sector as the ability to leverage declining asset values came under pressure, finance costs and margins became prohibitive and ultimately shareholders became the funders of last resort. The project finance deals that were on the table ironically required far more work, according to Allan Arthur Robinson partner Phillip Cornwell, because the balance of bargaining power has changed. "The documentation boilerplate has been wound back a few years to a more balanced or lender-friendly position (depending on your viewpoint)," Cornwell said. He added that there had also been a substantial tightening of lending terms, and banks had been second-guessing established risk allocation models. The affected areas included refinancing risk, construction risk pass-through, contractor security (levels are up, as are minimum credit ratings for bank guarantees), intercreditor principles (much tougher on mezzanine or subordinated debt) and gearing and cover ratio levels. "It has not all been the banks' way. In Australia, the concentrated market for major construction projects has seen greater risk-aversion manifested among contractors too, with a 'battle of the giants' ensuing," Cornwell said. Allan Arthur Robinson's staffing levels have been stable and the retention of young lawyers has improved simply because of the downturn in other centres such as London or New York. It expects to be hiring next year as government funding of infrastructure takes shape and the resources and energy market recovers. It also sees continued work in the refinancing area with a "wall of debt" to be refinanced over the next couple of years. Law firms are gearing up to cater for the growing interest in green energy. Over at Freehills, partner Bill Napier said that the principal issue this year was the shock to the debt and equity markets after the collapse of Lehman, with funding from debt capital markets disappearing overnight. The global financial crisis had an impact both on proposed deals and on deals that were active, he said. "These events and consequences are global, not just Australian and not just South-East Asian. If anything, the Australian debt and equity markets, and infrastructure deals, have been recovering sooner than other markets," said Napier. According to him, one of the main issues this year was the reduced bank debt appetite for PPP projects and economic infrastructure such as toll roads. However, social infrastructure projects where there was security of government cashflow were easier to get off the ground, with the A$4.5bn Victorian desalination project a prime example. Debt to equity ratios also came under pressure, with sponsors needing to kick in more equity. Margins and fees increased and tenors were generally in the three to five-year range, and this created greater refinancing risks, he said. Napier further explained that current PPPs under bid were also testing whether project risks were being reallocated, as governments have to take on more risks under the deals or provide funding. "Certainly, the federal government's push to inject real equity, requiring a return, into projects such as Gold Coast Light Rail, indicates a willingness both to provide funding and to assume some risk," he said. "We think the markets for social PPPs are well and truly recovering. However, it will be some time before debt and equity markets come back to the economic infrastructure." Grant Fuzi, managing partner at Clayton Utz, noted the major issue over the past year has been the difficulty in getting together fully funded bids. This has drawn out the timing for some tenders and has involved both governments and the private sector (sponsors and lenders) having another long, hard look at the PPP model. "Our experience of this scrutiny of the PPP model has been quite positive," Fuzi said. "We have found the parties on both sides of these deals prepared to work together with an open, flexible mind to change the model sufficiently to attract the banks, but still with a commitment to its overall effectiveness in delivering public infrastructure. "The PPP model may still have to adapt a bit, but with both governments and the private sector participants remaining convinced of its merits, and Australia with a long list of infrastructure spending needs, the PF market should be reasonably buoyant next year. What is required is robust political leadership to keep the pipeline going." In terms of the outlook for 2010, Fuzi said that the banks had considerable funds available to lend, coming out of the restrained market this year, and experience had shown that the good deals were being fully subscribed. Many firms are indeed optimistic and expect improved sentiment in 2010, but they are also pragmatic and realistic that a sharp surge is unlikely to happen.

13 18 November 2009 pfi 59 EMEA Emerging from crisis Mega-deals in the Middle-East have dominated the fattest part of EMEA's project finance sphere for years, with healthy support from some large UK PFI deals and the occasional Western European infrastructure project. After the market emerged from a late 2008 to mid-2009 slowdown, however, Central and Eastern Europe (CEE) and Africa look likely to challenge the old stomping grounds as the hottest spots to find business. A key source of deals will be the need for power. As well as the financial crisis delaying projects, high EPC and steel costs had been causing many sponsors to hold projects back. Activity in the renewables sector will continue to grow, although the total MW built will remain dwarfed by thermal projects. In CEE, a surge of new plants is expected, both conventional and renewable. An MOL/CEZ joint venture, for example, is looking to build an 800MW CCGT in Dufi-Szazhalombatta in Hungary, as well as a 800MW CCGT and a 160MW TPP in Slovakia, at a likely cost of 1.4bn. As countries move to ensure compliance with Europe's Large Combustion Plant Directive, many coal-fired plants will have to be either retrofitted, or shut down and replaced with new-build gas-fired plants. Turkey is also looking to increase power capacity to support a large population that has high (though slowing) annual growth. This could include a significant supply of renewables in May Zorlu Enerji completed the first nonrecourse financing for a windfarm in the country. Its 211m 135 MW Rotor Elektrik Uretim facility was backed by the IFC, the EBRD, the EIB, Denizbank and HSBC. The project also marked the EBRD's entry to the country and found a favourable spot market even more attractive than Turkey's 10-year feed-in tariff of 50/MWh 55/MWh. A decision is also imminent on whether to continue with or cancel the tender to build the country's first Market activity in the latter part of 2009 has given strong indications that 2010 could provide a much healthier supply of deals. In EMEA, the region s emerging markets look most likely to host the best share of opportunities. By Mark Kolmar. nuclear power plant. In September 2008 just one bid came in when the 3GW 5GW tender opened, and after three months the bidder, comprising Inter RAO, Atomstroyexport and Turkey's Park Teknik, was awarded the contract. The country is looking to build three nuclear plants in total, meeting 5% of its electricity demand, and has pledged to revamp the nuclear tender law to make future tenders more attractive before starting procurement. Eastern Europe could become the focus for the nuclear market, with many Western European countries reluctant to have the plants within their own borders. As seen in the Zorlu transaction, where the multilaterals provided 130m of debt and the commercial banks were exposed to just 30m, development finance from multilaterals and ECAs will be a key source of funding for renewable projects. James Douglass of Linklaters says that the "EIB will be the cornerstone of a lot of European deals". The potential for activity in Africa's power sector remains huge, although as ever much of it is likely still to be potential in 12 months time. This year's big deal the US$1.6bn 600MW Morupule B expansion in Botswana points to one very likely way large African financings will get done: with Chinese money. South Africa's neighbours will continue to host projects looking to export into the region's key consumer the 1,200MW Mmamabula Phase 1 leads the way but getting PPA agreements with Eskom will remain a key barrier to progress in the medium term. Morupule is unusual as a power project neighbouring South Africa in that all of its power will be sold into its own domestic market, and it is notable that is has been able to reach financial close while Mmamabula remains some way from securing the crucial PPA. Following the Chinese trend, Mmamabula already has US$500m lined up from Bank of China, which is mandated alongside Absa, Standard Bank and ECIC. As the number of generation projects in the region increases, transmission counterparts will also be required.

14 60 pfi 18 November EMEA Gulf of Guinea countries provide another potential pool of power projects. The Nigerian programme is still moving more slowly than had been expected, but Ghana could step in to breach the gap. Ghana is receiving an increasing amount of gas supplies from the Jubilee field will come on-shore and, more significantly, first deliveries from the West African Gas Pipeline will begin soon. Gasflaring, which Nigeria is yet to bring an end to despite supposedly being banned since 1979, is illegal in Ghana. North Africa will also provide opportunities both Morocco and Tunisia are building IPPs. In Tunisia, a winner is expected in March for the 350MW to 500MW Bizerte IPP. International Power, Marubeni, Mitsui, Powertek/Siemens and Suez have bid. The bidders will need to form a 65:35 JV with a local partner. State utility Steg will supply gas and take power. The IPP is the second in the country. President Ben Ali has signed an agreement with Italian Prime Minister Silvio Berlusconi on a third project a US$3bn 1,200MW plant to export 800MW of power to Italy alongside 200MW of renewable power. In Morocco, bid deadline continues to slip on the Safi IPP Acwapower/Mubadala, International Power/Navera, EDF, Marubeni and Suez/Mitsui have bid for the 1,320MW coal-fired scheme. Sub-Saharan Africa will probably continue to see most success with oil and gas deals. This year, the US$750m Kosmos facility, the Jubilee share of Tullow's refinancing and the US$265m NGL II refinancing have seen a lot of money flowing into West Africa's oil and gas sector. Jubilee continues to provide a source of deal activity, with the US$600m $900m FPSO financing for MODEC next up, split into onshore and offshore tranches to separate the highest risk. Also in the region, Afren has mandated BNP Paribas to source US$300m for its Ebok-Okwok development in Nigeria. Downstream, Trafigura is planning a US$230m oil terminal in Lekki to act as an import terminal and refined petroleum storage unit. The deal could be ready for the bank market in Q The US$6bn merger between Heritage Oil and Genel Energy could also provide activity. Production from Genel's Taq Taq field is intended to fund development of Heritage's finds in Uganda and Iraq's Kurdistan region, although political ambiguity continues to block progress. Chinese banks and development finance will again be key sources of finance in the short term. "When African nations want to develop their hydrocarbon resources will dictate where their financing comes from," says James Douglass of Linklaters. "If it is now, most of the money will have to come from Chinese banks and ECAs." The CEE also has strong potential in oil and gas. Banks will bid on November 25 for the IMLA role on the Polskie LNG project; the government-owned Gaz-System scheme is seeking 520m in debt in either zlotys or euros. Russia will continue to provide large deals. In October, Sakhalin received an additional US$1.4bn of debt insured by Nexi, with BTMU, BNP Paribas, Mizuho, Standard The CEE has strong potential in oil and gas. Russia will continue to provide large deals. Chartered and SMBC providing the liquidity under the Japanese ECA's cover. This followed Société Générale, BNP Paribas, Calyon, ING, Citigroup, Mizuho, Intesa, DZ Bank, UniCredit, SMBC and LBBW providing US$1.083bn and 192m for the Yuzhno-Russkoye gas field. The Shtokman gas field and the Yamal LNG project await, although it is not clear when either will make it to market. Outside of the energy sector, CEE will be a good source of transport deals. Poland, Slovakia and the Czech Republic have been busy with road deals, and now Turkey is gearing up. Next year could see road privatisations come to market. Two 1bn-plus suspension bridges are to be made available, one on its own and the other bundled with six roads into a package worth 3bn 4bn. A site has also been selected to build a third bridge. The Astaldi/Nurol/Ozaltin/Hakyol/Gocay consortium won the BOT competition for the 421km Gebze Orhangazi Izmir highway in July, although with a seven-year construction period, US$5bn-plus capex and high construction, traffic, expropriation and sovereign risk it will be a difficult project to pull off. The joint venture between Yapi Merkezi and South Korean companies SKEC Samwhan, Hanshin and NamKwang-Kukdong is believed to be looking for US$50m-plus equity investors on its 30-year Bosphorus tunnel concession. High construction risk will again be a difficulty on the technically challenging project. Turkey could also provide activity through PPPs. Prequalification bids are in for the US$250m $280m Kayseri hospital PPP, which is the first health sector PPP in the country, and will be followed by a further three projects. In Africa, infrastructure projects continue to be few and far between. Two key issues provide problems. One is that many countries don't have the sovereign strength to back big infra projects credit backstops still need a guarantee and the other is currency mismatches. Even the rand/dollar swap market is thin, let alone that of less prominent African currencies. Of course, the power house regions of EMEA's project market aren't going to disappear. "Five years ago, the Middle East was hosting large petrochemical deals," say Richard Parris and Peter Avery of Clifford Chance's Dubai office, "whereas in the last months it's moved away from more purely profit-oriented projects to those aimed at supporting an increasing population." The 650MW gas-fired Barka 3 and Sohar 2 IPPs in Oman will be in the market next year (the bid deadline for tenders is December 7). Ras Tanura in Saudi Arabia, the Taweelah C IWPP in UAE and the latest DP World deal will also provide activity. Of the UK market, Andrew Grenville of Clifford Chance says: "People are more optimistic than they thought they'd be at this stage." Strength, indeed, appears to be returning to the project finance market as a whole after a difficult nine months following the September/October 2008 doldrums, but it is perhaps previously quieter corners of EMEA that will generate the most interest.