ICBC Asia contributes $91 million USD to a $2.503 billion AUD syndicated loan for the New Royal Adelaide Hospital PPP Project (Linked to Record ID#93485 and #96446)

Project narrative

On May 19, 2011, a syndicate of 15 banks — including the Industrial and Commercial Bank of China (Asia) Limited (ICBC (Asia)) — entered into a $2.50354 billion AUD ($2.68597 billion USD) syndicated senior loan agreement with SA Health Partnership Securitisation Pty Ltd (later renamed as Celsus Securitisation Pty Limited) — an Australia-incorporated special purpose vehicle (SPV) then jointly owned by InfraRed Infrastructure Fund III (30.58% equity stake), Leighton Contractors (19.9% equity stake), John Laing Group plc (17.26% equity stake), Uberior Infrastructure Investments Limited (17.26% equity stake), and Macquarie Capital (15% equity stake) — for the New Royal Adelaide Hospital Public-Private Partnership (RAH PPP) Project. This debt carried a tenor (maturity) of seven years, a final maturity date of May 18, 2018, and an interest rate based on and an interest rate of BBSY plus a margin between 245 basis points (bps) and 260 bps. ICBC (Asia) contributed $91 million USD to this loan. Record ID#93468 captures ICBC (Asia)'s contribution. In addition to ICBC (Asia), the following banks contributed the following amounts to the syndicate: Australia and New Zealand Banking Group (ANZ) ($273 million USD), National Australia Bank Limited (NAB) ($273 million USD), HSBC ($227.5 million USD), ING Bank N.V. ($227.5 million USD), WestLB AG ($227.5 million USD), Crédit Agricole Corporate and Investment Bank (CACIB) ($227.5 million USD), Intesa Sanpaolo S.p.A. ($217.6 million USD), Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) ($204.7 million USD), Lloyds Bank ($182 million USD), Société Générale S.A. (SocGen) ($182 million USD), DBS Bank ($136.5 million USD), Banco Santander, S.A. ($136.5 million USD), Bank of Ireland ($91 million USD), and Investec ($68 million USD). ANZ, NAB, WestLB, and CACIB served as mandated lead arrangers. The RAH PPP Project had a total cost of $3.1 billion USD ($2.9 billion AUD), broken down into the $2.8 billion USD senior debt and $396 million USD in equity by InfraRed Capital Partners Limited, Leighton Infrastructure Investments Pty Limited, John Laing Investments Limited, Lloyds Bank Corporate Markets, and Macquarie Capital Group Limited, for a debt-to-equity ratio of 88:12. The RAH PPP operated under a 35-year concession. The hospital would be handed over to the State of South Australia after 30 years. After the completion of construction, the South Australian Government would pay an average of $397 million AUD ($420 million USD) annually for 30 years to the sponsor, which was responsible for the non-clinical costs of the hospital's operation and maintenance. At the end of the concession in 2046, the hospital would be handed over to the South Australian Government. DDue to a delay in the completion of the project to 2017, refinancing the original debt upon the 2018 maturity was not feasible for the sponsors. Instead, the sponsors decided to seek to amend and extend the existing debt until refinancing could be achieved. On April 24, 2018, a syndicate of 28 banks — including the Industrial and Commercial Bank of China (ICBC) — entered into an amendment agreement with the borrower to extend the maturity period of the loan by two years and one months (a new maturity period of 9.083 years). Some of the original lenders did not participate in the extension, and new lenders participated. Record ID#93485 captures ICBC's contribution to this extension. In 2020, the same lenders — including ICBC — entered into an amendment agreement with the borrower to extend the loan by one year and nine months (a new maturity of 10.833 years), having a new final maturity of September 2021. Record ID#96446 captures ICBC's contribution to this extension. On July 14, 2021, financial close on a deal in which a syndicate of 18 banks — including the Bank of China (BOC) and ICBC — entered into a $2.2 billion AUD ($1.63997 billion USD) syndicated sustainability-linked loan (SLL) agreement with Celsus Securitisation Pty Limited — whose shareholders were now InfraRed Infrastructure Fund III (30.58% equity stake), AMP Capital (17.26% equity stake), Aberdeen Asset Management (abrdn) (27.21% equity stake), The Infrastructure Fund (15% equity stake), and MM Capital Infrastructure Fund 1 (9.95% equity stake) — for the New Royal Adelaide Hospital PPP 2021 Refinancing Project. This loan carried a maturity period of four years. BOC contributed $75.03 million AUD ($55.93 million USD) and ICBC contributed $130.05 million AUD ($96.94 million USD). Record ID#93486 captures BOC's contribution. Record ID#93487 captures ICBC's contribution. Then, on June 15, 2023, financial close was reached on a deal in which a syndicate of 14 banks — including BOC and ICBC — entered into a $2.124 billion AUD ($1.44597 billion USD) syndicated green loan agreement with Celsus Securitisation Pty Limited — whose shareholders were now Dexus Community Infrastructure Fund (CommIF) (58.69% equity stake), Dexus Healthcare Property Fund (DHPF) (9.95% equity stake), AMP Capital Core Infrastructure Fund (CIF) (4.15% equity stake), abrdn (17.26% equity stake), and MM Capital Infrastructure Fund 1 (9.95% equity fund) — for the New Royal Adelaide Hospital PPP 2023 Refinancing Project. This term loan carried a maturity period of four years, a final maturity date of June 15, 2027, and an interest rate of BBSY plus a margin of 140 bps. This loan was a green and social loan, issued under the principles of the Asia Pacific Loan Market Associations and the Loan Syndications and Trading Association. The proceeds were to be used by the borrower to refinance the existing $2.2 billion AUD syndicated loan from 2021. BOC and ICBC each contributed $155.06 million AUD ($105.56 million USD) to the loan syndicate. Record ID#101580 captures BOC's contribution. Record ID#101581 captures ICBC's contribution. The RAH PPP Project sought to construct a new 800-bed hospital, consisting of 700 multi-day beds and 100 same-day beds, with 172,000 square meters of fully-enclosed space, replacing the existing Royal Adelaide Hospital, which was first constructed in 1840 with a larger, more technological advanced facility. The new hospital, located on a nine-hectare site in Adelaide's West End, near the Adelaide Railway Station, between the North Terrace to the south, the River Torrens to the north, and the Morphett Street Bridge to the east, was designed with 11 floors and a footprint of 27,000 square meters; the structure is 370 meters long from east to west and 215 meters wide from north to south. The hospital featured 40 operation theatres of 65 square meters each, 181 recovery spaces, 78 emergency treatment spaces, and eight resuscitation spaces. The facility also included internal gardens, retail stores, restaurants, cafes, a bank, a post office, a gymnasium, a crèche, and rain and storm water conversation facility. The new RAH featured 100% overnight single patient rooms, more operating theatres, intensive care beds, and emergency care capacity than its predecessor. RAH would also included teaching and research facilities co-located with the new South Australian Health and Medical Research Institute. The new RAH was expected to receive 80,000 admissions annually. In addition to being a larger facility, the new RAH was designed to return three hectares of rail yards to the Adelaide Park Lands. The new RAH also featured advanced information and communication technologies (ICT) provided by Hewlett Packard that raised the total capital cost to $2.9 billion AUD beyond the initial estimates of a $1.7 billion AUD to $1.9 billion AUD project. These ICT technologies included automated guide vehicles and automated ordering systems to transfer supplies and decrease staff time spent on paperwork and electronic tagging of biomedical and clinical equipment for tracking purposes. The new RAH also had a target of a 50% reduction in greenhouse gas emissions compared to other hospitals. This was Australia's largest-ever hospital project. Hansen Yuncken and CPB Contractors, working in consortium as Hansen Yuncken CPB Contractors Joint Venture (HYLC) were responsible for the design and construction of the hospital. Spotless was an active participant in the design process and would provide non-clinical operations and maintenance services, such as cleaning, security, pest control, waste management, catering, patient support services, linen distribution, logistics, and engineering for the hospital upon its completion. A joint venture between Silver Thomas Hanley and DesignInc was responsible for the architectural design of the hospital building. Tract Consultants served as the landscape architect for the project. WG-KBR, a joint venture between Wallbridge & Gilbert Consulting Engineers and Kellogg Brown and Root Consulting Engineers, was responsible for the civil and structural engineering. BESTEC and Lehr Consultants provided engineering consulting services, such as mechanical, electrical, hydraulic, and fire. Enright Consulting served as the fire engineer for the hospital building. In November 2011, Hastie, Frigite Air Conditioning, and CDC Plumbing & Drainage won a contract for the provision of mechanical, medical gases, and hydraulic engineering services for five years. In April 2012, Nilsen won a contract for the provision of electrical and integrated communication services. The Government of South Australia released the tender for the RAH PPP in early 2008. SA Health Partnership won the bid in December 2010, and received Development Approval from the Development Assessment Commission (DAC) in South Australia soon thereafter. Construction was planned to begin in 2011. It was scheduled to be completed in April 2016. Construction began in September 2011. The opening of the hospital was delayed several times. The missing of the April 2016 deadline led to the State of South Australia to issue a default notice against the construction consortium; it withheld daily service payments of about $1 million AUD to the builders. Legal action followed, with a settlement reached in February 2017. The hospital reached technical completion in March 2017 and then commercial acceptance in June 2017. The Royal Adelaide Hospital had its ceremonial opening on September 3, 2017; it began accepting patients the next morning, September 4. The new Royal Adelaide Hospital was said to be Australia's most expensive building and the world's third-most expensive building. The exact final cost of the building was a point of dispute between the Government of South Australia and the builders; in September 2015, South Australia agreed to pay an additional $34.3 million AUD to remediate the site. The delays and cost overruns of the RAH PPP Project were subject to criticism, with attacks on the design flaws and mistakes, rises in labor costs due to union demands and threats of strikes, insufficient capacity for storage during the transition to the new building, and the lack of overnight beds for emergency care. The PPP model was also of specific criticism; South Australia's Public Sector Comparator, which estimates the costs for PPP projects had the government undertaken them, showed that taxpayers would have better off by between $80.4 million AUD and $188.5 million AUD over the concession. The government's figures stated that the PPP would provide a 5.7% benefit over the concession, a figure that observers noted could be wiped away by different inflation and risk assumptions.