European Transport Privatisation Deal of the Year 2011: TASS
Turkeys privatisation programme is not renowned for speed of delivery, but last years $861 million sale of Istanbul Ferries - Istanbul Deniz Otobusleri (IDO), the worlds biggest municipal ferry operator by the Municipality of Istanbul to the TASS consortium closed in just six months from auction award in April to financial close on the long-term debt facility in September.
The speed was in part down to the timing the sponsors wanted to close the deal quickly so that they could assume control of the asset before the start of the peak revenue tourist season. Consequently, the deal was initially financed with a temporary senior loan in June 2011 whilst the lead arrangers worked on finalising the long term debt term sheet.
The deal is the first municipal transport privatisation in Turkey, a sector that has traditionally been financed on-balance sheet by entities like the Municipality of Istanbul, and may well be repeated in the coming years as Istanbul and other municipalities look to upgrade urban infrastructure.
The TASS consortium comprises Tepe, Akfen and Sera, which are also founding shareholders in TAV Airports, and Souter Investments, the private investment vehicle owned by Brian Souter, co-founder of Stagecoach in the UK. The sponsor line-up therefore features significant experience of transport operations, and is putting $111 million of equity into the acquisition.
The long-term acquisition debt closed in September and was fully disbursed by the end of the month. The debt comprises a 12 year fully amortising $699 million loan and a $50 million junior loan: Bank takes on the senior loan are EBRD $100 million, Garanti Bank $171 million, Isbank $171 million, TSKB $43 million, Deniz Bank $43 million and Vakif Bank $171 million. The $50 million seven-year EBRD junior loan comes with a bullet repayment.
The loans include a series of structural risk mitigants including a cash sweep designed to retire most of the debt by 2018 when competition on the trans-Marmara routes is expected to increase significantly with other projects coming on stream. Interest and currency hedging on both tranches is to be provided by all six lenders, and there is limited sponsor support in the form of a capped debt service undertaking.
The deal also includes a $108 million senior performance bond facility provided by the five commercial banks. The tranche counter-guarantees the Municipality of Istanbul for the financial guarantees that it issued in the past in support of the acquisition of vessels by IDO.
TASS
STATUS: Financial close 15 September 2011
TOTAL PROJECT COST: $861 million
DEBT: $749 million
DESCRIPTION: Privatisation of Istanbuls municipal ferry operator
SPONSORS: Tepe, Akfen, Sera, Souter Investments
MLAS: EBRD; Garanti Bank; Isbank; TSKB; Deniz Bank; Vakif Bank
SPONSOR LEGAL COUNSEL: Latham & Watkins; Sibel Ertekin Law Office
LENDER LEGAL COUNSEL: ASC Law Firm; Dickson Minto W.S.
The speed was in part down to the timing the sponsors wanted to close the deal quickly so that they could assume control of the asset before the start of the peak revenue tourist season. Consequently, the deal was initially financed with a temporary senior loan in June 2011 whilst the lead arrangers worked on finalising the long term debt term sheet.
The deal is the first municipal transport privatisation in Turkey, a sector that has traditionally been financed on-balance sheet by entities like the Municipality of Istanbul, and may well be repeated in the coming years as Istanbul and other municipalities look to upgrade urban infrastructure.
The TASS consortium comprises Tepe, Akfen and Sera, which are also founding shareholders in TAV Airports, and Souter Investments, the private investment vehicle owned by Brian Souter, co-founder of Stagecoach in the UK. The sponsor line-up therefore features significant experience of transport operations, and is putting $111 million of equity into the acquisition.
The long-term acquisition debt closed in September and was fully disbursed by the end of the month. The debt comprises a 12 year fully amortising $699 million loan and a $50 million junior loan: Bank takes on the senior loan are EBRD $100 million, Garanti Bank $171 million, Isbank $171 million, TSKB $43 million, Deniz Bank $43 million and Vakif Bank $171 million. The $50 million seven-year EBRD junior loan comes with a bullet repayment.
The loans include a series of structural risk mitigants including a cash sweep designed to retire most of the debt by 2018 when competition on the trans-Marmara routes is expected to increase significantly with other projects coming on stream. Interest and currency hedging on both tranches is to be provided by all six lenders, and there is limited sponsor support in the form of a capped debt service undertaking.
The deal also includes a $108 million senior performance bond facility provided by the five commercial banks. The tranche counter-guarantees the Municipality of Istanbul for the financial guarantees that it issued in the past in support of the acquisition of vessels by IDO.
TASS
STATUS: Financial close 15 September 2011
TOTAL PROJECT COST: $861 million
DEBT: $749 million
DESCRIPTION: Privatisation of Istanbuls municipal ferry operator
SPONSORS: Tepe, Akfen, Sera, Souter Investments
MLAS: EBRD; Garanti Bank; Isbank; TSKB; Deniz Bank; Vakif Bank
SPONSOR LEGAL COUNSEL: Latham & Watkins; Sibel Ertekin Law Office
LENDER LEGAL COUNSEL: ASC Law Firm; Dickson Minto W.S.
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