CONCESSION AGREEMENT FOR THE DEVELOPMENT AND OPERATION OF CYPRUS AIRPORTS. International Conference Transport Security Athens, May 2008

Transcription

1 CONCESSION AGREEMENT FOR THE DEVELOPMENT AND OPERATION OF CYPRUS AIRPORTS International Conference Transport Security Athens, May 28 1

2 Road Map: Procurement Process Initial Tender of Hermes Consortium Most Essential Ideas / Points of Negotiations Agreement of 12 May 26 2

3 Cyprus Airports - Procurement Process: Activity Advertisement for Expression of Interest (Eol) Receipt of Eol (from 23 parties) Dispatch of PIM and PQQ (to 16 parties) Receipt of PQQ (from 1 parties) Pre-qualification of 5 Bidders-notification Dispatch of Invitation to Tender (3 bidders) Date 2 March March May 21 2 July June 22 5 July 22 3

4 Procurement process (continuation): Submission of Tenders Activity Evaluation of the Technical Envelope Evaluation of the Financial Envelope Nomination of the Preferred Bidder (Alterra( Alterra) Commencement of negotiations with Alterra Date 25/1/22 31/1/23 31/1/23 21/11/23 12/1/24 4

5 Procurement process (continuation): Signing of Concession Agreement Financial Close Activity ALTERRA walks away HERMES is nominated Preferred Bidder Commencement of negotiations with Hermes Preliminary Agreement with Hermes Date 22/7/24 28/7/24 11/ 1/8/24 14/1/25 8/7/25 12/5/26 5

6 Signing of the Commercial Agreement 8 July 25 6

7 Signing of the Concession Agreement 11 Μαy 26 7

8 Document Room 8

9 9

10 HERMES AIRPORTS LTD Bouygues Batiment Egis Projects S.A. Cyprus Trading Corporation Ltd Hellenic Mining Co. Ltd Aer Rianta International cpt YVR Airport Services Ltd Iacovou Brothers (Constructions) Ltd Charilaos Apostolides & Co Ltd Chambre de Commerce et D D Industrie Nice Cote D D Azur 22% 2% 11.34% 11.33% 11% 11% 5.665% 5.665% 2% 1

11 Banks: Royal Bank of Scotland plc ING Bank N.V. Societe Generale West LB 11

12 Initial Tender of 25th October 22: Financial Proposal (Hermes): (α) Annual Guaranteed Payment AGP: 3,5 m. (β) Variable Concession Fee VCF: 33% The above correspond to the ITT Requirements 12

13 In addition, HERMES Consortium, was offering the following: An annual lump sum with a total Net Present Value equal to 7 m., and Open to discuss the idea of participation of the Government to the profits that may occur in case of a traffic greater than the base case 13

14 Consequences of the time elapsed between Οct Οct. 24 to the Financial Proposal of Hermes Airports according to their calculations Positives Increase of Aeronautical charges as of 1/11/4. Benefit of around 3,4 m.. Negatives Reduced traffic forecast by 29 m. pax (for 25 years). Increase of commercial revenues due to inflation. Reduced aeronautical and commercial revenues by 76 m., due to reduced traffic forecast. 14

15 Positives Banks offer better financial terms due to an increased availability of cash in the market. Negatives Increased construction cost by 85 m., compared to October 22, for the implementation of phase 1. Increased operational expenses. Increased requirements on behalf of the lenders, in case of Shock Events, so that the project will not fail. 15

16 High, Base and Low Traffic Forecast for Larnaka and Pafos Airports: 16,, Hermes 24 to ITT 14,, 12,, 1,, PAX 8,, 6,, 4,, 2,, Year to 3 June ITT (Larnaca) ITT (Pafos) 24 HC (Larnaca) 24 HC (Pafos) 24 BC (Larnaca) 24 BC (Pafos) 24 LC (Larnaca) 24 LC (Pafos) 16

17 Financial Model - 22 Expend. Reven. 22: VCF for the Government = 33% Financial Model - 24 Expend. Reven. 24: VCF for the Government = 26% 17

18 Ideas that the GNT had decided to discuss in order to achieve a VCF = 33% Optimisation of the design of the terminal buildings Transformation of the Additional Concession Fee of 7 m. into a Profit Share Mechanism Exemption of the obligation of Hermes to create a reserve account of 39 m. for the implementation of the 2nd phase Acceptance of deferral of the payment of the VCF (33%), only in cases of Shock Events 18

19 Optimisation of the Terminal Buildings: All requirements of the ITT are fulfilled From a first estimate of Hermes Consortium, there is a saving of 4 m. 19

20 Proposed Areas of Larnaka Terminal Building in m 2 : Initial Study Alterra CAG Hermes Hermes 2 Phase 1 7,5 mppa 14. (96.)* Phase 2 9 mppa * = Square meters for 6 m. pax basis for the ± 15% ( m 2 ) 2

21 Proposed Areas of Pafos Terminal Building in m 2 : Initial Study Alterra CAG Hermes Hermes 2 Phase 1 2, mppa Phase 2 2,7 mppa

22 Summary of Financial Proposals: Initial Proposal of October 22 3,5 m.. (AGP)( 33% (VCF) 7* m.. (ACF)( Concession Agreement of Μay 26 3,5 m.. (AGP)( 33% (VCF) 13* m.. (PSM( + ) * = Revenues (NPV) from the base case traffic forecast + = Profit Share Mechanism 22

23 Profit Share Mechanism (PSM): Equity IRR 12% 12% και 15% 15% και 2% 2% Share in % of the Government % 35% 57,5% 8% 23

24 Payments Priority: Priority 1st 2nd 3rd 4th 5th 6th 3,5 m.. (AGP)( + 33% (VCF)( Opex Senior Debt Reserve Accounts Mezzanine Debt Payments Profit Share Mechanism (PSM) 24

25 Profit Share Mechanism: Forecast Profit Share ( m.) Nominal Value NPV (7%) LC BC 863 m. 13 m. HC NA NA 25

26 Cash Flow Projections: 25 Net outflow on reserves 2 Net interest paid M (N o m in al) 15 1 Financing outflow Equity return Taxation Year ending 3 June Phase 1 Phase 2 Capex and lifecycle (including VAT on construction) Net inflow (Revenues net of opex and concession fees plus financing inflow ) 26

27 Profit Share Mechanism Base Case: 25 2 M (Nominal) Year ending 3 June AGP VCF Profit share 27

28 Profit Share Mechanism High Case: 25 2 M (Nominal) Year ending 3 June AGP VCF Profit share 28

29 Forecast Annual Revenues (AGP + VCF) from Low, Base and High Traffic Case: m.. (nominal( value) 3 June LC BC HC 29

30 Forecast Annual Revenues (AGP + VCF) from Low, Base and High Traffic Case: m. (nominal value) 3 June LC BC HC 3

31 Forecast Annual Revenues (AGP + VCF) from Low, Base and High Traffic Case: m. (nominal value) 3 June LC BC HC 31

32 Forecast Total Revenues (AGP + VCF) from Low, Base and High Traffic Case: Forecast Revenues (AGP + VCF) LC Nominal Value m. 2.4 Net Present Value (NPV) m. 588 BC HC NA NA 32

33 Forecast Total Revenues (AGP + VCF) from Low, Base and High Traffic Case: M (Nominal) Year ending 3 June AGP Low Case VCF Base Case VCF (additional) High Case VCF (additional) 33

34 Shock Event: Traffic Time 34

35 Shock Events: Subject Reduction of Traffic ADSCR -1% when comparing same month of two consecutive years or -5% when comparing same group of three months of two consecutive years -During construction: The Gross Revenues shall be less than those corresponding to the Low Case -After construction: ADSCR < 1,2 CONCESSION AGREEMENT 35

36 Shock Events (continuation): Subject Maximum Deferral Amount Payment of the Deferral Amount CONCESSION AGREEMENT 55 m.. (indexed( indexed) Just after ADSCR becomes greater than 1,2 36

37 ADSCR Revenue curve 1,3 1,2 Revenue to be deferred when adscr = 1,3 Time Revenue to be deferred when adscr = 1,2 37

38 Illustrative scenario September 11 traffic assumptions The graph below compares projected traffic in the Hermes Base Case model and in the illustrative scenario September ,, Underlying traffic assumptions (Larnaka and Pafos) Total passengers (arriving and departing) 14,, 12,, 1,, 8,, 6,, 4,, 2,, Year ending 3 June Shock - September 11 Base Case (no shock) Scenario 1 assumptions: 211-1% drop on prior year 212 5% drop on prior year Thereafter Hermes low case growth 38

39 Illustrative scenario September 11 key data Deferral period Duration Six monthly period end dates Repayment period Duration Six monthly period end dates Deferral amount Deferral (Nominal) m Deferral (NPV*) m 8.5 years Dec 211 Dec year Jun 221 Dec Repayment amount Repayment (Nominal) m Repayment (NPV*) m Concession fees (AGP+VCF) deferral repayments Total receipts (Nominal) m Total receipts (NPV*) m * Net Present Value (discounted to 1 July 25 using the Government real discount rate of 7%) ,

40 Deferral of Payment of 33% (VCF): September 11 Scenario: Year ends 3 June Revenues m VCF deferred m. VCF that is paid VCF deferred m. % VCF that is paid %

41 Deferral of Payment of 33% (VCF): September 11 Scenario: Year ends 3 June Revenues m VCF deferred m VCF that is paid VCF deferred m. % , , ,6 49 4,6 VCF that is paid % 33 3,7 28,5 28,4 28,4 41

42 Deferral of Payment of 33% (VCF): September 11 Scenario: Year ends 3 June Revenues m VCF deferred m VCF that is paid VCF deferred m. % 52 4, , , ,13 71 VCF that is paid % 28,49 28,42 28,89 3,

43 Deferral of Payment of 33% (VCF): September 11 Scenario: Year ends 3 June Revenues m VCF deferred m. VCF that is paid VCF deferred m. % VCF that is paid %

44 Deferral of Payment of 33% (VCF): September 11 Scenario: Year ends 3 June Revenues m VCF deferred m. VCF that is paid VCF deferred m. % VCF that is paid %

45 Refurbishments of Existing Terminals: Expenditure: Up to 5 m.. Savings from Reduction of Areas = SRA SRA > 45 m., then HERMES pays 4 m. SRA < 45 m., then the difference 45 Χ will be covered as follows: 7% by the Government 3% by Hermes 45

46 Benefits from Re-financing: Any gains from re-financing will be shared as follows: 55% for Hermes, and 45% for the Government 46

47 Cyprus Airports BOT Vs Bulgarian Airports BOT Project Larnaka + Pafos Varna + Bourgas Total number of Pax 25 6,97 m. 3,12* m. Invest- ment 64 m. 14 m. Concessi on length (years) VCF 33% 3% * : +22%, : +16% 47

48 Syndication Jason ZIBARRAS, Director, Infrastructure Finance & Advisory at ING Bank said: This transaction should be a reference point for any government considering airport privatisation, from the state s perspective they have gained an incredibly efficient financing structure, huge capital investment, operational risk transfer and 2 years after opening the new terminals they get the assets back. 48

49 Compensation on Termination (ProjectCo default): At Bid stage: 1% payment of the remaining debt After negotiations: 95% payment of the remaining debt 49

50 Thanks for your attention! 5