Towards the end of 2008, in the teeth of the global financial crisis, the unique Lille stadium PPP in France reached financial close - despite, or perhaps because of, a contractual structure which was anything but vanilla.

The end result of the project [Projects Database] will see the city of Lille become home to France's third largest stadium, after the Stade de France in Paris and Marseille's Vélodrome.

The stadium just missed out on being France's first PPP stadium to close - Le Mans beat it to the punch by just a few weeks - but Lille was on a far larger scale, and unlike Le Mans was independent of state funding. Lille will also be the first stadium in France to be funded purely on an availability basis.

What really sets the deal apart, however, is the partnership agreement which also provides for the construction of other associated buildings to house hotels, restaurants, leisure businesses and a sports-health centre, as well as 3,500 car parking spaces.

The project

The €330 million project came in two parts - the 50,000-seater stadium, with associated gym facilities and the car park, was financed as a design, build, finance, operate and maintain PPP. The stadium will be used first and foremost as the home of LOSC-LM (Lille Football Club) for its football matches but will also be available for other sporting, cultural or economic events.

The project also includes an additional 27,000m² real estate development including hotels, apartments, shops and offices, to be financed separately.

This was the first example of a major project in which the party awarded the partnership agreement creates a real estate project ancillary to the main construction project.

The contract to undertake the project was won by an SPV called ELISA SAS, made up of Eiffage, Bouygues and Vinci.

The financing

The funding of the PPP faced a serious hurdle early in 2008, when two MLAs - Société Générale and RBS - pulled out of the project.

The 81.5:18.5 debt-to-equity ratio left the project needing €269 million in debt - a big ask in market conditions in the second half of banking's annus horribilis.

Four MLAs stepped up to the plate:

• CIC, lending €53.4m
• Dexia, lending €53.4m
• HSBC, lending €40.9m
• Fortis, lending €30.3m

However, this left the project with a €91 million shortfall on the debt side - and it fell to lead sponsor Eiffage to plug the gap. It lent the full €91 million pari passu with the banks, making it the largest single lender to its own project.

The senior loan has a 31-year tenor.

There is also a standby facility tranche worth €4 million, which was split between the banks. That also has a 31-year tenor.

Equity was provided by Eiffage, to the tune of €61 million.

Advisory roles

The Greater Lille Metropolitan Council's financial adviser was Depfa Bank, and its legal adviser was Paul Hastings. The Paul Hastings team was led by Pascal Cuche (partner) and Karine Debaecker (senior associate). This team, which was part of Ashurst prior to February 2008, advised the Greater Lille Metropolitan Council over the entire duration of the project, from its launch in May 2006 until signature of the partnership agreement on 15 October 2008.

Groupe Eiffage was advised by Gide Loyrette Nouel, the banks arranging the senior debt were advised by Clifford Chance and Groupe Eiffage's financial adviser was HSBC France.

Conclusion

This deal will take its place in the history books of PPP in France as the first stadium to be financed on availability payments - and through the add-on of neighbouring real estate development rights.

Presumably that extra opportunity played its part in persuading lead sponsor Eiffage to put €91 million of its own into the project's senior debt, as well as a sizeable equity contribution.

That lending made financial close possible - making the deal also notable for being one of a select few to close in the last weeks of 2008.

The Project at a Glance

The project at a glance