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For further information, or feedback, please contact us at the address below, or via email to our dedicated Community Liaison Officer.

Muharraq STP Company BSC (c)
Building 200, Road 13,
Block 115, Hidd
Kingdom of Bahrain

Tel +973 1756 0540
Fax:+973 1756 0519
E-mail: community@muharraqstp.com

TOLL FREE NUMBER: +97380098888

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Middle East Infrastructure Deal of the Year

The US$300m Muharraq sewage treatment project was signed in July and the funding was completed in September this year. The project closed successfully and within its time line despite the challenging situation in Bahrain and in other parts of Middle East at the time. The debt financing includes a US$124m direct loan from Kexim, a US$83m Kexim covered tranche and a US$43m uncovered tranche, with a 13.7% standby facility on each tranche. The commercial banks are Credit Agricole, Natixis and SMBC. The commercial agreements on the deal were signed in February, with financial close pencilled in for April, but then political events intervened. The keys to getting the deal back on track were the improving political situation and the agreement on extending the concession by two years to 29 years to give the concessionaire more revenue, following the crisis. Margins on the deal finally came in at 180bp to 220bp for the US$90m Kexim covered tranche and 225bp to 275bp for the US$50m uncovered tranche. Each tranche had a 13.7% standby facility included. Fees were 150bp and 225bp respectively. Kexim provided a US$137m direct loan. The all in swap came in at 3% below the 3.6% expected.

Given the political problems in the Kingdom earlier in the year and that it suffered a two notch rating downgrade to BBB by Standard & Poor's, the fact that the margins did not change from the project's bid stage was a result. Credit Agricole, Natixis and SMBC banked the deal. Macquarie and Ashurst advised the consortium and HSBC and Norton Rose advised the government. Shearman & Sterling advised the lenders. The Samsung Engineering / United Utilities / Invest AD team bid BD0.55 per m 3 for the plant, which will initially total 100,000m 3 . Samsung will hold 45% of the project company, Invest AD 35% and United Utilities 20%. Within a decade, it is expected that the scheme will be expanded by a further 60,000m3. The project includes a 16km deep gravity sewer pipeline that can be bought back by the government at any stage. Launched to the market with the full RFP in May 2009, the project involves the construction, ownership, operation and maintenance of a new 100,000m 3 /day wastewater treatment plant at Muharraq in Bahrain. The project will deliver critical new infrastructure for Bahrain.

Middle East Water/PPP Deal of the Year 2011: Muharraq STP

The project was awarded the prize "Middle East Water/PPP Deal of the Year 2011: Muharraq STP" by project finance magazine. To find out more click here.