Tunisia’s first signing
Construction at the Rades site has not started but the project is
expected to become operational in the next 27 months. The
consortium awarded a $180 million contract to France's Alstom in
May 1999. Offtaker is the state-owned Societe Tunisienne
d'Electricite et du Gaz (STEG).
As requested by the Tunisian government debt to equity on the deal is 70:30. Financing is spilt into two commercial 10-year tranches of $109.5 million (arranged by Paribas and Sanwa) and a $79 million Jexim loan: Coface also looked at the deal but Jexim's offer made French participation unnecessary. Paribas is also acting as agent while Sanwa was financial adviser to the consortium. Chadbourne & Parke was legal adviser to the sponsor and Baker & McKenzie advised the lenders.
Bankers claim the deal is solid ? despite being a first. ?STEG is a sound company that was able to negotiate a competitive tariff with the developers. And Tunisia has never defaulted on its debt-repayment and never rescheduled either. There has never been double digit inflation and the Tunisian central bank is doing an excellent job?, says Charles Bichet, senior vice-president in project finance at Paribas in Paris.
Nevertheless, the deal did not have an easy ride. The Tunisian Ministry of Finance did not appoint financial, technical or legal advisers which caused problems given its lack of project finance experience. But on the upside ?there was no doubt over the Tunisian government's commitment ? they had to make Rades a show-case for future deals in the country?, notes Bichet. ?Rades is not a one-off exercise.?
Ian Catterall, director of project finance at PSEG Global in London is positive about the role Tunisia can play in the project finance market. Says Catterral: ?The development of Rades responds to a very good level of demand for power in Tunisia. There is still appetite for more projects in the country.? PSEG Global will remain in the region with a number of power projects both in Morocco and Israel.
Tunisia is potentially a big market for the development of power-related projects. Demand for power has been growing by 7% annually and according to market rumour there are government plans for another 15 deals in the coming years.
According to David Wasserman, vice-president in development at Sithe Energies in New York: ?Negotiating with STEG was tough but amicable.? Disagreements between STEG and the developers over aspects of the deal's security slowed the pace of the financing, albeit not for too long.
The contract between STEG and the consortium was signed in March 1999 and approved by a decree of the Tunisian president Zine el-Abidine ben Ali at the end of April this year.
Wasserman values the experience gained by Rades: ?It has been an educational process for both sides of the negotiating table with the participation of very experienced players such as the Tunisian central bank.? Sithe Energies plans more investments in the region with a special eye for Israel. Sithe came second and lost to Electricite de France (EdF) in the bid for the development of two power projects in Egypt where the power sector has been particularly attractive for foreign investors. SG won the financial advisory mandate.
Syndication of Rades' $109.5 million commercial tranche will involve relationship driven banks, mainly from Europe. Pricing at syndication will be 140 basis points over Libor for the pre-completion period stepping up to 155 basis points over Libor in the post-completion period. At the time Project Finance was going to press, a limited number of banks had been invited by the arrangers for a presentation due to take place in London. It is understood that both sponsors and financiers are interested in having a small number of banks involved in the syndication phase that should close by the end of October this year.
Tunisia is catching up with other countries in the region such as Egypt and Morocco. In 1999 the entire north African region proved to be exciting for those international sponsors and financiers interested in the power sector.
Tunisia is a new comer but has good prospects for making an impact in the next months when more projects will come to the market. Those in the pipeline include financing for the $1.1 billion Tursa oil refinery to be built in the southern part of the country. The plant will refine oil coming from neighbouring Algeria and Libya with the possibility of more crude coming from countries in the Gulf and Russia.
Financing for the development of a GSM telephone network sponsored by Alcatel Alsthom is also in the pipeline. This follows the successes of other telecom projects such as MobiNil in Egypt and Medi Telecom in Morocco.
The water and infrastructure sectors are also interesting for those keen to develop a presence in Tunisia. Appetite for financing of Tunisian deals seems strong among France-based project financiers whose knowledge of the country and Tunisians' familiarity with the French language are valuable assets for those international sponsors that for the first time are doing deals in Tunisia.
Rades power plant
Total cost: $250 million
Debt: $109.5 million loan, $73 million direct loan
Sponsor: Marubeni, Sithe Energies, PSEG Global
Contractor: Alstom
Arrangers: Paribas, Sanwa, Jexim
Lawyer to the lender: Baker & McKenzie
Lawyer to the consortium: Chadbourne & Parke
Financial adviser to the consortium: Sanwa, Paribas
Offtaker: Societe Tunisienne d'Electricite et du Gaz
As requested by the Tunisian government debt to equity on the deal is 70:30. Financing is spilt into two commercial 10-year tranches of $109.5 million (arranged by Paribas and Sanwa) and a $79 million Jexim loan: Coface also looked at the deal but Jexim's offer made French participation unnecessary. Paribas is also acting as agent while Sanwa was financial adviser to the consortium. Chadbourne & Parke was legal adviser to the sponsor and Baker & McKenzie advised the lenders.
Bankers claim the deal is solid ? despite being a first. ?STEG is a sound company that was able to negotiate a competitive tariff with the developers. And Tunisia has never defaulted on its debt-repayment and never rescheduled either. There has never been double digit inflation and the Tunisian central bank is doing an excellent job?, says Charles Bichet, senior vice-president in project finance at Paribas in Paris.
Nevertheless, the deal did not have an easy ride. The Tunisian Ministry of Finance did not appoint financial, technical or legal advisers which caused problems given its lack of project finance experience. But on the upside ?there was no doubt over the Tunisian government's commitment ? they had to make Rades a show-case for future deals in the country?, notes Bichet. ?Rades is not a one-off exercise.?
Ian Catterall, director of project finance at PSEG Global in London is positive about the role Tunisia can play in the project finance market. Says Catterral: ?The development of Rades responds to a very good level of demand for power in Tunisia. There is still appetite for more projects in the country.? PSEG Global will remain in the region with a number of power projects both in Morocco and Israel.
Tunisia is potentially a big market for the development of power-related projects. Demand for power has been growing by 7% annually and according to market rumour there are government plans for another 15 deals in the coming years.
According to David Wasserman, vice-president in development at Sithe Energies in New York: ?Negotiating with STEG was tough but amicable.? Disagreements between STEG and the developers over aspects of the deal's security slowed the pace of the financing, albeit not for too long.
The contract between STEG and the consortium was signed in March 1999 and approved by a decree of the Tunisian president Zine el-Abidine ben Ali at the end of April this year.
Wasserman values the experience gained by Rades: ?It has been an educational process for both sides of the negotiating table with the participation of very experienced players such as the Tunisian central bank.? Sithe Energies plans more investments in the region with a special eye for Israel. Sithe came second and lost to Electricite de France (EdF) in the bid for the development of two power projects in Egypt where the power sector has been particularly attractive for foreign investors. SG won the financial advisory mandate.
Syndication of Rades' $109.5 million commercial tranche will involve relationship driven banks, mainly from Europe. Pricing at syndication will be 140 basis points over Libor for the pre-completion period stepping up to 155 basis points over Libor in the post-completion period. At the time Project Finance was going to press, a limited number of banks had been invited by the arrangers for a presentation due to take place in London. It is understood that both sponsors and financiers are interested in having a small number of banks involved in the syndication phase that should close by the end of October this year.
Tunisia is catching up with other countries in the region such as Egypt and Morocco. In 1999 the entire north African region proved to be exciting for those international sponsors and financiers interested in the power sector.
Tunisia is a new comer but has good prospects for making an impact in the next months when more projects will come to the market. Those in the pipeline include financing for the $1.1 billion Tursa oil refinery to be built in the southern part of the country. The plant will refine oil coming from neighbouring Algeria and Libya with the possibility of more crude coming from countries in the Gulf and Russia.
Financing for the development of a GSM telephone network sponsored by Alcatel Alsthom is also in the pipeline. This follows the successes of other telecom projects such as MobiNil in Egypt and Medi Telecom in Morocco.
The water and infrastructure sectors are also interesting for those keen to develop a presence in Tunisia. Appetite for financing of Tunisian deals seems strong among France-based project financiers whose knowledge of the country and Tunisians' familiarity with the French language are valuable assets for those international sponsors that for the first time are doing deals in Tunisia.
Rades power plant
Total cost: $250 million
Debt: $109.5 million loan, $73 million direct loan
Sponsor: Marubeni, Sithe Energies, PSEG Global
Contractor: Alstom
Arrangers: Paribas, Sanwa, Jexim
Lawyer to the lender: Baker & McKenzie
Lawyer to the consortium: Chadbourne & Parke
Financial adviser to the consortium: Sanwa, Paribas
Offtaker: Societe Tunisienne d'Electricite et du Gaz
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