ICBC contributes $300 million AUD to a $3.350 billion AUD syndicated loan for the Melbourne Metro Tunnel and Stations Phase I (9KM) Public-Private Partnership (PPP) Project (Linked to Record ID#94697)

Project narrative

On December 18, 2017, financial close was reached on a deal in which a syndicate of 10 banks — including the Bank of China (BOC) and the Industrial and Commercial Bank of China (ICBC) — entered into a $3.350 billion AUD ($2.56524 million USD) syndicated term loan agreement with Stella MMTS Finance Pty Limited — a special purpose vehicle (SPV) — for the Melbourne Metro Tunnel and Stations Phase I (9KM) Public-Private Partnership (PPP) Project. This loan carried a maturity period of seven years and nine months (7.75 years) and a final maturity date of September 18, 2025. BOC contributed $400.00 million AUD ($306.30 million USD) and ICBC contributed $300.00 million AUD ($229.72 million USD). In addition to BOC and ICBC, the following banks contributed the respective amounts to the loan syndicate: Australia and New Zealand Banking Group (ANZ) ($465.00 million AUD; $356.07 million USD), Credit Agricole CIB Australia Limited ($465.00 million AUD), Mizuho Bank ($465.00 million AUD), Westpac Banking Corporation ($465.00 million AUD), DZ Bank AG ($50.00 million AUD ($38.29 million USD), Canadian Imperial Bank of Commerce (CIBC) ($225.00 million AUD; $172.29 million USD), United Overseas Bank Limited (UOB), and Crédit Industriel et Commercial (CIC) ($150.00 million AUD; $114.86 million USD). KfW IPEX-Bank GmbH also contributed to towards the loan. Record ID#94697 captures BOC's $400 million AUD contribution. Record ID#94698 captures ICBC's $300 million AUD contribution. The State Government of Victoria entered into the PPP agreement with Cross Yarra Partnership (CYP) on December 16, 2017 for the financing, design, construction, and maintenance of the project over a 25-year concession under an availability-based PPP framework. CYP is an consortium between Lendlease Engineering Pty Ltd (25%), Bouygues Construction Australia Pty Ltd (25%), John Holland Pty Ltd (25%) – which is owned by Chinese state-owned China Communications Construction Company, Ltd. (CCCC) – and Capella Capital (25%), specifically consisting of a design and construction unincorporated joint venture of Lendlease Engineering, John Holland, and Bouygues Construction Australia, John Holland as the maintenance subcontractor, and Capella Capital as the financial sponsor. The Melbourne Metro Tunnel and Stations Phase I (9KM) PPP Project had an cost of $6 billion AUD. In addition to the $3.350 billion AUD in debt, the sponsors provided $1.650 billion AUD ($1.26348 billion USD) in equity, with each sponsor providing $412.50 million AUD ($315.87 million USD). Additionally, the State Government of Victoria would supply up to $2.5 billion AUD in capital contributions to CYP in tranches until provisional acceptance, after which it would provide $1.5 billion AUD to CYP. The proceeds of the debt were used for the development of the Melbourne Metro Rail located in Victoria, Australia. Specifically, the project involved the construction of twin 9-kilometer long rail tunnels between South Kensington and South Yarra as part of a new end-to-end Sunshine-Dandenong line and five new underground stations at North Melbourne (Arden), Parkville, State Library in the north of Melbourne's Central Business District (CDB) and with a pedestrian connection with Melbourne Central Station, Town Hall in the south of Melbourne's CDB and with a pedestrian connection with Flinders Street Station, and Anzac (Domain); this development would connect passengers in the precedents of Arden, Parkville, and Domain with heavy rail for the first time and relieve the congested Swanston Street / St Kilda Road tram corridor, the world's busiest. Alongside other upgrades to the Melbourne rail network, the Metro Tunnel Project would enable more trains to run in and out of Melbourne on the Sunbury, Cranbourne, Pakenham, Werribee, Craigieburn, Upfield, Sandringham, and Frankston lines and carry 39,000 additional passengers during the peak period. This was Victoria's largest public transport project and the biggest enhancement to the Melbourne CDB rail network since the construction of the City Loop 30 years prior. The design and construction unincorporated joint venture of Lendlease Engineering, John Holland, and Bouygues Construction Australia was responsible for the implementation of tunnels and stations. John Holland served as the maintenance subcontractor. Metro Trains Melbourne Pty Ltd., the train franchisee and operator of the Melbourne rail network and a joint venture between Hong Kong-based MTR Corporation (60%), John Holland Group (20%), and UGL Rail (20%), was responsible for the provision of advice and safe access to the rail corridor and management of disruptions to train services. Lendlease, alongside Scape, was also responsible for the development of mixed commercial and retail oversite development, including student housing and office space, at the State Library and Town Hall Stations, which, while not part of the PPP contract, was packaged together with the Tunnel and Stations PPP works for efficiency purposes. Construction on the Tunnels and Stations PPP package began in 2018. The project was planned to be completed by 2025. In December 2020, the State Government of Victoria and CYP entered into amending and settlement deeds to resolve various commercial issues related to the project; in it, both parties agreed to share increased costs of the project on a 50:50 basis ($1.37 billion AUD each) and resolve outstanding legal claims.