White & Case advises Goldman on mega-Mexico PPP

White & Case strengthened its relationship with Goldman Sachs last week, in particular in relation to Latin American projects, with the closure of Mexico’s largest-ever infrastructure financing.

The record deal, one of the largest ever in the Americas, is a 30-year public-private partnership (PPP) financing of a package of toll roads totalling a distance of 550 kilometres across the states of Michoacán, Jalisco, Guanajuato and Aguascalientes.

A team headed by White & Case New York partner Tomer Pinkusiewicz was instructed by sponsors Goldman Sachs and Ingeneieros Civiles Asociados at the start of 2007, after Pinkusiewicz worked opposite Goldman on two earlier US infrastructure deals.

Pinkusiewicz said one of the unusual aspects of the toll road deal was that it was entirely funded in Mexican pesos even though the loan documentation was governed by US law.

“The benefit of White & Case having a very robust Mexico City office is that we are very used to advising on peso-denominated deals,” added Pinkusiewicz, “but we also clearly have New York capability.”

Partners Juan Manuel Gonzalez and Vicente Corta led White & Case’s team in Mexico City along with Ned Neaher in Washington.

The deal is significant not only because of its size but also because of what it suggests is to follow in the region. After the Mexican financial crisis in the mid-1990s, a significant number of private sector toll road concessions, financed by US dollar bonds, defaulted.

In August 1997, the Mexican government transferred 23 of the 52 concessions to a new governmental entity, Fideicomiso de Apoyo al Rescate de Autopistas Concesionadas (FARAC). This deal is the first of several packages of Mexican toll roads that are being re-privatised and which are likely to be financed via a PPP.

Allen & Overy New York partner David Slade, who led the firm’s team for lead lender Banco Santander, said the success of the deal suggested more toll roads deals in Mexico would follow.

“This is the first package but there will be more,” said Slade. “That’s why people are so excited.”