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Vasco da Gama Bridge

The Vasco da Gama Bridge funding project, with a total value of 897 million Euros, was mostly funded by the private sector under a "Build, Operate, Transfer" ("BOT") scheme.

A BOT project is normally funded by a mixture of private equity, through shareholders, bank loans, and sometimes with the aid of grants. The shareholders carry the risks but receive a return on their investment and dividends during the concession period, while the government's subsequent reward is to obtain an infrastructure it could not, otherwise, have financed from its budget.

The Vasco da Gama Bridge has been financed from the following resources:

  • European Union Cohesion Fund: 319 million Euros (35%);
  • European Investment Bank Loan: 299 million Euros;
  • Toll revenues from the 25 Abril Bridge: 50 million Euros (6.0%);
  • Others: (shareholders, government grants etc.): 229 million Euros (26%).


The term of the EIB loan was 20 years with no capital repayment over the first 120 months, guaranteed by the commercial banks for only 15 years. Of the project total cost, about 644 million Euros was for construction and the balance for maintenance costs of both crossings, payment of expropriated land, rehousing, and environmental projects.

On 3rd July 2000, Lusoponte and the Portuguese State signed an Agreement, which included a draft of Global Financial Rebalance Agreement (Global FRA), which allowed, after the Global FRA approval by the Court of Accounts, that any disputes with the Portuguese State would be settled, the duration of the Concession would be established and extended until 24 March 2030, and the set up of a Global Financial Rebalance Agreement (Global FRA) would be drafted, thus defining the six-monthly payments to be made over a period of 19 years in order to make up for the changes in the toll rates on the 25 de Abril Bridge.

Refinancing

On the same date that the Agreement was signed the refinancing of Lusoponte was approved. In very brief terms, the main objectives that were to be accomplished with the Refinancing were:

To fit the financing costs of the project with the new risk profile and to the projected revenues, once the Vasco da Gama Bridge is concluded, taking into consideration the financing current market conditions, to acquire funds to pay additional construction costs and to anticipate a part of the debt payment.

In fact, the original funding was negotiated in 1994, when the interest rates reached the highest levels of the nineties. Furthermore, the referred funding was established with fixed interest rates, which became not attractive when compared to the recent long-term market rates. Lusoponte looked for, and achieved, a negotiation with the European Investment Bank (EIB) the conversion of the original loans to a sole long-term loan in Euros, and guaranteed by commercial banks for a 19 years term. The EIB loan is for 21 years, with a refund profile in agreement with the projected Lusoponte's "cash-flows", being the EIB guaranteed only by the project risk on the last two years. At the same date, a second 19-year loan of 120 million Euros was contracted, in order to finance construction additional costs as well as the Refinancing costs. The financing structure after Refinancing is as follows:

The facility was guaranteed by Société Générale, BNP Paribas, Caixa Geral de Depósitos, Banco Comercial Português and BCP Investimento S.A. A secondary syndication for this facility, involving 14 banks, took place in November 2000.

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