APM Terminals and Terminal Investments signed a $679 million debt package for their greenfield Brasil Terminal Portuario (BTP) project on 17 March. The Inter­national Finance Corporation (IFC) arranged the financing, which included the multilateral’s largest ever syndicated dollar B loan. The new container terminal will go a long way towards reducing congestion at the Port of Santos, South America’s busiest, and is yet another sign of commercial banks’ increasing interest in deals in the Latin American powerhouse.

BTP will add 2.2 million TEUs of container and 1.2 million tonnes of liquid bulk capacity at Santos. It will include three berths on land formerly occupied by a dump used by the city of Santos. The port is located in Sao Paulo state, 80km south of the city of the same name, and handled roughly 2.3 million TEUs in 2009.

The IFC provided a $97 million direct A loan with a 16-year maturity, semi-annual repayments and 2.25-year grace period (roughly equal to construction). Banco Santander, BNP Paribas, Credit Agricole CIB, DnB Nor, ING Capital and KfW participated in a $582 million syndicated B loan that was arranged by the multilateral. It also has a 16-year maturity, semi-annual repayments and 2.25-year grace period. Each participant provided $97 million. The commitment fee was 100bp and pre-completion pricing started at 275bp over Libor on both tranches. The sponsors split the roughly $229 million equity contribution equally.

Commercial lenders would probably have been able to cope with the deal without multilateral involvement. Soren Sjostrand Jakobsen, head of project implementation at APM, says it would have been possible to finance the terminal with a project finance loan from only commercial lenders. However, Terminal Investments had already begun the financing pro­cess with the IFC when the second sponsor became involved in the project. He adds that the sponsors were happy to proceed with the IFC-arranged financing after looking at other options and acknow­ledging that the multilateral’s package was competitive.

“Capacity today at the Port of Santos is much, much smaller than demand today and in the future,” says one banker who worked on the deal. The banker cites the presence of the world’s largest shipping companies at the port as a positive in its institution’s due diligence on the project. The sponsors have strong relationships with the two largest container shipping lines in the world – APM is a subsidiary of Denmark-based AP Moller-Maersk, the owner of Maersk Line, and Terminal Investments is a subsidiary of Switzerland-based MSC. The lender, while happy to point out the parentage, did not confirm whether the project company benefited from any capacity contracts with these parents.

A group related to some of the other terminal operators at Santos challenged the right of the grantor, Companhia Docas do Estado de São Paulo (Codesp), to award the concession. Brazil’s national waterway and maritime agency, Agência Nacional de Transportes Aquaviários, or ANTAQ, decided in favour of Codesp and BTP but there is potential for future lawsuits.

Codesp, the state port authority, award­ed the 20-year concession for BTP to a consortium of local investors in 2007, and ANTAQ approved the concession agreement later that year. Terminal Investments, through its indirect subsidiary GTL-Europe Terminal, bought a 50% stake in the project from the local investors in 2008 and the remaining equity in 2009. The sponsor then engaged Credit Suisse to run a competitive auction for a 50% equity stake in the terminal, which APM won in early 2010. Construction began the same year and operations are slated to begin during the second half of 2012.

BTP is not the only terminal project in Brazil to use multilateral financing. DP World and Odebrecht are expected to close on roughly $400 million in Inter-American Development Bank (IDB) and Caixa Economica Federal-arranged debt for their roughly $800 million Embra­port terminal at Santos. The debt is split between a $100 million A loan from the multilaterals and a $300 million B loan syndicated to commercial lenders, including Banco Santan­der, Caixa Geral, HSBC and WestLB. The terminal will have a capacity of 1.2 million TEUs and roughly 2 million tonnes of ­liquid bulk per year.

Few additional port terminal deals are expected in Brazil during the near term. Sao Paulo-based lenders say they are focused primarily on arranging financing for energy, oil and gas, and infrastructure projects for the latter, especially projects related to the 2014 World Cup and 2016 Rio Olympic Games. Many of these deals, especially in the infrastructure sector, are expected to be financed in cooperation with BNDES, Brazil’s national development bank.

Andrade Gutierrez is the engineering, procurement and construction contractor for the BTP terminal and DEC, a subsidiary of Belgium-based DEME Group, is the site soil remediation contractor. The sponsors are providing guarantees of these contracts during construction. APM and Terminal Investments will operate the terminal when it is complete.

Brasil Terminal Portuario
Status: Signed 17 March 2011
Size: $908 million
Location: Port of Santos, Sao Paulo state, Brazil
Description: New 2.2 million TEU and 1.2 million tonnes of liquid bulk capacity greenfield container terminal
Grantor: Companhia Docas do Estado de São Paulo (Codesp)
Sponsors: APM Terminals (50%) and Terminal Investments (50%)
Equity: $229 million
Debt: $97 million A loan and $582 million B loan
Lenders: International Finance Corporation (A loan and lead arranger), Banco Santander, BNP Paribas, Credit Agricole CIB, DnB Nor, ING Capital and KfW
Sponsor legal counsel: Machado, Meyer, Sendacz e Opice Advogados and in-house
Lender legal counsel: Clifford Chance and Mourant Ozannes
EPC contractor: Andrade Gutierrez
Soil remediation contractor: DEC