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P3 financing for Port Mann bridge uncertain
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by mike_yvr | January 16, 2009 at 08:18 pm
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A plan to privately finance the twinning of the Port Mann Bridge and widen Highway 1 through a public-private partnership (P3) appears to be on shaky ground.
The Australian financial partner in the scheme -- the market-battered Macquarie Group -- has been unable to secure financing for the massive transportation project and has asked the Province of B.C. for another month to complete the deal.
It's just the latest P3 transportation megaproject that's hit the skids as a result of the global credit crisis.
Last month, the British government was forced to bailout a major P3 deal to expand the M25 motorway near Carlisle when the Franco-Belgian bank Dexia failed to line up more $260 million (142 million pounds) in financing for the project.
Dexia was bailed out by the French and Belgian banks last year and is expected to be carved up by its creditors.
Dexia is also involved in the financing of two B.C. hospital projects as well as the Golden Ears Bridge.
Private financing arrangements to fund other highway and public transit projects in the U.K. are also at risk including upgrades to the London Underground.
Recently, a plan to build a major tunnel at the Port of Miami was scuttled when another embattled Australian P3 lender -- Babcock and Brown -- could not secure promised capital for the project.
Trading in B&B shares is currently suspended as banks negotiate the investment firm's survival.
The provincial minister in charge of the Port Mann project, Kevin Falcon, claims not to be concerned about the situation.
A missed financing deadline has raised doubt over whether the twinning of the Port Mann Bridge and widening of Highway 1 will proceed as a full private-public partnership (P3).
Connect BC Development Group was picked as the preferred bidder over rival groups last summer and a final contract was to have been signed with the province last fall.
But the banks lined up by the Macquarie Group, the Australian financing partner in the consortium, have so far refused to sign off on the project loan, which was to have been finalized Jan. 8.
Transportation minister Kevin Falcon, in a statement issued Wednesday, said the province has agreed to Macquarie's request for a one-month extension to complete the loan.
"This is in response to the current challenges facing capital markets," Falcon said.
"Macquarie advised government that they remain confident that they will be successful in completing lending syndication. The Province of B.C. will wait and see the results of the proponents' effort, but regardless remain committed to the Port Mann project utilizing alternative means of financing should that be necessary."
Falcon wasn't available for an interview and ministry staff say he's not speculating on whether the province might borrow money directly and terminate the financing component of the project.
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