The EuroLink consortium has closed Ireland's €338.9 million (US$454.8m) financing of the M3 Clonee-Kells toll road project - a project that took nearly seven years to make it from drawingboard to the start of construction

The project - now estimated to be worth more than €600 million (US$805m) over the 45-year concession period - was originally announced by the National Roads Authority (NRA) in the summer of 2000 under Tranche II of the PPP roads programme.

The DBFO road project recently reached financial close and is currently at a 'split close' stage - due to be fully finalised with the project starting at the end of the month.

The 50km stretch of motorway and dual carriageway will also include 11km of new single carriageway and the installation of toll collection systems at two locations on the motorway section. The project will incorporate a further 24km of link road as well as the widening and realignment of existing roads.

It will form part of the M3/N3 national primary route in County Meath, in the north east of the Republic of Ireland. The route of the new road will bypass Dunboyne, Dunshaughlin, Navan and Kells.

It will be a real toll road; however the state will set rates. To counter this lack of concessionaire control, the government is offering a level of state support across all PPP road toll schemes.

Support from the government is split between a construction subvention to be released as payments through the design/build phase and a possible operational payment through the life of the concession - to be paid out as an annual unitary charge.

Background

The project was announced in June 2000 and in April 2002 the NRA issued the initial tender.

In June 2002, six pre-qual bidders were named:

• Togher Toll
• EuroLink
• Direct Route
• Erin Route
• ICON
• Celtic Roads Group

Bids were submitted in December 2002 but fell victim to delays as the project was mired by budgetary uncertainties and disputed routes. It was finally approved in August 2003.

In January 2004  four consortia were shortlisted:

• Celtic Roads Group (CRG)
• Direct Route
• EuroLink
• ICON

After tenders were received in early 2005, the NRA carried out an evaluation and announced on 13 July 2005 that the EuroLink consortium had been identified as the leading tenderer.

EuroLink includes:

• SIAC Construction
• Cintra - Concesiones de Infraestrucutras de Transporte

EuroLink was deemed by the NRA to be the 'most economically advantageous' out of all the consortia.

On 19 September 2006, EuroLink - lead by Cintra - was named preferred bidder and in October 2006, the NRA officially awarded it to the group.

CRG was the second-placed bidder with a consortium comprising:

• NTR
• HBG Ascon/Edmund Nuttall
• Grupo Dragados

The ICON consortium includes:

• PJ Hegarty & Sons
• FCC Construction

The Direct Route group was made up of:

• Kellogg Brown & Root
• Strabag
• John Sisk & Son
• Lagan
• Roadbridge (Mulcair)
  

Legal

Legal advisors to the NRA are McCann Fitzgerald and Pinsent Masons is advising EuroLink.

In May 2004 - prior to the selection of EuroLink - an archaeological find stalled progress.

The formal invitation to tender (ITN) was issued to the shortlisted bidders after the archaeological dig was finished in June 2004. During this period, discussions were pending for the bidders and legal action was taken by protestors against the project.

The case - launched by environmental lawyer Vincent Salafia - challenged the route of the motorway and the impact it would have on the local countryside through the archaeologically rich Tara-Skyne valley.

The Hill of Tara is reputed to be the seat of the High King of Ireland and the motorway will come within 1.2km of the site. Close to the site is also a number of pre-Celtic Neolithic monuments.

The legal challenge - issued by the minister for the environment, heritage and local government - was brought before the High Court on 4 July 2005. These proceedings were heard before Mr Justice Smyth in January 2006 and on 1 March, the case was dismissed - the challenge labeled as unfounded.

The applicant appealed the High Court’s ruling to the Supreme Court. However on 3 October 2006, in advance of the Supreme Court hearing, the applicant withdrew the legal challenge.

The final route selected for the section between Dunshaughlin and Navan was one of 10 potential routes and was chosen as it will have the least impact on the local community and will pass in equal distance between the historical sites of Tara and Skreen.

Financing

KPMG acted as financial adviser to the NRA, while PwC is advising the EuroLink consortium.

Total costs over 45 years were initially estimated to be around the €500 million mark, but last month this was expected to be closer to €600 million.

The MLAs were:

• BBVA
• Santander
• Calyon

The MLAs closed the financing of €338.9 million on 7 March 2007.

In early April syndication of the €338.9 million package backing the project was proposed and is expected to be launched within the next two weeks. It will be a limited deal, bringing on board a few banks.

SIAC currently owns 10 per cent of the EuroLink consortium, but has the option to bring that figure up to 25 per cent at a later date.

Conclusion

After languishing in the doldrums for years, the Clonee-Kells road toll has progressed through to financial close, despite receiving strong environmental and archaeological opposition as well as budgetary problems.

The M3 toll road project consolidates Cintra's presence in the transport concession business in Ireland - a market where there has been a marked increase in PPP transport projects over recent years.

In 2003 Cintra obtained a 30-year concession for the N4/N6 Kilcock-Kinnegad  road project - the country's first toll highway to be put out to tender.

Last month Celtic Roads Group (CRG) was announced by the NRA as PB for the DBFOM Portlaoise motorway  PPP as well as the announcement of the release of tenders for the €1.2 billion Dublin Metro. The NRA also chose ICON - a Sacyr and FCC consortium - as PB for the €500 million M50  ring road PPP project around Dublin.

Since the beginning of the year, Ireland has increasingly featured in IJ News with a number of transport projects getting underway. The country's economic boom and political will from experienced project managers and promoters has greatly contributed to the growth of a flourishing infrastructure.

The project at a glance