Proyecto Pacifico Norte (Farac IIA)

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In December 2009 Promotora del Desarrollo de America Latina, SA de C V officially began operating Proyecto Pacifico Norte, a 30-year, 241.5km highway concession in the state of Sinaloa. The Pacifico Norte highway package entailed the operation, rehabilitation and maintenance of the 181.5km Mazatlan Culiacan highway as well as the construction, operation and maintenance of the four-lane, 37km Mazatlan bypass and the four- lane, 22km Culiacan bypass. The project sponsor Promotora del Desarrollo de America Latina SA de C V was a direct subsidiary of Impulsora del Desarrollo y el Empleo en America Latina SA de CV (IDEAL) [Mexico]. Proyecto Pacifico Norte was originally part of a larger project known as Proyecto Pacifico (Farac II), which consisted of 850km of roads in Mexico's Pacific states, including 370km of new construction. The large project failed to attract enough bidders in the atmosphere of the financial crises and was halted in March 2009. As a result, Mexico’s Secretariat of Communications and Transport (SCT), divided Proyecto Pacifico into two smaller projects- Proyecto Pacifico Norte (Farac IIA) and Proyecto Pacifico Sur (Farac IIB). On October 15, 2009 Proyecto Pacifico Norte was awarded to Promotora del Desarrollo de America Latina, SA de C V (IDEAL) by SCT in an international competitive tender in which the highest payment to the government was the bidding criterion. The tender was launched on April 2, 2009 and was modified on June 4, 2009. On September 30, 2009 three consortia submitted final offers: • OHL Concesiones México, SA de CV with 210 million MXN (US $15.6 million), • Controladora de Operaciones de Infraestructura, SA de C V; Caminos y Carreteras del Mayab, SAP. I. de CV; and Global Via Infraestructura, SA; and Mexicana de Global Vía Infraestructura, SAde CV with 1700 million MXN (US $125.9 million) and • Promotora del Desarrollo de America Latina, SA de C V (IDEAL) with 3220 million MXN (US $238.5 million). The total project cost was approximately US $662 million and consisted of the payment to the government as well as construction, operation and maintenance over the 30-year period. In November 2009, financing was provided by Grupo Financiero Inbursa and La Caixa and comprised an eight-year, MXN 4.535bn loan (US $336 million) and MXN4.402bn (US $326 million) in equity. The debt to equity ratio was 51:49. Pacifico Norte was the second package of highways to be awarded using the asset utilization model which re-tendered assets that had been operated for ten years or more by the former Fideicomiso de Apoyo para el Rescate de Autopistas Concesionadas (FARAC). FARAC was formed as a federal trust to manage the assets and debt of 23 Mexican highways that had been repurchased by the Mexican government in 1997. The asset utilization model re-tendered these highways to the private sector in exchange for a monetary payment and an obligation of the private sector to build additional roads, bypasses or bridges. Proceeds from the private sector were earmarked for further transport development in Mexico. The first highway package, known as Centro Occidente or FARAC I, was awarded in October 2007. On February 8, 2008 the assets of FARAC were placed under the management of the Fondo Nacional de Infraestructura (Fonadin). Figures were converted using the IMF market rate, period average for 2009 of 13.5 MXN to 1 USD.