Lovells' focus on Portuguese projects pays off with EIB job

Lovells has broken new ground in Portugal, acting for the European Investment Bank (EIB) on the first monoline-wrapped bond refinancing of a Portuguese shadow toll road (Scut) project.
Refinancing arrangements comprise a euro130m (£81.44m) loan from the EIB, a euro126.5m (£79.25m) bond issue and a working capital facility of euro25m (£15.66m), which is provided by Banco Santander Central Hispano and HypoVereinsbank. The EIB loan and the bond issue are guaranteed by US monoline insurer XL Capital Assurance to AAA level.
The original financing for the project was established last year and the concession was granted to Portuguese project company Euroscut.
Refinancing was always going to be necessary to minimise the risk and increase the appeal for investors. Shibeer Ahmed, who led the Lovells team, said: “It was felt that it would be easier to market the bond with this guarantee.”
The deal was complicated by Portuguese securities law restrictions. In order to overcome these difficulties, the refinancing took place through a Dutch special purpose vehicle, Algarve International.
Local firms handled the first round of financing to see the project through its inception phase. When the EIB became interested in the refinancing it put the work out to tender among its panel firms, with Lovells winning the instruction.
The cross-border complexity of the transaction made it a magnet for law firms. Freshfields Bruckhaus Deringer advised Euroscut and Algarve International, Slaughter and May represented the lead manager and the bond trustee and Debevoise & Plimpton acted for XL Capital Assurance.
Ahmed said: “It was good because it involved a lot of people and we all just got on with it. It was one of those deals where everyone needed to get involved in order to see it through.
“I expect that a number of the existing and proposed Portuguese toll road projects will be financed or refinanced using a structure similar to that adopted for the Algarve project.”
Portugal has become a lucrative market for Lovells. The country is the recipient of considerable EU investment for infrastructure development; and also like Greece, the country has an abundance of projects work. In addition to the Scut project, the firm is acting for one of two shortlisted bidders on another toll road project.