Autopistas Metropolitanas de Puerto Rico closed a $1.136 billion financing for the PR-22 and PR-5 real toll concession on 22 September 2011. The deal, sponsored by Goldman Sachs Infrastructure Partners II and Abertis, was the only real toll deal to close in North America in 2011 and the first brownfield highway transaction in the US since the failed Pennsylvania Turnpike deal in 2008. In addition, it was the first for the grantors, the Puerto Rico Highways and Transportation Authority (PRHTA) and the Puerto Rico PPP Authority (PRPPPA), and is expected to be the beginning of a strong pipeline of brownfield and greenfield concessions from the latter.

The 40-year concession includes the 83.7km PR-22 and the 6.4km PR-5 toll roads through the suburbs of capital San Juan and across the north side of the island to Arecibo. The former is considered the central artery of Puerto Rico while the latter is an urban road from the centre of San Juan to the suburb of Bayamon. PR-22 generated $85 million in revenue and PR-5 $4.2 million in 2009. Revenue grew at a compounded annual growth rate of 5.2% and 7.7%, respectively, between 2005 and 2009.

The seven-year debt was split between a $750 million club loan with a bullet maturity and a $75 million capex facility. It priced at 250bp over Libor with step-ups to 350bp over Libor by maturity, and was swapped to a fixed interest rate. Royal Bank of Canada (RBC), left joint lead arranger, Bankia (Caja Madrid at close), CaixaBank, Credit Agricole, ING, Intesa Sanpaolo, Banco Popular Puerto Rico, Banco Santander, Scotia Capital, Societe Generale, Siemens Financial Services and WestLB provided the debt. Goldman (55%) and Abertis (45%) provided $386 million in equity.

Peter Vermette, managing director at Goldman Sachs Infrastructure Partners, said that the deal provides a view of the bank market for real toll brownfield transactions. While it attracted a lot of demand and was oversubscribed, he noted that building a wide bank group was very important in the current credit market. The sponsors plan to refinance the loan with long-term debt, which is likely to be a bond issue, before the bullet maturity.

The concessionaire, known as Metropistas for short, is responsible for $656 million in additional investment on the highways during the concession. Accelerated safety upgrades, including an upgraded tolling system, new signage and roadway resurfacing, valued at $56 million must be completed by September 2014. The remaining $600 million in investments, which are likely to be financed through additional borrowings, will be made on the highways at a later date.

Metropistas has clear title to toll revenues and carries full traffic risk, with limits on toll rate increases, according to the concession contract. It cannot raise tolls until 1 January 2014, after which it can raise them by a rate no greater than the US consumer price index for all urban residents plus 1.5% annually. It can retroactively raise tolls at this rate for the three years since financial close to 2014. In addition, the Puerto Rican government can suspend toll collection on the highways if the governor declares a state of emergency. PRHTA is responsible for toll and speed enforcement.

PRHTA will also build a 10km Metro Urbano bus rapid transit (BRT) and dynamic tolling demonstration project in the median of PR-22. The roughly $75 million project will be handed over to Metropistas, which will operate and maintain the lanes, by 31 August 2013 or pay penalties of $10,000 per day to the concessionaire. Operations and maintenance will be funded through toll revenues, which will be collected by the concessionaire but split equally with PRHTA. The project includes one new lane in each direction from Toa Baja to Bayamon and can be extended at a later date if it is successful.

The PRPPPA is already building on the success of Metropistas. It has shortlisted six consortiums, including GMR Infrastructure/Incheon International Airport Corporation, Goldman Sachs Infrastructure Partners/Fraport and Macquarie/Ferrovial, for a 40- to 50-year concession of the Luis Munoz Marin International Airport in San Juan, which if it closes would be the first major airport in the US to be privatised under the Federal Aviation Administration’s airport privatisation pilot programme. It has also plans a long-term design-build-finance-maintain concession for a 600-bed juvenile detention centre, and has already awarded a number of small schools packages.

Autopistas Metropolitanas de Puerto Rico
STATUS: Closed 22 September 2011
SIZE: $1.136 billion
DESCRIPTION: 40-year brownfield concession of PR-22 and PR-5 toll roads in San Juan, Puerto Rico
GRANTORS: Puerto Rico Highways and Transportation Authority and the Puerto Rico PPP Authority
SPONSORS: Abertis (45%) and Goldman Sachs Infrastructure Partners II (55%)
EQUITY: $386 million
DEBT: $750 million term loan and up to $75 million capex facility
LEAD ARRANGERS: Bankia (Caja Madrid at close), CaixaBank, Credit Agricole, ING, Intesa Sanpaolo, Banco Popular Puerto Rico, RBC, Banco Santander, Scotia Capital, Societe Generale, Siemens Financial Services and WestLB
FINANCIAL ADVISERS: Goldman Sachs and RBC (sponsors), Macquarie (grantors)
SPONSORS’ LEGAL COUNSEL: Freshfields (US) and McConnell Valdes (local) LENDERS’ LEGAL COUNSEL: Milbank (US) and Adsuar Muniz Goyco Seda & Perez-Ochoa (local)
GRANTORS’ LEGAL COUNSEL: Allen & Overy (US) and Pietrantoni, Mendez & Alvarez (local)
FINANCIAL MODEL AUDITOR: Operis (lenders)
SPONSORS’ TECHNICAL ADVISER: Aecom
LENDERS’ TECHNICAL ADVISER: Stantec
GRANTORS’ TECHNICAL ADVISER: URS
SPONSORS’ TRAFFIC ADVISER: Steer Davies Gleave
LENDERS’ TRAFFIC ADVISER: Stantec
SPONSORS INSURANCE ADVISER: Aon
LENDERS INSURANCE ADVISER: Willis

Note: An earlier version of this article attributed the Peter Vermette quote to Jonathan Hunt, vice president at Goldman Sachs Infrastructure Partners. Hunt is a managing director at Goldman Sachs Infrastructure Partners.