Allied Irish Bank (AIB) and Depfa Bank have closed the financing of Dublin Convention Centre PPP - a deal 10 years in the making and touted to generate additional foreign revenue earnings of €25 to €50 million per annum once completed

The centre will comprise two buildings, a conference centre and a five star hotel. The main auditorium will accommodate 2,000 people, with two exhibition halls and roomsholding a total of 10,000.

The Spencer Dock International Conference Centre Consortium (SDICCC) - led by Treasury Holdings with John Sisk taking a minority share - was named preferred bidder on 31 August by minister for tourism John O'Donoghue.

The sponsor is Treasury Holdings led by  .

State transport agency CIE (Coras Iompair Eireann) - the holding company of Irish Rail - is developing the site as a non-stake holding part of the Spencer Dock International Conference Centre Consortium (SDICCC). It has put aside 52 acres of an 81-acre site north of the Liffey.

Under the concession agreement, CIE owns no part of the project company and is not fianacially associated with the bidding and developments in any way other than to provide the land.

Unitary Charge

In additional, the structure of the unitary charge payments involves a unique and dual approach.

The unitary charge payment will be divided into two parts. 65 - 70 per cent of the annual payment will be worked out according to the usual system of availability that is utilised in most UK PFI.

The rest of the unitary charge to the private sector will be worked out on the basis of the revenue the conference centre brings in, once completed from actual conferences, customers and publicity.

Background

The  Spencer Dock has been on the drawing board for nearly 10 years, during which the value of the site has rocketed to several times its worth from from the first proposal to build the conference centre

The government decided to invite offers from developers to construct a 2,000-seat national conference centre in Dublin, guaranteeing to lease it in return for the private sector funding its building.

The tendering process was planned to begin within six months after the Cabinet originally approved the proposal from the Minister for Tourism and Sport to go ahead with the project. Several previous attempts to fund the facility had already failed.

Financing

Allied Irish Bank and Depfa acted as MLAs with Barclays and RBS subsidiary Ulster Bank brought in as sub-underwriters on the deal that is valued at around €294 million (US$395m) and a debt package of €264 million (US$355m).

KBC had been involved in the deal until late on, but the bank was unable to get credit committee approval in time and was dropped.However, sources close to the deal say that KBC will definitely be involved in the syndication.

The term loan is for €250 million (US$336m) with a mezzanine facility of €14 million (US$19m). The pricing is around Euribor plus 100bp on the term loan and around 250bp on the mezz.

The two MLAs are providing the mezz 50:50 and they are in for 35 per cent each of the senior debt. Barclays and Ulster Bank are sharing the remainder of the term loan with each taking a 15 per cent share.

The equity package is around €30 million (US$40.3m), €28 million (US$7.68m) is cash - the rest comes from the value of the land on which the facilities are to be built which is owned by the winning consortium (two-thirds) ,Harry Crosbie (one-third) and John Sisk - with less than 1 per cent.

It has a debt: equity ration of around 90:10.

The concession is for 25 years with a construction phase that is expected to last three-and-a-half years. The total duration is for some 28-and-a-half years.

The facility is being run on a predominantly availability risk basis with an element of conference risk - similar to the Melbourne Conference Centre deal.

The sponsor is Treasury Holdings led by Spencer Dock International Conference Centre Consortium (SDICCC) with John Sisk which took a small shareholding.

The operator is NEC - the company that runs NEC Birmingham - and this is its first venture outside of the Midlands venture.

The procuring authority is the Office of Public Works (OPW) - effectively the Irish government.

KPMG acted as financial adviser to the consortium while Operis took on the modeling and Arup acted as technical adviser.

The legal advisers are:

• Ashurst acting for the banks
• Arthur Cox - sponsor
• McCann Fitzgerald - OPW

The City of Dublin's scheme to redevelop the Spencer Dock area includes the construction of a national convention centre as the focal point.

Work is scheduled to start mid-2007 and be completed in 2009. Once construction of the centre is complete and it is operational, the state will pay the company an annual charge, the maximum total cost of which over 25 years will be just under €380m in present day values.

At the end of the concession, the facility will revert to state ownership.

The redevelopment scheme involves the construction of two buildings; a convention centre and a five star hotel.

The main auditorium will hold 2,000 people, and is supported by two exhibition halls and rooms catering for a total of 10,000.

According to independent estimates, the National Conference Centre - when fully operational - will generate additional foreign revenue earnings of €25 to €50 million per annum.

PwC and Fortis Bank have already committed to moving into new office blocks at Spencer Dock.

The project at a glance