Enfidha and Monastir International Airports

active

In March 2007, the Tunisian government awarded the Turkish airport operator TAV a 40 year concession contract to rehabilitate and operate the existing airport of Monastir and to build and operate the airport of Enfidha. In 2007, the airport of Monastir served 3.8 million passengers annually. When completed, Enfidha Airport was expected to serve 5 million passengers annually. The Tunisian government planed to increase its capacity to 20 million passengers annually by 2020. The award followed an international tender process, in which 7 international companies took part. In the last stage of the process, TAV won over the other final bidder, a consortium which included Germany's Hochtief and Canadian SNC Lavelin. In early 2004, the Government of Tunisia, advised by Rothschild on the financial side and Gide Loyrel Nouette on the legal side, launched the tender for a BOT concession for the construction and operation of the new Enfidha Airport. By July 2004, seven bidders had submitted expressions of interest and pre-qualified, including a number of leading airport operators from Europe and emerging markets as far away as Argentina or South Africa. However, it quickly became clear that the Monastir Airport's proximity was a thorny issue: it could compete with the new airport and jeopardise its financial viability. The bidding process was suspended for a period of two years. In 2006, the Tunisian authorities included the operation of the Monastir Airport in the scope of the concession and the bidding process resumed at an accelerated pace, with three companies submitting offers in January 2007 (TAV Airports of Turkey, Germany's Hochtief and Aeroports de Nice/SNC Lavallin). TAV Airports and Hochtief made it to the shortlist and in March 2007, TAV Airports was announced the winning bidder, on account of higher, less back-ended concession fees, in particular for the Enfidha Airport. On May 18, 2007, the 40 year concession contract was officially signed by Tunisian Prime Minister Mohamed Ghannouchi. Under this agreement, TAV was responsible from January 2008 on for carrying all major operations except air traffic control services in the existing airport of Monastir. It was also responsible for the construction of Enfidha Airport, which started in July 2007 and for its operation, which was expected in the first half of 2009. The project’s total cost was estimated to US$840 million, to be financed through a 30% equity contribution from TAV and 70% through debt. In April 2008, IFC approved and signed a US$574 million loan (Loan for IFC’s own account for US$199 million, Syndicated IFC B-Loan for US$375 million). In 2009, IFC acquired 15% of the prject company for US$38.9 million (Euro 28 million.) The concession agreements were signed on May 18 2007 for a period of 40 years, with TAV Airports expected to take over the operation of the Monastir Airport The project is governed by two separate but interlinked concession agreements, both for a 40-year period: one for the existing Monastir Airport and one for the new Enfidha Airport. The concession contracts for the Monastir and Enfidha Airports were to some extent based on the French concession framework, hence featuring sound foundations and being overall fairly balanced and protective, but nevertheless exposed to a couple of loopholes, as per standard project finance standards, mainly resulting from the fact that such a concession was the first of its type in Tunisia. A noticeable feature of the project's contractual structure is the involvement of a number of affiliates (duty free, ground handling and catering contracts) or sister companies (EPC Contractor) of TAV Airports. While in itself this provides a strong alignment of interests between parties, this inter-relationship between various related companies required work with the sponsor to ensure appropriate risk allocation and an arm's length contractual structure. As of March 2012, France's Aeroports de Paris Group acquired 38% of the capital of TAV Airports, for US$874 million (666.2 million euro).