Lead arranger Korea Development Bank (KDB) closed syndication of a W418 billion ($338 million) facility for special purpose company Gyeonggi Nambu Highway – a consortium led by Doosan Engineering and Construction – in May 2009.

The deal backs development of the Seo (West) Suwon-Uiwang toll road project, one of very few major Korean infrastructure deals to close last year in a market where development has been hit hard by the global liquidity crisis.

The W465 billion project entails the expansion of the 12.98km section of Regional Highway Road 309 – which links Geumgok-dong, Suwon City with Cheonggye-dong, Uiwang City – from four to eight lanes. Scheduled to be constructed from 2009 to 2012 (42 months), the BOT project has a 29-year concession post-construction. The Gyeonggi-Do Provincial Government is the concession awarder and appointed Doosan as sponsor in 2008.

The strategically important project is expected to significantly ease heavy traffic in the south-west region of Seoul, including Uiwang and Gwacheon. Furthermore, if the road is linked to the Seosuwon-Osan-Pyeongtaek expressway in the future, the region will have a wide-area transport network that links the southern and northern regions of Seoul's south-west, which will significantly ease the heavy burden on the logistical network centered on the Gyeongbu Expressway, playing a key role in the Seoul metropolitan road network.

While the deal relies heavily on Korean Development Bank, the pricing was particularly aggressive illustrating the political importance of the project. The debt comprises a W300 billion 20-year loan, a W89.9 billion 32-year loan structured as a bullet and a W30 billion five-year standby facility. Debt-to-equity was 90/10 and the margin on the loans is 70bp-100bp.

The list of sub-participants on the debt is dominated by life and pension companies. Lender takes on the first tranche are: KDB W60 billion, Korea Life Insurance W50 billion, Samsung Life W50 billion, Industrial Bank of Korea W30 billion, Dongbu Insurance W30 billion, Samsung Marine & Fire W30 billion, Lotte Insurance W20 billion, Busan Bank W20 billion, and Meritz Fire & Marine W20 billion. Korea Infrastructure Investment and Financing Co. No. 2 took the second tranche.

West Suwon-Uiwang toll road
Status: Financial close 16 April 2009
Description: The development of a 12.98km toll road in South Korea
Concession awarder: Gyeonggi-Do Provincial Government
Sponsor: Gyeonggi Nambu Highway/Doosan Construction & Engineering
Financial adviser and lead arranger: Korean Development Bank
Lender legal adviser: Kim & Chang
EPC contractor: Doosan Construction & Engineering