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Thinking Outside the Cell
Plan The second half of the Writer's 37 years career at Commonwealth Bank was in Infrastructure Finance. Syndicates of first ranking banks and/or second ranking bondholders funded 'Joint Venture' SPVs that had received an Information Memorandum from an 'Arranger Bank'. An 'Arranger Bank' such as Macquarie Bank, Investec, or one of the Four Pillars, would invite global commercial banks to lend money to a prospective Greenfield or Brownfield infrastructure project such as the - * Joint Venture of Transfield and the Japanese tunneling company, Kumagai, that built the Sydney Harbour Tunnel over 26 years ago; or * $3.95b First Ranking Debt when Federal Airports Corp. privatized Sydney Airport to Macquarie Airports Group which 37 global banks funded.
An Information Memorandum or I.M. is a document, ranging from 50 to 150 pages, typically prepared by the 'Arranger Bank' with the assistance of the Sponsors (usually comprising one or more Equity Investors, Major Construction Companies (eg. BHP Billiton, Leighton Holdings, Transurban).
Once prepared and approved by the Sponsors, the Arranger Bank provides the I.M. to potential syndicate debt providers and subordinated debt providers, after each executes a 'Confidentiality Agreement'. The Sponsors assists the Arranger in writing the Information Memorandum on the basis of information provided by the Sponsors during the 'due diligence' process. The I.M. contains a commercial description of the 'Senior Borrowers' business, management and accounts, as well as the details of the proposed loan facilities and funding structure.
See: Six P's of Project Progress
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