Paris Office Advises Lenders on €620 Million Marseille Road Project

October 15, 2013

The French State signs 30-year public-private partnership (PPP) contract for the financing, design, construction and maintenance of the A507 motorway (L2 Bypass), a 10 kilometer toll-free urban expressway.

It was recently announced that the French State (Ministry of Ecology, Sustainable Development and Energy) signed a 30-year public-private partnership (PPP) contract with a project company for the financing, design, construction and maintenance of the A507 motorway (L2 Bypass), the investment cost of which is approximately €620 million. Willkie advised the project lenders Allianz Global Investors (and funds managed by Allianz GI), Crédit Agricole Corporate & Investment Bank and Société Générale in the deal.

The project company is formed by Bouygues Construction group affiliates (Bouygues Travaux Publics, the consortium leader Bouygues Travaux Publics Régions France, DTP Terrassement and Bouygues Energies & Services), Colas Midi-Méditerranée, Spie batignolles, Egis, Meridiam Infrastructure and CDC Infrastructure, all of which were members of the bidding consortium.

This new 10 kilometer toll-free urban expressway will significantly decongest the city of Marseille and will link the A7 motorway, leading north to Aix-en-Provence, and the A50, an eastbound motorway leading towards Aubagne and Toulon.

The financing for the project is implemented under an innovative and complex arrangement that is unprecedented in France for a project of this nature as it is based on the issuance of a tranche of project bonds (€78 million) directly by the project company and another tranche of project bonds (€84 million) issued by a Fonds Commun de Titrisation (FCT – a securitization conduit regulated by French law), which refinances a bank loan made in consideration of irrevocable rental payments to be made by the State and assigned as security for such financing. These project bonds have been privately placed with a number of funds managed by Allianz Global Investors, which act as the main lenders in this transaction.

An equity bridge loan and a VAT credit facility were structured and put in place by Crédit Agricole Corporate & Investment Bank and Société Générale to finance the project VAT costs and bridge the equity to be contributed by the project company’s shareholders. The rest of the L2 financing is made available by the French State and the Region in the form of public subsidies.

The Willkie team was lead by partners Thierry Laloum, Amir Jahanguiri and senior associate Michaël Armandou and included partner Vincent Brenot, special European counsel Driss Bererhi, and associates Lamia Benzine, Anne-Laure Barel, Emilie Patoux and Hugo Nocerino.