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Green Chairs Panel at Euromoney Institutional & Alternative Lender Conference

 

Monday, September 23rd, 2013

In the conference season, Jason Green, Senior Advisor at Portland, chaired a panel discussion amongst institutional investors and asset managers at Euromoney’s inaugural Institutional & Alternative Lending conference in London on 19th-20th September.

With representatives from Allianz Global Investors, Legal & General Investment Management, Aviva Investors and the world’s largest asset manager, Blackrock, Jason guided the panel through a lively discussion of how the big institutions are providing liquidity to Global Project & Infrastructure deals in the wake of continued bank market weakness.  Topics covered included the growth of privately-placed institutional debt as an alternative to bank finance and traditional public securities, the increased acceptance by pools of investors of greenfield project risks and some of the implications of Solvency II on institutional appetite.  Many of the top credit managers, opportunities funds and direct lending institutions, all known to Portland Advisers, were present.  They are playing a growing and increasingly important role in global financing markets, not only in addressing market failure, but as key providers of liquidity for high quality, long term projects.

For further information see the Euromoney Conference website here or contact Jason directly on +44 (0) 20 7183 8288 and at Jason.green@portlandadvisers.com

 

By Nick Flitterman

Knox acts as Expert Witness

Geoff Knox acted as an expert witness to the Supreme Court of Western Australia in the recently settled $3.5 billion lawsuit filed by Perdaman Chemicals against an Australian subsidiary of Lanco Infratech Limited.

Geoff was approached to use his experience of raising non-recourse project financing for major projects to provide input into matters surrounding the debt financing of the financing of Perdaman’s proposed $3.8 billion urea project at Collie, Western Australia, which collapsed in 2011.

For further information click here

 

 

By Nick Flitterman

BBC seeks Portland perspective on Sir Alex’s retirement

Following the official announcement by Sir Alex Ferguson that he will retire from his position as manager of Manchester United at the end of the current season in favour of a role as Director and Club Ambassador, Portland’s Head of Stadium Finance, Harry Philp, was sought out by the BBC to reflect on the impact this may have on Manchester United’s commercial strategy.

The full article can be found by clicking here.

For further thoughts and insight, contact Harry directly on +44 20 7183 8392 or at harry.philp@portlandadvisers.com

 

By Nick Flitterman

US Ex-Im Bank board approves Indian Solar PV project

US Ex-Im Bank has announced that its Board of Directors has approved an export finance loan of US$ 9 million as part of the debt financing for a 11.6 MW solar PV project in Rajasthan, India sponsored by KSK Energy Ventures, an Indian power developer. Debt is being co-financed by IDBI Bank Ltd. Portland Advisers is acting as financial adviser to US Ex-Im Bank.

The solar panels for the project have been procured from Miasolé, a pioneer in the development of copper indium gallium selenide (CIGS) thin-film PV solar panels which are among the highest-efficiency and lowest-cost solar panels.

Click here for the official press release from US Ex-Im Bank.

For further information contact geoff.knox@portlandadvisers.com

 

 

By Nick Flitterman

Portland Thought Leadership in Nuclear Power financing

David Stearns, who leads Portland’s nuclear power practice, recently published a thought piece in Nuclear Intelligence Weekly, offering perspectives on nuclear power as an asset class and the outlook for attracting low-cost capital for new-build projects.

A copy of the article can be found by clicking here.

For further information, contact David at david.stearns@portlandadvisers.com or on +44 20 7183 9764.

 

By Nick Flitterman

Flitterman Chairs Panel at TMT Finance Conference

In the conference season, Nick Flitterman, Portland’s Head of Telecom’s, chaired a panel discussion amongst bankers and financing executives at TMT Finance’s annual M&A forum in London on 14th March.

With representatives from BNP Paribas, Investec, the EBRD, Digital World Capital and Houlihan Lokey, Nick guided the panel through a lively discussion of topical financing issues including the high level of liquidity in the leveraged bank market for telecom credits, the ups and downs of the high yield bond market and needs of banks as they assess credit proposals for telecom infrastructure projects.

For further information see the TMT Finance website here or contact Nick directly on +44 (0) 20 7183 8385 and at nick.flitterman@portlandadvisers.com

 

By Nick Flitterman

Portland Panelist at Telecom Finance 2013 Conference

On 30th January, demonstrating his continued thought leadership in the sector, Nick Flitterman, Portland’s Head of Telecoms, joined a distinguished panel of bankers and finance executives at Telecom Finance’s annual conference in London to discuss a number of topical issues and trends in financing telecom infrastructure projects today.

The panel debated topics such as pressure on bank margins, growing use of ECAs in the sector, the improving level of liquidity in the bank market as European banks start to re-enter the fray, and the increasing presence of Chinese banks in funding telecom projects.

For further details see the Telecom Finance website here or contact Nick directly on +44 (0) 20 7183 83 85 or at nick.flitterman@portlandadvisers.com

 

By Nick Flitterman

GAP gets DFID “Green Light”

In November 2012, the Green Africa Power (“GAP”) initiative received approval from the Department For International Development (“DFID”) for the UK’s proposed contribution to GAP, a new company to be established under the Private Infrastructure Development Group (“PIDG”) Trust.

A substantial amount of funds have been dedicated to help capitalise GAP which will support the implementation of Renewable Energy projects in power starved Sub-Saharan Africa. GAP’s support will be through the provision of deeply subordinated equity tranches into project companies and / or the issuance of guarantee products to cover specific project risks which could facilitate successful financing for such projects. GAP will also enter a policy dialogue with host Governments to help move participating countries towards cost-reflective tariffs.

Portland Advisers, in conjunction with Trinity LLP, an Africa-focused law firm, assisted in the preparation of a business plan and detailed financial model on behalf of PIDG (see our press release in Sept 2011). This business plan formed the basis for DFID’s internal business case in obtaining approval to proceed and invest UK donor capital.

Portland Advisers, in co-operation with Trinity, will remain closely involved with GAP during the next phase of its implementation process. Further news to follow.

For further information please contact either Klaus Frietsch (klaus.frietsch@portlandadvisers.com / 020 7183 8394) or Darryck Luiz (darryck.luiz@portlandadvisers.com / 020 7183 8391)

By Nick Flitterman

Portland advises on Welsh National Broadband project

In a team lead by Frauke Bialokoz, Portland Advisers has been advising the IT Procurement Team in the Welsh Government on the Next Generation Broadband for Wales (NGBW) project.

Following a competitive process BT was awarded the Next Generation Broadband project for Wales in July 2012 , subject to European State Aid approvals. Following completion (scheduled for the end of 2015), 96 per cent of businesses and homes in Wales will be able to access a fibre-based broadband service. The project will specifically target the 52% of premises in Wales for which there is currently no planned commercial roll out of broadband. It will build on commercial investment already made or planned by the private sector.

Portland Advisers acted as financial adviser to the Welsh Government’s procurement team, providing advice from the early stages with soft market testing to the procurement itself where we were involved throughout by developing evaluation criteria and methodology, providing commercial input into the documents and assisting with all financial aspects of the competitive dialogue process.

An announcement by the Welsh Government regarding the EC decision approving the UK’s National Broadband schemes from November 2012 can be found here.

For further information contact Frauke at frauke.bialokoz@portlandadvisers.com or on +44 20 7183 8386.

By Nick Flitterman

Portland’s David Stearns interviewed on BBC News at 10

With the announcement by Hitachi of their acquisition of Horizon’s land and development rights to build multiple nuclear power stations in the UK in the coming years, Portland’s senior advisor on nuclear power, David Stearns, was approached by BBC News for his views.

Part of David’s interview can be found 1 min 33 secs into the news item, which can be accessed using the link below.

https://www.bbc.co.uk/news/business-20149476

For further information and insight, contact David directly at david.stearns@portlandadvisers.com or +44 20 7183 9764

seabras-1 – risk and insurance

Introduction

 

This document is based on discussions with officers of Seaborn Networks LLC and upon review of the ASN Supply Contract. Its purpose is to describe the general nature of physical, insurable, risk to which the Project may be exposed. As such this document will be of interest both to Seaborn Networks internally and also to their advisors and proposed financiers, but cannot be relied upon by any reader other than Seaborn Networks LLC to which our duty is solely due in accordance with our terms of appointment dated October 2012.

 

Background

 

The Project: Seabras-1 is a four fiber pair 32 Tbps submarine fiber optic cable system to be built between Wall Township, New Jersey and Santos, Brazil, with a branching unit landing in Fortaleza, Brazil. Physical completion is currently planned for July 2014, with operational activation in Quarter 1 2015.

 

The project is currently sponsored and managed by Seaborn Networks, LLC with offices at 100 Cummings Center, Suite 435-P, Beverly, MA 01915. As of October 2012 this space is utilised primarily as meeting space, with desks occupied by the CEO and COO, but by July 2013 it may be the office base for a total of 11 general and administration staff and will grow to 19 by June 2014. [is either CEO / COO employed by Seaborn Networks? when will the first staff arrive?]

The Engineering and Network Operations heads will be based at the network operations center (NOC), but as of October 2012 the specific location of the NOC remains to be determined. For planning purposes, it is intended that the primary NOC will be in South Florida (greater Miami area) and that the CTO and General Counsel will have offices there. By end 2013 there will be 2 Engineers at the NOC, growing to 5 with 8 operations staff by end 2014, but will grow by December 2015 to 8 engineering and 27 operations plus the CTO and GC.

 

The corporate structure of Project ownership and management once the system is operational is currently un-finalised, but planning assumes that the structure will include local Brazilian and US entities, respectively referenced as Seaborn Networks Brazil and Seaborn Networks International.

It is the Project’s intention that the Seabras-1 cable landing stations will be located at (a) the Wall Cable Landing Station, Wall Township, New Jersey, USA (b) Telefonica’s cable station in Fortaleza, Brazil (“Fortaleza Landing”) and (c) Telefonica’s cable station in Santos, Brazil (“Santos Landing”). It is planned that while the Project will retain ownership of the land cables and the system-specific equipment within the landing stations, via SN Brazil and SN International, engineering maintenance and insurance will be contracted-out to the bailee landing station parties, which for these purposes will act as agents to the owners (reporting to the NOC engineering staff for system administration purposes).

 

The Project timetable is already underway, with the signature in September 2012 of a turn-key supply contract with Alcatel-Lucent Submarine Networks (ASN) and the issuance to them 26th September 2012 of a Notice to Proceed relating to pre-lay planning to result in a desk-top study and detailed routing proposals by end December 2012. Detailed surveys are planned to be finished by April 2013; Cables ready to load August 2013 and the marine lays finished by end May 2014. Land cables and equipment should be installed in each landing station, New Jersey Fortaleza and at Santos contemporaneously from December 2013 and should be complete by end March 2014, to be ready for the respective submarine cable.

 

Retained and allocated risk exposures during installation

 

Design of physical systems and routes is allocated to ASN under the turn-key Master Supply Contract, under which the configuration and performance specifications (against which ASN is to build or procure) are set out.

Procurement, lay and installation of all components is allocated to ASN under the Master Supply Contract, under which ASN retains full title and responsibility for its security, upkeep and maintenance until Provisional Acceptance.

Some permits are the responsibility of Seaborn to procure, while most are allocated to ASN to procure. During the survey period prior to commencement of the ocean lay the existence of submarine utilities and their identities will be discovered. Seaborn will then decide upon to appropriateness of negotiations with that utility for crossing rights and, if appropriate, will proceed to obtain a Crossing Agreement in the standard trade format.

After completion and testing, when Provisional Acceptance is agreed title to the Seabras-1 system will transfer to Seaborn Networks companies (subject, of course, to proper payments) and with it all risk related to the system will also transfer to Seaborn.

 

Under the Supply Contract, ASN is obliged to insure (as described in Schedule 7):

Comprehensive General Liability in an amount of USD10,000,000 any one accident and in the aggregate (implicitly in respect of ASN’s operations other than are shipboard, which will be covered by the P&I insurance)

“All Risks” insurance in the replacement amount of the cable system

Charterers’ Liability insurance in an amount “appropriate” to ASN’s exposure related to a chartered vessel

P&I on the vessel used by ASN, including all third party liability arising out of its Specialist Operation

“Hull & Machinery” insurance (implicitly covering damage to the vessel) in the amount of the full value of the vessel.

 

Accordingly, during installation, from Notice to Proceed until Provisional Acceptance, full risks of damage (fortuitous or otherwise) to the system and liabilities to third parties incurred by ASN arising out of the works would in theory be protected by these insurances.

These insurances do not cover the consequences of delay caused by any of the covered fortuities. Most fortuities would fall under one or other of the “force majeure” risks (per clause 15.1).

Under clause 10.1, each party indemnifies the other for all losses or liabilities for death, personal injury or property damage arising out of any breach or negligent or otherwise wrongful act or omission by them.

In order to avoid subrogation, Seaborn has or will requested that ASN procures the addition of Seaborn as jointly insured on all property insurances and as insured principal on all liability insurances.

For their part, as office occupiers, Seaborn has or will procure an annual “office insurance package” in respect of each of their offices (currently only at Cummings Centre, Beverly) covering their property (of which they currently have none) and their public liability, together with WCA and Employer’s Liability in respect of their staff (of which they currently have none).

As marine ASN operations commence, Seaborn will additionally procure maritime Third Party Liability for the Project in an amount of USD25,000,000 any one accident or occurrence (unlimited in number of occurrences) for the period until Provisional Acceptance.

Seaborn will also procure Maritime Employer’s Liability in an amount of USD10,000,000 any one accident or occurrence (unlimited in number of occurrences) from the time their first representative goes onboard the layship.

With respect to any Crossing Agreement calling for insurance of strict liability accepted by Seaborn (as the crossing party), Seaborn will also procure Liability insurance in an amount of the agreed cap (typically for any one accident or occurrence but unlimited in number of occurrences) from the time of commencement of lay, or of later signature of the respective Agreement.

 

 

Retained and allocated risk exposures after Provisional Acceptance

 

After transfer of title and risk to Seaborn, it is intended that an Area Maintenance Agreement (AMAs) is signed, whereby all fortuitous damage (whether of internal / defect or external cause) will be repaired by the service company. AMAs are typically arranged as a form of mutual benefit structure whereby members contribute to the overall costs of procuring and maintaining ships and engineering expertise capable of regular visits and surveys of the members’ cables. The AMAs also provide response services triggered by fortuitous damage, which accrue additional contributions from that cable’s member.

The appropriate AMA for Seabras-1 would be ACMA (the Atlantic Cable Maintenance and Repair Agreement).

As part of the desktop study undertaken by ASN will be an expert technical estimation of the frequency of damage by shipping or fishing activities along the cable route, as mitigated by recommended burial or other defensive strategies.

It is currently estimated that the range of repair costs would be between USD130,500 for a 2.5 day shallow water outage, to USD450,000 for a 9 day deep water outage (including 6 days mobilisation / transit). Seaborn currently plan to absorb this exposure without insurance, but await review of the desktop study.

Meanwhile, as owner and operator of an international submarine cable, even though their exposure to directly incurred personal injury is insignificant, Seaborn recognises that it has an exposure to ship or fishing vessel sacrifices under the local enactments of the Submarine Telegraphs Convention 1884. Accordingly Seaborn plans to procure annual Third Party Liability Insurance in respect of the submarine cable (between beach manholes) for an amount of USD25,000,000 any one accident or occurrence (unlimited in number of occurrences)

 

As office occupiers, Seaborn has or will procure an annual “office insurance package” in respect of each of their offices (at Cummings Centre, Beverly and for the NOC and for one or both of Santos and Fortaliza, Brazil) covering their office property and their public liability, together with WCA and Employer’s Liability in respect of their staff (of which they currently have none).

With respect to any Crossing Agreement calling for insurance of strict liability accepted by Seaborn (as the crossing party), Seaborn will also procure Liability insurance in an amount of the agreed cap (typically for any one accident or occurrence but unlimited in number of occurrences) annually from the provisional acceptance.

 

Meanwhile, under the Supply Contract (Clause 8. Warranty) ASN has continuing responsibility to complete “punch-list” items and to correct defects if and as they appear at their cost and expense. Their obligations with regard to the litany of insurances in Schedule 7 are not interrupted by the provisional acceptance and risk transfer, with the implication that there will be such insurance available to protect each incidence of repairs.

 

It is anticipated that within the sales strategy currently adopted by Seaborn, of selling long-term indefeasible rights of use (IRUs), the protection of interruption to the ongoing (operating and maintenance) revenue stream by insurance of fortuitous incidents would be uneconomical if available (which is uncertain). [would a 9 day interruption be reflected in reduced O&M payments anyway?]

 

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