Sociedad Concesionaria Operadora Aeroportuaria Internacional (Opain) began construction on its El Dorado International Airport concession in Bogota in early 2007, 18 months before a crash that changed infrastructure lending for good. It is debateable whether international commercial lenders would have become comfortable with a Colombian credit, and the country did not reach investment grade until 2011.

By the time the 2008 crash hit, El Dorado’s grantor, Unidad Administrativa Especial Aeronáutica Civil (Aerocivil), had decided to change the scope of the project, sparking a two-year negotiating and design process. Instead of an expansion, El Dorado would be demolished and rebuilt.

But Opain and its financial advisers BNP Paribas and Bancolombia still managed to expand the playing field for the $390 million financing. They brought in China Development Bank (CDB), which had long been interested in Latin American markets, for the lender’s first transport project financing in the region. Opain had also considered a bond deal in the US 144A market, given that 85% of El Dorado’s revenues are in US dollars.

Opain always expected it would need multilateral support, so it approached the Inter-American Development Bank (IADB) in 2007. The IADB soon signed on, but the sponsors would need to bring in other multilaterals if the package did not include a B loan from commercial banks. Opain considered that structure, but soon found that the B tranche would be too short. Domestic banks would not go long on a mostly dollar financing, while international banks would not go beyond eight years. And the IADB could not go more than two years further on an A loan than the maturity of the B tranche.

The potential for CDB to come in as a participant emerged in 2009, when China joined the IADB. At that time, both CDB and China Ex-Im expressed interest in the El Dorado financing, even though the project would make minimal purchases of Chinese equipment. But with the IADB already on board, the remaining debt was too small to allow both CDB and China Ex-Im to write large tickets, as is their preference. CDB won approval first – even though the process involved two separate divisions – so China Ex-Im pulled out. Corporación Andina de Fomento (CAF) is the third and final member of the bank group, and was the last to sign on. The financing closed on 24 October 2012, about six years after Opain won the 20-year concession from Aerocivil.

The El Dorado 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 contributed $165 million, while CAF came in for $50 million. CAF’s debt is priced at 500bp over Libor, while CDB’s piece is priced at a fixed, though comparable, 7.21%. The IADB’s ticket is divided into two pieces, each with a distinct margin: $115 million has a fixed rate of 7.06%, with the balance priced at 500bp over Libor.

The financing has a debt service coverage ratio of 1.4x and the banks are assuming traffic risk. The deal includes at least two quirks. Under the concession agreement, lenders are not allowed to take first priority security interests over El Dorado’s receivables and primary revenue collection accounts, which must be Colombian-domiciled and list Aerocivil as the first beneficiary. To avoid protracted discussions with government entities, the deal features an account structure that grants lenders sufficient contractual rights over the accounts. Aerocivil is permitted to ask Opain to fulfil additional work at El Dorado – beyond what is specified in the concession agreement. If Opain agrees, it will be paid for any work, according to a negotiated (and understood) compensation mechanism.

Opain initially funded airport operations and early construction with short-term bridge loans and equity contributions. BNP, Bancolombia and Banco de Bogota were among the providers of the bridges, the last of which was refinanced with the multilateral financing.

The Opain consortium, made up of Colombian construction and infrastructure players Odinsa, CSS, El Cóndor, Coindustrial and Marval, hopes to expand its reach beyond Colombia with the $1.2 billion El Dorado expansion. The airport is among a handful globally that experienced growth during the recent recession, and appears poised to emerge as a South American transport hub. By the end of the concession in 2026 El Dorado is projected to handle at least 26 million passengers annually. At that point, it will boast a new 163,000 square metre passenger terminal with more than 60 gates, built on top of the existing terminal. Already, Opain has opened a new international passenger terminal. It expects to complete the modernisation project in July 2014. 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.
GRANTOR
Aerocivil
EQUITY
$354 million
(internal cash flows meet remaining project costs)
SPONSORS
Odinsa (35%), CSS (30%), El Cóndor (15%), Termotécnica Coindustrial (10%), Marval (10%)
DEBT
$390 million
LENDERS
CDB, CAF, IADB
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
SECURITY TRUSTEES
BNP Paribas, Fiduciaria Bogota
TECHNICAL ADVISER
Arup
TRAFFIC ADVISER
SH&E
INSURANCE ADVISER
AON
ENVIRONMENTAL ADVISER
Golder & Associates