It took two banking syndicates, three term sheets and 17 lenders, but on 20 February the sponsors for Eiffarie, the holding company for the French motorway network Autoroutes Paris-Rhin-Rhone (APRR), completed a Eu3.5 billion refinancing of its existing acquisition debt. This was the largest project financing to close in Europe last year, and signed at a time of uncertainty in the banking market.

The refinancing closed exactly one year before the existing acquisition debt was due to mature. This timing was important because any delay could have adversely affected APRR’s credit rating. Incorporating a mixture of holding company and operating company debt, the deal involved tricky intercreditor negotiations.

Eiffarie is a holding company for four sets of toll road assets, of which APRR is by far the most important. The 2,282km APRR network serves several major business centres, including the Paris-Lyon corridor that links France’s two major cities and also serves as a gateway to most of Europe, including the Benelux, Switzerland, Germany and Italy.

Eiffage and Macquarie formed Eiffarie when France began privatising its publicly-owned toll roads, and took control of APRR in 2006. Eiffarie initially bought 81% of APRR’S shares and has steadily bought out minority shareholders. In December last year, the sponsors received approval to complete a mop-up of the remaining shares after a legal action by some minority shareholders failed.

In February 2006, the sponsors closed a roughly Eu5.6 billion financing to fund their acquisition of APRR, split between a Eu2.8 billion 7-year term loan at the holding company level, and a Eu1.8 billion revolving credit facility at the operating company. The sponsors sought an early refinancing in order to improve APRR’s capital markets access.

APRR is no stranger to the bond market and the sponsors sought to incorporate a bond component in the refinancing. From early 2011 onwards, APRR raised roughly Eu2.5 billion through several issues at ever-decreasing coupons. The proceeds were used to fund an upstream dividend and to reduce the refinancing requirement at both the holding company and operating company levels.

The sponsors then approached the bank market in September, settled on a core group of banks by December, and had signed the financing by February the following year. The deal closed as roughly Eu3.5 billion in non-recourse debt, split between a Eu2.76 billion five-year term loan at the holding company and a Eu720 million five-year revolving credit facility at the operating company.

The speed with which the deal reached close is impressive, given the size of the financing package and the number of participants. BBVA, BTMU, CBA, Lloyds, Mediobanca, Natixis, RBC, Santander and Societe Generale were bookrunners and lead arrangers. Credit Agricole and CIC were lead arrangers, while BayernLB, ING, KfW-IPEX, La Caixa, Sabadell and WestLB were arrangers.

The sponsors were able to attract this wide support without enhancements such as a regular debt amortisation profile on the term loan. But sponsors did not have everything their way, and the lenders went through three separate term sheet drafts before the deal eventually closed

The financing features an enhanced cash sweep on the holding company loan. This includes a regular cash sweep mechanism that sweeps any surplus cash to repay senior debt, but also prohibits the sponsors from paying a dividend unless a certain proportion of the senior debt is repaid. Cash sweeps start at 25% for the first three years, before stepping up to 75% in year 4 and hitting 100% by year 5.

Bookrunners on the holding company debt received fees of 275p, and pricing starts at 300bp before stepping up to 350bp by year 4 and rising to 400bp by year 5. The sponsors initially proposed a type of step-down mechanism in the pricing based on how quickly they could reduce leverage at APRR. They had included this mechanism on the acquisition financing, but banks were unwilling to repeat this, and were also able to extract fairly robust margins from the sponsors.

Despite the wrangling the sponsors were able to close the deal within such a tight time-frame and retain such a large bank following because of the strength of the APRR credit. Moreover, the sponsors emerged from the refinancing with a more generous debt maturity profile and APRRs credit rating intact. 

APRR/Eiffarie
Status
Signed and closed 20 February 2012
Size
Eu3.48 billion
Description
Refinancing of the acquisition facilities for APRR, a French toll road network spanning 2282km
Sponsors
Eiffage (50% + 1 share), Macquarie (50% – 1 share)
Mandated lead arrangers
BBVA (syndication agent), BTMU (syndication agent), CBA (syndication agent), CIC, Credit Agricole, Lloyds (syndication agent), Mediobanca (syndication agent), Natixis (syndication agent), RBC (syndication agent), Santander (syndication agent) and Societe Generale (facility agent, documentation agent, syndication agent)
Other lenders
BayernLB, ING, KfW-IPEX, La Caixa, Sabadell, WestLB
Sponsors’ financial adviser
Rothschild
Sponsors’ legal adviser
Bredin Prat, Clifford Chance
Lenders’ legal adviser
Gide Loyrette Nouel
Model auditor
KPMG
Technical adviser
Steer Davies Gleave