International Public Partnerships Further Investment into Northern Diabolo Rail Link (5953J)
23 Diciembre 2020 - 1:00AM
UK Regulatory
TIDMINPP
RNS Number : 5953J
International Public Partnerships
23 December 2020
Further investment into Northern Diabolo rail link
23 December 2020
International Public Partnerships Limited ("INPP" or the
"Company"), the FTSE 250 listed infrastructure investment company,
announces that it has made an additional investment of EUR10
million and made a contingent commitment of a further EUR14 million
to the 100% indirectly owned special purpose company that owns the
Northern Diabolo Rail Link (the "Project" or "Diabolo"). Diabolo is
a rail infrastructure investment which integrates Brussels airport
with Belgium's national rail network.
The additional EUR10 million has been invested by the Company to
support the Project's liquidity position, ensure its debt covenants
will continue to be met, and ultimately protect the value of the
Company's investment. The likely need for this commitment has been
flagged previously.
As previously advised, Covid-19 has resulted in the number of
passengers using the Project being significantly lower over the
course of 2020 compared to previous years, and the reinstatement of
a national lockdown in Belgium at the end of October 2020 has
further impacted passenger numbers. Whilst Diabolo does not operate
train services, and part of its revenues are paid on an
availability basis, the larger part of its revenues, while paid by
the public authorities and not directly by passengers, are
nonetheless linked to the numbers of passengers that use either the
rail link itself or the wider Belgian rail network.
The Project's operational performance remains excellent.
However, without remedial action by the Company, the continued
lower than projected passenger numbers would be anticipated to
result in a liquidity shortfall and a breach of certain
formula-based debt covenants in early 2021. The Company has been
aware of this possibility for several months and has been
proactively engaged in discussions with the Project's lenders and
the Belgian state railway since the onset of Covid-19. Agreement
has now been reached to provide this additional funding to mitigate
the issues noted above.
The extent to which funding additional to the EUR10 million
investment is required will depend upon the timing of the recovery
in passenger numbers. There is naturally a high degree of
uncertainty inherent in future passenger projections so, with an
intention of prudence, the Company has allowed up to EUR24 million
in total to be made available should the Project require it. To the
extent that the full EUR24 million is not required, unutilised
commitments will be cancelled.
Despite the Covid-19 related issues the Project has encountered,
the investment remains strategically important for INPP and retains
a number of attractive investment characteristics including:
-- Historic strong performance with high levels of passenger use;
-- A remaining concession term of over 26 years;
-- High degree of inflation linkage;
-- Providing an essential service for travellers; and
-- Supporting the climate-positive modal shift towards the greater use of public transport.
The Company's valuation of the Project was reduced as at 30 June
2020 in recognition of the likely impact of reduced passenger
numbers. Further negative adjustments are not currently anticipated
to exceed the amounts of additional capital now being committed to
the Project but this position will remain under review.
The long term valuation and cashflow impact on the Company is
not straightforward to project as, besides the fact that ongoing
discussions continue with the Project stakeholders with respect to
mitigation, in the longer-term, the Project benefits from a
contractual mechanism which permits an adjustment to the future
passenger fee should passenger numbers and returns fall below a
certain threshold. This mechanism operated successfully earlier in
the life of the Project but, subsequently, the higher than forecast
passenger use during the period 2013 to 2019 resulted in returns
above the threshold at which this mechanism could be invoked. The
lower passenger numbers consequent on Covid-19 have not yet
rendered this mechanism available. However, this mechanism remains
an important downside protection for the remaining term of the
concession.
ENDS.
For further information:
Erica Sibree/Amy Joslin +44 (0)20 7939 0558/0587
Amber Fund Management Limited
Hugh Jonathan +44 (0)20 7260 1263
Numis Securities
Ed Berry/Mitch Barltrop +44 (0) 20 3727 1046/1039
FTI Consulting
About International Public Partnerships:
INPP is a listed infrastructure investment company that invests
in global public infrastructure projects and businesses, which
meets societal and environmental needs, both now, and into the
future.
INPP is a responsible, long-term investor in 130 infrastructure
projects and businesses. The portfolio consists of utility and
transmission, transport, education, health, justice and digital
infrastructure projects and businesses, in the UK, Europe,
Australia and North America. INPP seeks to provide its shareholders
with both a long-term yield and capital growth.
Amber Infrastructure Group ('Amber') is the Investment Adviser
to INPP and consists of over 130 staff who are responsible for the
management of, advice on and origination of infrastructure
investments.
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