Firms: Allens (Federal Government Department of Infrastructure and Regional Development); Ashurst (Sydney Motorway Corporation); and King & Wood Mallesons (senior lenders)
Deal: The Federal Government has made a concessional loan for the second stage of Australia's largest urban road project, WestConnex.
Value: $2 billion
Area: Banking and Finance/Government
Key players: Partner Phillip Cornwell (pictured) led the Allens team, which included Rob Watt (partner), Scott McCoy (managing associate), Darko Vranesevic (associate), Steven Faulkner (associate), Nicholas Condylis (lawyer). Allen’s construction and major projects team comprised Leighton O'Brien (partner), Susan Bentley (consultant) and Tanvir Ahmed (associate).
Deal significance: WestConnex is a 33-kilometre road project that will complete Sydney's Orbital Road Network. It is Australia’s biggest urban road project, with a total value of approximately $17 billion, and is to be delivered in three stages over 10 years.
According to a release by Allens, the Commonwealth funding of the project represents a new model for Public-Private Partnerships (PPP) in Australia, as it is the first major road project to receive concessional loan funding from the Federal Government. The funding will be drawn pro rata with, but rank behind, $1.5 billion in private senior bank debt funding of the project.
“What we saw in this case was a combination of significant upfront public sector grant funding, supplemented by long-term interest bearing Commonwealth government concessional loans designed to support private sector debt co-funding and provide a platform for future private sector equity investment,” said Mr Cornwell.
“Australian governments, both federal and state, have expressed a desire to find new ways of partnering with the private sector to fund infrastructure projects on a basis that will provide a return on public capital invested.
“Stage 2 of the WestConnex project is a perfect example of that, and is the first use of concessional loans, adopting a similar funding model to that used in transport infrastructure projects in the US.”