A class act
?The financing process has galloped along since we were selected as
preferred bidder for the Enfield project in October 1998,? says
Yvonne Dee, head of projects at Laing Hyder in London. Achieving
financial close so soon after being awarded the concession has been
all about streamlining the concession process.
In 1998, Laing and Hyder ? two UK construction companies which have worked together on a number of Private Finance Initiative (PFI) deals ? formed a joint-venture company Laing Hyder. Enfield is the first school project to close under the joint-venture.
Says Dee: ?The new relationship works particularly well for small projects where it is just not efficient to take the time to go through the learning curve every time. We now have a consistent dedicated team rather than forming ad hoc alliances.?
This is particularly important when dealing with local councils. Says Dee: ?One of the challenges was to engender confidence with the public sector. This type of deal is new to them in many respects.?
Laing Hyder's approach extends to its financing. When the company had to choose an arranger, Dee says that the eventual decision to appoint Dresdner was, in part, motivated by the already strong relationship the two companies had established with the bank.
?We know Laing Hyder very well,? says Richard Turner, manager in the project finance department at Dresdner in London. ?We are prepared to go for smaller projects such as these partly because of this strong relationship. In addition, we've taken the view that if you can produce a blueprint then other projects can be done just as quickly and therefore smaller PFI projects become viable. This is an area with great growth potential.? MW
Enfield school
Location: Enfield, UK
Cost: £25 million ($41.25 million)
Description: Laing Hyder won the 25-year concession from Enfield Council to build-manage and maintain a secondary school for 1,290 pupils. The company beat off 20 other companies to win the contract worth £25 million. The school is due to open in September 2000. Under the terms of a £16.5 million contract, Laing will build the school.
Debt/equity ratio: approximately 90/10
Financing: Split between senior, junior debt and shareholder equity.
Tenor: 25 years
Margin: Under 100 basis points over Libor post construction
Arranger: Dresdner Kleinwort Benson
Financial advisers: PricewaterhouseCoopers (to the Council) and Macquarie (Laing Hyder)
Lawyers: Cameron McKenna (Dresdner) and Wilde Sapte (Laing Hyder)
In 1998, Laing and Hyder ? two UK construction companies which have worked together on a number of Private Finance Initiative (PFI) deals ? formed a joint-venture company Laing Hyder. Enfield is the first school project to close under the joint-venture.
Says Dee: ?The new relationship works particularly well for small projects where it is just not efficient to take the time to go through the learning curve every time. We now have a consistent dedicated team rather than forming ad hoc alliances.?
This is particularly important when dealing with local councils. Says Dee: ?One of the challenges was to engender confidence with the public sector. This type of deal is new to them in many respects.?
Laing Hyder's approach extends to its financing. When the company had to choose an arranger, Dee says that the eventual decision to appoint Dresdner was, in part, motivated by the already strong relationship the two companies had established with the bank.
?We know Laing Hyder very well,? says Richard Turner, manager in the project finance department at Dresdner in London. ?We are prepared to go for smaller projects such as these partly because of this strong relationship. In addition, we've taken the view that if you can produce a blueprint then other projects can be done just as quickly and therefore smaller PFI projects become viable. This is an area with great growth potential.? MW
Enfield school
Location: Enfield, UK
Cost: £25 million ($41.25 million)
Description: Laing Hyder won the 25-year concession from Enfield Council to build-manage and maintain a secondary school for 1,290 pupils. The company beat off 20 other companies to win the contract worth £25 million. The school is due to open in September 2000. Under the terms of a £16.5 million contract, Laing will build the school.
Debt/equity ratio: approximately 90/10
Financing: Split between senior, junior debt and shareholder equity.
Tenor: 25 years
Margin: Under 100 basis points over Libor post construction
Arranger: Dresdner Kleinwort Benson
Financial advisers: PricewaterhouseCoopers (to the Council) and Macquarie (Laing Hyder)
Lawyers: Cameron McKenna (Dresdner) and Wilde Sapte (Laing Hyder)
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