Odebrecht, DP World and Grupo Coimex closed the $1.04 billion Empresa Brasileira de Terminais Portuarios, or Embraport, port deal on 18 November. The project involves constructing a greenfield 1.2 million twenty-foot equivalent unit (TEU) capacity mixed-use container terminal and a liquid bulk terminal with a capacity of two million tonnes at the port of Santos in Sao Paulo state. The facility is designed to relieve congestion at Brazil’s largest port.

The Inter-American Development Bank (IADB) and Caixa Economica Federal led the $786 million multi-currency debt financing for the project. The multilateral’s $430 million A/B loan was split into a $100 million A tranche with a tenor of 15 years and a $330 million B tranche with a tenor of 12 years. Caixa Geral de Depositos, HSBC, Banco Santander and WestLB are lead arrangers of the latter tranche. The A loan priced at 337.5bp over Libor with step-ups to 387.5bp by maturity and the B loan priced at 300bp over Libor with step-ups to 350bp over Libor by maturity. The commercial lenders are providing an interest rate hedge.

Caixa Economica provided a R$633 million ($335 million) loan with a tenor of 15 years. BNDES lent the funds to the state-owned bank through a repasse operation. The lender, and not the development bank, is the intermediary and bears the full credit risk of the debt. The sponsors contributed $253.1 million in equity split 58% Odebrecht, 27% DP World and 15% Coimex.

The financing was originally expected to close in the second quarter of 2011 but commitments and the complexity of the package pushed that back to November. “The marriage of two loans and all of these components brought a huge level of complexity,” says John Graham, senior investment officer in the IADB’s structured and corporate finance division.

Terms for the debt package are about par with those for the $679 million financing for APM Terminals and Terminal Investments’ $908 million Brasil Terminal Portuario (BTP) deal, which closed in March. Embraport’s financing carries a slightly wider spread – 300bp and 337.5bp over Libor initially compared to 225bp over Libor – and shorter tenor – 15 years and 12 years versus 16 years with a 2.25-year grace period – the current economic issues in Europe and the historically low base rates make the small differences about equal to the terms of the earlier deal. In addition, the project lacks any service contracts, whereas BTP’s sponsors benefitted from strong relationships with two of the largest container shipping lines in the world – Maersk Line and MSC.

The International Finance Corporation (IFC) arranged the A/B loan debt for BTP, which was split between a $97 million A tranche and $582 million B tranche. Banco Santander, BNP Paribas, Credit Agricole, DnB, ING and KfW participated in the financing. BTP is also a greenfield terminal at Santos.

Multilateral A/B loans have emerged as the primary source of financing for ports in Latin America. Embraport and BTP used the structure, though with different multilaterals, and almost all of the other port deals that are currently pending are using it as well. These include ICTSI and Loginter’s $328 million Tecplata container terminal in Argentina and Wilson Sons and Intermaritima Terminals $117.2 million expansion of the Tecon Salvador container terminal in Brazil, both of which are seeking IFC funds. APM Terminals, Callao Port Holding and Central Portuaria’s $898 million Mulle Norte container terminal modernisation in Peru and APM’s $992 million Moin container terminal concession in Costa Rica are also expected to use an A/B loan structure.

Coimex formed Embraport after a private approval from the federal maritime transport regulator, Agência Nacional de Transportes Aquaviários (ANTAQ), in 1998. Plans for the terminal languished until Caixa Economica Federal-managed Fundo de Investimento do Fundo de Garantia do Tempo de Servic¸o (FI-FGTS) took a stake in the project in 2008. Odebrecht and DP World bought a majority stake from the two sponsors in 2009 and the financing package was put together during the following year. The IADB approved the $400 million A/B loan in December 2010 and commercial lenders committed to the debt in the first half of 2011. FI-FGTS remains indirectly involved with the project but is no longer an equity shareholder. 

Empresa Brasileira de Terminais Portuarios
Status: Closed 18 November
Size: $1.04 billion
Location: Port of Santos, Sao Paulo state, Brazil
Description: Greenfield 1.2 million TEU and 2 million tonnes liquid bulk capacity mixed-use container and liquids terminal
Sponsors: Odebrecht (58%), DP World (27%) and Grupo Coimex (15%)
Equity: $253.1 million
Debt: $786 million
Lenders: Inter-American Development Bank, Caixa Economica Federal, Caixa Geral de Depositos, HSBC, Banco Santander and WestLB
Financial adviser: HSBC
Legal counsel: Souza, Cescon, Barrieu & Flesch and Davis Polk & Wardwell (sponsors), Dias Carneiro and Milbank (IADB and commercial lenders), White & Case (Caixa Economica Federal), Machado Meyer (hedge provider)
Model auditor: Operis
Technical consultant: Moffatt & Nichol
Insurance consultant: Willis
Environmental and social consultant: JGP Consultoria e Participacoes
EPC contractors: Conso´rcio Construtora Norberto Odebrecht and Jan de Nul do Brasil Dragagem