BNDES - Brazilian Development Bank
   




BNDES releases indicative loan conditions for airport concessions

12/20/2016

Credit is conditioned to governance and monitoring requirements by an independent company certifying the adequate progress of the project.

The Brazilian Development Bank (BNDES) published the loan conditions for the concessions of the airports of Salvador, Florianópolis, Porto Alegre, and Fortaleza that will be auctioned by the National Civil Aviation Agency (ANAC), in accordance with the notice published on December 1st. 

According to the loan conditions disclosed by BNDES during the meeting of the Investment Partnership Program Committee (PPI), in September this year, BNDES will be able to finance up to 40% of the value of eligible items of the project in Long-Term Interest Rate (TJLP, in Portuguese), for a period of up to 15 years. The resources in TJLP will be used exclusively in investments required for improvement of airport infrastructure, as established in the First Cycle of the Airport Exploration Plan (PEA). The repayment schedule will use constant amortizations.

BNDES can complement its financial support up to 80% of the value of eligible items based on market costs, preferably by means of infrastructure bonds issued under Brazilian law. Each project must have at least 20% of equity (Information was updated on March 6, 2017).

The value of the credit will be determined according to the project’s cash flow generation, observing the compliance to the Debt Service Coverage Ratio (DSCR) of the project, with a 1.30 minimum. The project security package can be shared only with other credits intended exclusively to finance investments of the project, and will not be shared with debts in connection with the concession fee.

Governance requirements – In addition to the general loan conditions of airport concessions, BNDES will include the following mandatory governance requirements in its loan contract for the projects, in particular related to transactions with related parties (“TRP”):

  • TRP above a pre-defined amount will be subject to approval by the SPV’s Board of Directors (the Board), excluding members with potentially conflicting interests;
  • The Board  shall consider at least three proposals, with corresponding values and quantities, by companies with similar know-how before approving a TRP;
  • The Board shall have an independent committee to support the analysis of each TRP. The independent committee shall provide an opinion with its favorable or not favorable conclusion about each TRP.
  • The minority shareholders with at least 5% of the voting shares shall have the right to request an opinion by an independent entity, which shall be paid by the SPV.
  • The SPV shall disclose every TRP approved by its Board, which shall also be published in the quarterly financial results.
  • The fulfilment of TRP obligations shall be attested to by a yearly external auditor, to be paid by the SPV.

BNDES will also require disclosure of operational data on an internet website in a level of detail set by BNDES, with monthly updates and of accounting balance sheets, with quarterly updates. BNDES will include the obligation of contracting an engineering manager /certifier company in its loan contract, which will act on behalf of creditors, including bondholders, especially in the production of reports about the reasonableness of CAPEX (Capital Expenditure), physical progress of the project, reasonableness of hiring service providers, fulfilment of the concession obligations, enterprise risk management, and technical analysis of events that give cause to lawsuits with the grantor.

BNDES points out that the loan conditions are valid for the winners of ANAC auctions for the concessions of the four airports, planned for March 2017, which, however, does not necessarily imply the right to obtain the loan contract by the future winner of the competition. After signing the concession contract, the concession holder must claim the credit with BNDES, which will examine the KYC and credit risk situation of the claimant and of potential guarantors, as well as all legal, economic, and environmental aspects of the project presented.

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12/20/2016
BNDES releases indicative loan conditions for airport concessions
Credit is conditioned to governance and monitoring requirements by an independent company certifying the adequate progress of the project.