Autopistas del Nordeste

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In December 1999 the Secretary of Public Works and Communications awarded a 30 year BOT contract to Autopistas del Nordeste C. for the design, construction, operation, and maintenance of a 106 km toll road to connect Santo Domingo with the country’s northeastern peninsula. The contract which was identified as a concession under the country laws was the country’s first-ever highway license. The project was designed to lower transportation costs by reducing distance and travel time from 220 km and four hours to 120 km and 1.5 hours respectively. The project company, Autopistas del Nordeste C. por A., was controlled by Colombian Grupo Odinsa (42.5%) and also owned by Dominican construction firm Consorcio Remix (37.5%) and Colombian Grodco SA (20%). The contract was awarded through an international bidding process. But no additionally information was publicly available. The project company and the Secretary signed the BOT contract on July 18th 2001. The estimated projec cost by Odinsa, the leading sponsor, was US$250 million. The financing structure agreed for the project was as follows: 20% of construction cost to be financed by a government contribution. Those resources were to be managed by an international financial entity through a trust fund. 20% of construction cost to be financed by a contribution from the concessionaire. 60% of construction cost to be financed through long term debt. 100% of financing and other costs to be financed through long term debt. The project reached financial closure in February 2006 with the issuance of US$162 million in senior notes, underwritten by Morgan Stanley and rated by Fitch in February 2006. The financing was raised in the form of senior secured notes issued pursuant to Rule 144A and Regulation S of the US Securities Act. Morgan Stanley acted as underwriter. The notes have a 20 year legal maturity and a 13 year average life. The debt was rated B by Fitch Rating, one notch above the sovereign ceiling. The issuance was a structured finance deal backed by future toll revenues. The financing was innovative because it was the first-ever bond issue for project finance covered by MIGA. In March 2006, MIGA provided $108 million in political risk insurance for the development of a toll road in the Dominican Republic. The insurance covers portions of a $14 million equity investment in and a $162 million bond issue for Autopistas del Nordeste C. Por. A. The coverage was for up to 20 years against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract. Tariffs were defined in Dominican pesos and were indexed to local inflation. Under the concession contract, the Government assumes the Project’s traffic risk and guarantees the Company a minimum level of revenues sufficient to cover certain project payments. Excess revenues beyond the minimum guaranteed revenues were to be shared between the Company and the Government, through a formula designed to give both the Company an incentive for increased revenue collection and the Government a return for its minimum revenue guarantee obligation. Construction began in 2006 and the project became operational in August 2008. In 2009, the sponsors of Autopistas del Nordeste decided to exercise an option in their contract to rehabilitate 99km of existing road running between the towns of Nagua, Sanchez, Samana, El Limon, and Las Terrenas, and building a new section between Las Terrenas and Majagual. A new project company was created for the undertaking. See project 5355 Boulevard Touristico del Atlantico (BTA). http://www.odinsa.com/categoria.php?cid=82