German construction company Hochtief AG (HOCFF.PK) Friday said a consortium comprising its North American subsidiary Hochtief PPP Solutions and Spanish parent ACS Actividades de Construccion y Servicios SA (ACSAF.PK) has reached the financial close for a ring road project in Edmonton, Canada. The contract worth 1.39 billion euros or C$1.81 billion was secured jointly by Hochtief, Flatiron, ACS and Dragados.
As per the agreement, the public-private partnership or PPP will design, build, operate and partially finance the Northeast Anthony Henday Drive project over 34 years. The current Anthony Henday Drive project began in 2000 with the construction of the southwest section, while sections of the ring road were built in the 1970s and the 1990s. The contract was awarded following the selection process which began in March 2011.
Under the project, the companies will construct 27 kilometers of six and eight-lane divided roadway, nine interchanges, two road flyovers, eight rail crossings, and two bridges across the North Saskatchewan River, for a total of 46 bridge structures. Construction will commence in June 2012, with completion of the project scheduled for the fall of 2016.
The construction work of the project will be subcontracted to a joint venture which includes group subsidiaries Flatiron and Dragados, in which each hold a 33.75 percent share.
Hochtief and ACS each hold a stake of 25 percent in the concession company - the infrastructure investor and operator unit that handles airports, roads, social infrastructure/public-sector building construction and further PPP projects .
Frank Stieler, Chairman of the Executive Board of Hochtief, said, "We are benefiting from the strength and expertise of the alliance between HOCHTIEF and ACS. Together, we can provide most of the services required to fulfill this contract, and that is why the client has selected us. We are thus responsible for another transportation project and are profiting from our corporate alignment."
The company noted that the PPP project will be financed by the issuance of a bond which has been placed extremely successfully: The C$535 million bond issue, which has received an A- rating, was met with great interest on the part of investors and was over-subscribed, it said.
According to the company, CIBC World Markets and National Bank Financial acted as joint leads in fully underwriting the senior secured project bonds required to fund the project.
Hochtief shares are currently trading at 36.83 euros, down 0.25 euros or 0.67 percent on Frankfurt's Xetra.
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