Sociedad Concesionaria Operadora Aeroportuaria Internacional (Opain) closed a $390 million bank financing on 24 October for its El Dorado International Airport concession in Bogota. The deal is China Development Bank’s inaugural Latin American project financing in the transport sector – and the first anywhere that combines CDB and the Inter-American Development Bank (IADB). Corporación Andina de Fomento (CAF) also provided some of the US dollar-denominated debt, while BNP Paribas and Bancolombia were financial advisers to the concessionaire.

The financing has a tenor of 14 years, allowing for a one-year tail on the concession’s outstanding 15 years, and includes a repayment grace period during construction. CDB took the largest ticket – $175 million. The IADB lent Opain $165 million, while CAF contributed $50 million. The IADB and CAF’s tickets are priced at 500bp over Libor, while CDB’s piece is priced at a fixed, though comparable, 7.21%.

Opain initially funded airport operations and initial construction, which began in 2007, with a short-term bridge loan and equity contributions. Banco de Bogota provided an early bridge loan, guaranteed by the sponsors, and later renewed this.

Opain is a consortium of Colombian construction and infrastructure players Odinsa, CSS, El Condor, Coindustrial and Marval. Opain views El Dorado as a chance to make its name as an international airport operator. Globally, El Dorado was one of a small number of airports that experienced growth during the recent recession, and is poised to emerge as a major South American hub. By the end of the concession, in 2026, El Dorado is expected to handle at least 26 million passengers per year. “This is a first step,” predicts Rodrigo Arias, manager of investment relations at Grupo Odinsa, which, at 35%, is Opain’s largest shareholder.

El Dorado, though, has been a labour-intensive first effort. The financing process, in particular, was glacial. Opain won the 20-year concession in 2006 from grantor Unidad Administrativa Especial Aeronáutica Civil (Aerocivil). The next year, BNP and Bancolombia, an Odinsa shareholder, investigated a potential bond issue for El Dorado, while the IDB began studying a bank debt alternative.

Several factors delayed the closing. Among them was the government’s two years of deliberations over Opain’s proposed design changes, and the effects of the 2008 financial crisis on commercial banks’ willingness to lend long-term. Some banks were leery of assuming the risks of construction and design and lending to a consortium with a limited track record outside Colombia. Several lenders, early in the financing process, were wary of Colombia’s political risk, though that concern eased in the ensuing years. Fitch promoted Colombia from a rating of BB+ to an investment-grade BBB- in June 2011.

“So Opain had to focus on multilaterals,” says Victor Salgado, a project team leader in the IADB’s structured and corporate finance department in Washington, DC. Opain’s financial advisers suspected that a Chinese bank might be attracted to the El Dorado deal. Deals in countries with a Pacific coastline are particularly appealing to Chinese banks, given the shared ocean and the abundance of natural resources in many of those countries – as were financings that involve the IADB.

Indeed, CDB and the Export-Import Bank of China had begun investigating the Latin American project finance market shortly before China joined the IADB, ultimately joining in 2009. Both CDB and China Ex-Im were interested in El Dorado, despite its minimal proposed purchases of Chinese equipment. But the deal would not be large enough to allow both to write large tickets, as is their preference. CDB happened to secure approval first, and was the only one to participate.

The concession agreement does not allow the lenders to take first priority security interests over El Dorado’s receivables and primary revenue collection accounts, which have to be Colombian-domiciled and have Aerocivil as the first beneficiary. To avoid protracted discussions with government entities, the deal features an account structure that grants the lenders sufficient contractual rights over the accounts.

Aerocivil can ask the project company to carry out additional work at El Dorado beyond that outlined in the concession agreement. Lenders were wary of the project company making this open-ended commitment, but note that a request is not deemed an immediate obligation unless Opain consents. Aerocivil also must compensate Opain for the additional work. “A compensation mechanism is there if the concessionaire agrees,” explains a source familiar with the deal.

The $1.2 billion expansion project will feature a new 163,000 square metre passenger terminal with more than 60 contact gates, built in phases, atop the existing terminal. Opain opened the new international passenger terminal in October 2012 and expects to complete modernisation work at El Dorado in July 2014. The project also includes new cargo facilities. A-port Operaciones Colombia, a subsidiary of Flughafen Zurich, is helping operate El Dorado. 

Sociedad Concesionaria Operadora Aeroportuaria Internacional
STATUS
Closed 24 October 2012
SIZE
$1.2 billion
DESCRIPTION
Expansion to Bogota’s international airport, including 163,000 square metre passenger terminal with more than 60 contact gates built atop the existing terminal.
EQUITY
$354 million (internal cashflows meet remaining project costs)
SPONSORS
Grupo Odinsa (35%), CSS Constructores (30%), Construcciones El Cóndor (15%), Termotécnica Coindustrial (10%) and Marval (10%)
DEBT
$390 million
LENDERS
China Development Bank, Corporación Andina de Fomento and the Inter-American Development Bank
SPONSOR FINANCIAL ADVISERS
BNP Paribas and Bancolombia
SPONSOR LEGAL ADVISER
Allen & Overy and Prieto & Carrizosa
LENDER LEGAL ADVISERS
Milbank, Tweed, Hadley & McCloy and Cardenas & Cardenas