Linklaters steers banks to success on troubled Ugandan project

Linklaters has advised the 10 lenders that brought the $867.7m (£439.4m) Bujagali power plant deal in Uganda to a successful close after the previous sponsor, AES, pulled out.

The firm won the instruction through an existing relationship with senior lender African Development Bank on smaller deals in the continent.

The withdrawal of developer AES’s sponsorship had led to the project stalling for some years, until a consortium led by Muslim investor the Aga Khan and private equity house Blackstone took over the reins. The consortium was advised by Chadbourne & Parke.

In the early stages of negotiation with the government this involved a Washington-based team led by Bob Shapiro, while London-based project finance partner Robin Mizrahi handled later aspects of the transaction.

Linklaters managing associate Martin Kavanagh, who led the Linklaters team along with energy and infrastructure partner James Douglass, said the deal was relatively complex from the lenders’ point of view.

“There were complex issues with transmission lines and the lenders having to get to grips with the fact that this was a true non-recourse project,” he added.

The 18-month turn-around from Linklaters’ initial instruction in May 2006 to project close was relatively quick considering the large number of multilateral investors involved, each requiring separate environmental and social assessments to be undertaken, and the fact that the sponsors were negotiating the engineering, procurement and construction contract until the end.

Senior debt of $613.8m (£311m) was provided by IFC, African Development Bank, European Investment Bank, Agence Francaise de Developpment, KfW, FMO, DEG, Proparco, Standard Charted Bank and ASBA Bank. FMO and Proparco also provided subordinated debt, which totalled $68m (£34m).