Aquiris: A Belgian first

The first concession in the Belgian water sector, the Brussels-North wastewater project reached financial close on 8 December 2006: The deal is also the first project finance scheme to close under Belgian's cumbersome concession law.

The plant is one of the most significant in Europe both for the financing precedents it sets and for environmental reasons. Brussels-North wastewater has the capacity to treat water equivalent to the amount consumed by up to 1.1 million people. The plant consists of a biological channel for the treatment of water in times of dry weather and a channel for the treatment of excess water flow in periods of wet weather.

The Veolia-led Aquiris consortium followed a policy of 'zero pollution' throughout the design and construction of the plant, which led it to incorporate soundproofing of installations, air filtration at every stage of the water treatment process, architectural integration and the Athos hydro-thermal oxidation process for the environmentally friendly treatment of sludge. The project should improve the treatment standards of wastewater and achieve full compliance with the EU Urban Waste Water Treatment Directive.

The Eu267 million ($350 million) project debt was arranged by Calyon, who split the Eu167 million commercial debt with three of its group banks – Caisse du Nord France, Caisse du Nord Ouest and Credit Agricole Belgium. Additionally, the European Investment Bank provided a direct loan of Eu100 million.

The 20-year build-operate-own-transfer concession was awarded to Aquiris consortium in 2001. Tenor on the commercial debt is 19 years from award of concession and 18 years for the EIB tranche – in effect one- and two-year tails, respectively.

Municipal end-user Brussels Capital Region will be paying Aquiris around Eu50 million in fees annually over the life of the concession which will cover a part of the construction costs each year, as well as the plant's annual operating costs. Consequently pricing on the commercial debt is very competitive, ranging from 35bp during construction to 50bp during operation and with a commitment fee of sub-30bp. The EIB debt is priced at 20-25bp during construction and 40bp during operation.

Construction of the plant was completed in November 2006, and the operation of the treatment plant is expected to start in March 2007 for a duration of 20 years, before the plant is handed back to the Brussels-Capital Region.

The deal was done late in the day due to issues of bankability arising from Belgian administrative law. It is hoped that the deal will form a starting point to legislative amendments that make project financings easier to bank in the future.

Aquiris
Status: Closed 8 December 2006
Description: Eu267 million project debt backing the 20-year BOOT Brussels-North wastewater project
Sponsors: Veolia, Jan De Nul, De Nys
Mandated lead arranger: Calyon
Multilateral: EIB
Legal counsel to borrower: Ashurst
Legal counsel to lenders: Freshfields