TransJamaica Highway’s $285 million refinancing and extension financing rose from the ashes of the credit crunch to close on 28 February. The multilateral-led loan closed just days before outstanding debt matured and ended nearly four years of work by the sponsors to secure fresh financing for the toll road.

The National Road Operating & Constructing Company (NROCC) and the government of Jamaica awarded Trans­Jamaica the 35-year real toll concession to design-build-finance-operate-maintain the 71km phase one of a new, limited access national highway in November 2001. TransJamaica’s sponsors are Bouy­gues Travaux Publics (66% when the project was awarded) and Vinci subsidiary Autoroutes du Sud de la France (33%).

The project stretches from Jamaica’s capital Kingston to Williamsfield, and a first 33km stretch from Kingston to Sandy Bay opened in stages between 2003 and 2006. The current financing package will refinance the debt on the completed phase and fund phase 1B, a 10km extension to May Pen from the current terminus. The concessionaire has the first right of refusal on the 100km phase 2, which includes ex­ten­sions to Montego Bay and Ocho Rios.

The European Investment Bank (EIB), Inter-American Development Bank (IDB), International Finance Corporation (IFC) and Proparco provided a $198.4 million senior secured loan to the project company. The 18-year fully amortising debt priced at a floating margin over Libor, which was swapped to a fixed-rate structure, and includes step-ups after year seven to encourage refinancing. A cash sweep brings the average life down to 14 years, and the minimum debt service coverage ratio is 1.5x. EIB, IDB and IFC provided roughly $53.57 million each and Proparco $37.7 million. $66 million in cash from existing operations was also included in the financing package.

IFC and Proparco also provided a $7 million capital infusion in return for equity stakes of 17.04% and 8.89%, respectively, in the project company. Bouygues wanted to restructure the shareholdings in TransJamaica because it could only remove the concession’s debt from its balance sheet if its shareholding went below 50%. But the IFC and Proparco would not invest until NROCC’s interest in the concession was restructured. The grantor’s $92 million in financing for the first stretch of highway was originally structured as subordinated debt, which resulted in accounting losses because capitalised interest, which prevented the payment of dividends.

NROCC’s participation in Trans­Jamaica is now effectively a contractual profit sharing mechanism between the government body and the project company’s shareholders. For phase 1B, the grantor contributed an additional $13.5 million towards construction. Bouygues owns 48.89% and Vinci 25.18% of the project company under the new ownership structure.

Proceeds of the $285 million package will repay $119.1 million in outstanding debt on the road, finance the $127.9 million construction cost of phase 1B, contribute $18.5 million to reserve accounts and cover all transaction-related fees.

The financing faced a number of setbacks before it could close. These includ­ed the restructuring of the NROCC’s participation, the credit crunch, an Inter­national Monetary Fund (IMF) government bailout and social unrest in Jamaica. The sponsors first sought a roughly $356 million financing package that included a roughly $250 million 144A bond issue underwritten by commercial lenders to refinance outstanding debt and finance a 17km extension to Four Paths in July 2007. After the events of September 2008 in the mandated ar­ranger of the bonds withdrew. The sponsors next looked briefly at a commercial bank loan next but found that they could not close one because of the country’s B- sovereign rating.

The sponsors mandated the EIB, IDB, IFC and Proparco in December 2008 and lenders carried due diligence throughout 2009. All four approved their contribution to a roughly $257 million financing package by the end of that year and the NROCC agreed to a restructuring of its participation in the project company in January 2010.

But deteriorating economic conditions in Jamaica and a downgrade in the country’s credit rating during 2009 culminated in the approval of a $1.27 billion IMF bailout in February 2010. This limited the government’s ability to fulfil its financial obligations to the concessionaire, thus further delaying close. Finally, following a new traffic study and a re-phasing of the project that shortened phase 1B to 10km from 17km, work was able to begin again on the financing and the deal closed in February 2010.

Bouygues Travaux Publics holds the en­gi­neering, procurement and construction contract for the four-lane tolled extension to May Pen. Jamaican Infrastructure Operator, a Bouygues (49%) and Vinci (51%) joint venture, will operate the extension along with the existing highway. The ex­tension project is scheduled to open in September 2012. The 28km phase 1C will run from Williamsfield via Four Paths.

TransJamaica demonstrates the continuing difficulty facing sponsors trying to secure financing for projects in the Carib­bean. The region’s heavy economic de­pen­dence on the services industry – and traffic volume directly correlated to economic activity – and the sluggish recovery of tourism will continue to make regional road projects a challenge. The last highway financed in the region, Moya’s 70km Autopista del Coral in the Dominican Republic, coupled a $38.6 million US Ex-Im loan with financing arranged by BNP Paribas in December 2010, and was eventually closed as a sovereign credit. 

TransJamaica Highway
Status: Closed 28 February 2011
Size: $285 million
Location: Jamaica
Description: Refinancing and construction financing for a 10km extension of the Highway 2000 toll road from Sandy Bay to May Pen
Grantor: National Road Operating and Construction Company (NROCC)
Government contribution: $13.5 million
Sponsors: Bouygues Travaux Publics (48.89%), Vinci subsidiary Autoroutes du Sud de la France (25.18%), IFC (17.04%) and Proparco (8.89%)
Equity: $7 million from IFC and Proparco
Debt: $198.4 million term loan
Cash: $66 million from existing operations
Providers: EIB, IDB, IFC, Proparco
Financial adviser: Astris Finance
Underwriter counsel: Clifford Chance and Myers, Fletcher & Gordon (local)
Borrower counsel: Hart Muirhead Fatta and in-house
Traffic consultant and independent engineer: Arup
Insurance consultant: Marsh
Environmental consultant: Exponent
Construction contractor: Bouygues TP Jamaica
Operator: Jamaican Infrastructure Operator