The first significant project financing in Vietnam since the onset of the global financial crisis, the $201.4 million debt for the 50 year Cai Mep International Terminal concession is also EKF's first major offering of cover to a Vietnamese project.

Project company Cai Mep International Terminal Co (CMIT) is sponsored by APM Terminals (49%) – ultimately AP Moller-Maersk Group – with two Vietnamese partners – Vinalines (36%) and Saigon Port (15%). The project involves the construction of a greenfield 1.2 million TEU container terminal near Ho Chi Minh City. Maersk is expected to be CMIT's main client and to provide most of its Vietnamese container throughput once the port is operational.

The scheme is one of a number of government approved projects designed to bring foreign investment into the upgrading of Vietnam's seaports. Vietnam's rapid economic development has not been matched by infrastructure development and most of its ports are small and obsolete – goods have to be reloaded into smaller vessels from neighbouring major ports such as Hong Kong and Singapore, significantly upping overall transportation costs. Cai Mep is under construction and has an expected start of operations of 1 January 2011.

The total project cost is $269 million, funded on a 75/25 debt to equity ratio. The $201.4 million debt, sole arranged by Credit Agricole CIB (also agent and onshore & offshore account bank) comprises a $171.2 million 14-year senior facility covered by EKF and a $30.2 million uncovered tranche. Pricing on the tranches is 150bp over Libor and 350bp respectively.

The bilateral commercial loan was a rare phenomenon in Vietnamese infrastructure financing in 2009. The financing was arranged under challenging economic conditions, at a time when international lenders' appetite for project finance in Vietnam – in fact any project finance anywhere – was at an all time low.

This project is also AP Moller-Maersk Group's first in Vietnam, and one of their few developments involving non-recourse project financing. APM Terminals has since also entered into a joint venture agreement with Pharung Shipyard Company, a division of the Vietnam-based Vinashin Group, a second container terminal in the Dinh Vu Industrial Zone, serving the Vietnamese Capital of Hanoi, and the Red River Delta region of Northern Vietnam.

Cai Mep International Terminal Co
Status: Financial close 24 February 2009
Description: $201.4 million facility to finance construction of a 2-berth, 1,150,000 TEU container terminal located at Cai Mep Thi Vai, Vung Tau province, Vietnam.
Sponsors: APM Terminals, Vinalines, Saigon Port
Lead arranger: Calyon
Guarantor: EKF
Lender counsel: Allen & Overy; VILAF
Sponsor counsel: Freshfields
Consultants: Mott McDonald (technical and environmental); Drewry Shipping Consultant Ltd (market); Jardine Lloyd Thompson Ltd (insurance)