China Construction Bank contributes $100 million AUD to a $1.25 billion AUD syndicated loan for the Westlink M7 Project

Project narrative

Circa May 26, 2003, financial close was reached on a deal in which a syndicate of 13 banks — including China Construction Bank Corporation (CCB) — entered into a $1.25 billion AUD ($802 million USD) syndicated senior loan agreement with WSO Finance Pty Ltd — an Australia-incorporated special purpose vehicle (SPV) and joint venture of Macquarie Infrastructure Investment Management Limited (MIIML) as trustee for the Western Sydney Orbital Holding Trust, wholly-owned via another trust by Macquarie Infrastructure Trust (40% equity stake), Transurban Nominees Pty Limited, a wholly-owned subsidiary of Transurban Holdings Limited, as trustee of the Transurban WSO Trust, wholly-owned via another trust, by the Transurban Holding Trust (40% equity stake), four SPVs wholly owned, through holding companies and trusts, by Abigroup Limited: Abigroup WestLink Partner No 1 Pty Limited (2.5% equity stake), Abigroup WestLink Partner No 2 Pty Limited (2.5% equity stake), Abigroup WestLink Partner No 3 Pty Limited (2.5% equity stake) and Abigroup WestLink Partner No 4 Pty Limited (2.5% equity); and four SPVs wholly owned, through holding companies and trusts, by Leighton Contractors Pty Limited: LMI WSO No 1 Pty Limited (2.5% equity stake), and LMI WestLink Partner No 2 Pty Limited (2.5% equity stake), LMI WestLink Partner No 3 Pty Limited (2.5% equity stake), and LMI WestLink Partner No 4 Pty Limited (2.5% equity stake) — for the Westlink M7 Project. This loan carried a maturity period of 15 years, divided into a 3.5-year construction and a 11.5 year term loan, and an interest rate of BBSY plus an initial margin of 150 basis points (bps) rising to 170 bps after 3.5 years, then to 185 bps until 7.5 years, then 185 bps to until 8.5 years, and 200 bps thereafter. 25% of the loan was a bullet loan repayable at maturity. This loan was secured by (i.e. collateralized against) fixed and floating charges over the assets, undertaking, and rights of WSO Finance Pty Ltd and Westlink Motorway Partnership over the project deed, the motorway stratum agreement to lease, the gantry land agreement to lease, the motorway stratum lease, the gantry land lease, the partners' undertaking, the deed of appointment of independent verifier, the contractors' side deed, the operator's side deed, the TCM operator's side deed, the Roads and Traffic Authority (RTA) Security, RTA consent deed, and all other project contracts. National Australia Bank Limited served as security trustee. CCB contributed $100 million AUD. In addition to CCB, the following lenders contributed to the loan syndicate: RBS (Australia) Pty Limited ($150 million AUD), National Australia Bank Limited (NAB) ($125 million AUD), the Australia Branch of WestLB AG ($125 million AUD), Bank of America, N.A. ($100 million AUD), BOS International (Australia) Ltd. ($100 million AUD), Commonwealth Bank of Australia (CBA) ($100 million AUD), Societe Generale Australia Ltd ($100 million AUD), Westpac Banking Corporation ($100 million AUD), Norddeutsche Landesbank Girozentrale (NORD/LB) ($65 million AUD), ANZ Investment Bank ($75 million AUD), KBC Finance (Ireland) ULC ($65 million AUD), and Dexia Credit Local Asia Pacific Pty Ltd ($45 million AUD). RBS, NAB, WestLB, and Bank of America served as lead arrangers. CCB, BOS International, CBA, Societe Generale Australia, Westpac, and NORD/LB joined as lead managers in syndication. ANZ Investment Bank, KBC Finance (Ireland), and Dexia Local Credit joined as managers in syndication. The initial loan was closed by the lead arrangers on March 7, 2003 before being launched in syndication. The nine banks joined in syndication during the sub-underwriting offered oversubscription, leading the arrangers to not launch retail syndication. The proceeds were used by the borrower to finance the construction of the $2.23 billion AUD ($1.34 billion USD) Westlink M7 Project, a 40 km four-lane ring toll road through the western suburbs of Sydney, New South Wales linking Hume Highway at Prestons in Sydney's south to Pennant Hills road and the F3 Freeway at West Baulkham Hills in Sydney's north. The road would have a toll of 0.25% per km, adjustable for inflation, conducted electronically. The project would save 65 minutes in journey time over the length of the road and help serve the commuter population in the western suburbs of Sydney. The Federal Government of Australia provided $356 million AUD for the finance. MIG and Transurban funded their equity stakes through CARS convertible preference securities ($430 million AUD convertible security issues for Transurban) and Macquarie secured its equity through a placement to the Ontario Teachers Pension Plan Board. A joint venture between Leighton Contractors Pty Limited and AbiGroup Contractors Pty Limited were responsible for project implementation on a construction contract, with a fixed price of $1.543 billion AUD and a term of 42 months; they each had a profit-sharing mechanism, that would sell a 5% effective interest to the larger sponsors, and could sell their stake for five years, subject to first refusal by the other two. A joint venture of Maunsell AECOM and SMEC was contracted for design work. Arup was subcontracted for design work. In August 2001, the Government of New South Wales issued a tender for a consortium to build-own-operate-transfer the project. It received bids in March 2002. In November 2002, it named WestLink as the preferred bidder. In February 2003, commercial and financial close and underwriting occurred. The project was scheduled to open in August 2006. The project opened on December 16, 2005.