Clayton Utz, Freehills and Mallesons Stephen Jaques advised on Victoria’s A$759m Peninsula Link PPP – a deal that could revolutionise the way Australian road deals are structured.
Mallesons advised the Southern Way Consortium, which is made up of Abigroup, Bilfinger Berger and the Royal Bank of Scotland (RBS). Freehills advised the lenders while Clayton Utz advised the Victorian government.
The Southern Way consortium won the tender to build and operate the toll-free highway, which will be the first road PPP financed through an availability model. “It has the advantages of PPP delivery for government but at the same time removes patronage risk which has been an issue for the private sector on some road projects,” Clayton Utz lead partner Marko Misko said.
The innovative structuring also allowed the project to reach contractual close in record time – it took just nine months from issuing the EOI to signing the documents. “The Peninsula Link Project was negotiated and agreed relatively quickly,” Mallesons partner Jeff Clark said. “This was due in part to the Victorian Government’s decision to structure the project as toll-free with payments to be made as an availability charge and also to the improved outlook in financial markets.”
Misko said that all three bidders for the project had excellent financing solutions, which bodes well for other major projects across the country. “It was a very encouraging response and we think it augers very well for the infrastructure sector going forward,” he said.
The availability model will be a “great model for road projects going forward”, Misko said but he stopped short of saying that it signals the end of the traditional toll road model. The first infrastructure deal on which Clayton Utz advised the Victorian government was the City Link toll road in 1996. Misko said that City Link showed that there was still the opportunity for successful toll roads to be built in Australia.
Peninsula Link is the first major PPP project to reach contractual close since the A$3.7bn Victorian desalination plant. Clayton Utz and Mallesons also acted on that deal along with Allens Arthur Robinson, and Corrs Chambers Westgarth.
Mallesons has acted for the sponsors on a number of PPP deals, including Metro Trains Melbourne on its tender to operate the Melbourne Metro train system; ABN AMRO and Thiess as sponsors of the Royal North Shore Hospital PPP; and the Pinnacle Education SA Consortium on its successful bid for the South Australian Schools project.
Related stories: