Litoral Sul Highway

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In February 2008, the Brazilian federal government signed a 25-year concession contract with Obrascon Huarte Lain (OHL) [Spain] to operate and rehabilitate the Litoral Sul Highway. The Litoral Sul Highway consisted of 382 km of federal highways BR 116/376/101 from Curitiba to Florianopolis. OHL formed Autopista Litoral Sul as the project company. OHL owned 60% of the equity through its subsidiary OHL Brasil. The remaining 40% was owned by private individuals. The project was awarded to OHL in October 2007 along with four other concession contracts in an international competitive tender in which the bidding criteria was the lowest tariff. OHL was awarded the bid after submitting the low bid of: 1.028 Brazilian reals per toll plaza. A total of 28 bidders competed in the auction, but the number of bidders for Litoral Sul was not available. The total project cost was estimated at US $1.1 billion over the life of the project. After taking possession of all five highways in February 2008, OHL began building toll plazas in July 2008 to recover its cost. By December 2008, more than half of the toll plazas had been built. In July 2008, OHL Brasil closed its R$670 (US$420.3m) financing for its five toll road concessions won in October 2007, with Santander as the lead bank, followed by Banco do Brasil and Bradesco. The cost was to be CDI, or 12.6%, plus1.037%, with an 18-month term and a bullet. It was still seeking long term financing and had negotiated requested funding from BNDES, Brazil’s development bank, which agreed to fund approximately 70% of the project cost. The remaining 30% was to be funded from OHL’s equity. As of December 2008, long term financing had not been arranged. As of Sep. 2009, the OHL group was experiencing difficulties and investments were delayed. The group alleged that traffic had been below the estimation and environmental hurdles had delayed the instalation of the toll booths. As a result, the group requested that the toll rates should be increased. In addition, due to the 2008 financial crisis, the concessionares in the toll road sector in Brazil have faced higher costs on external financing. In July 2011, BNDES granted a US$ 496.3 million (BRL 810 million) loand to the project company.