The European Investment Bank (EIB), the European Union's financing institution, is supporting the modernisation of London Underground with GBP 900 million (EUR 1.3 bn) term loan facilities. GBP 300 million (EUR 436 m) was made available to the Tubelines -sponsored Infraco JNP in the end of 2002 and GBP 600 million were committed today at the financial close of the Metronet transactions (Infracos BCV and SSL).
Each Infraco will under the Public Private Partnership (PPP) promoted by London Underground Limited improve, refurbish and modernise their respective parts of the underground network. Infraco BCV is responsible for the Bakerloo, Central, Victoria and Waterloo&City lines while Infraco SSL is responsible for the Circle, District, Metropolitan, East London and Hammersmith&City lines and Infraco JNP for Jubilee, Northern and Piccadilly lines.
The three Infracos are responsible for maintaining, renewing and upgrading the infrastructure of the underground network while London Underground Ltd. remains responsible for train operations, customer services at stations and fare collection as well as overall safety.
Metronet Rail BCV Holdings and Metronet Rail SSL Holdings, the ultimate owners of the Infraco BCV and SSL, are each owned 20% by Bombardier Transportation UK Ltd., WS Atkins plc, Balfour Beatty plc, SEEBOARD plc and Thames Water plc. The GBP 600 million EIB facilities form part of the GBP 2.65 billion (EUR 3.85 billion) senior debt funding package. The other senior debt is provided by a syndicate of banks led by Deutsche Bank, CIBC World Markets, Royal Bank of Scotland and Abbey National, and both a fixed-rate and index-linked bond issues wrapped by Ambac and FSA.
Infraco JNP is owned by the members of the Tubelines consortium, Bechtel Enterprises Holdings Inc., Jarvis plc, and Amey plc. The GBP 300 million EIB term loan facility is one of the GBP 1.94 billion (EUR 2.82 billion) senior debt facilities. The rest of the senior debt is provided by a syndicate of banks, led by Bank of Scotland, WestLB, Mizuho and Societe Generale. A portion of the bank term loan is wrapped by Ambac.
EIB's Vice-President Peter Sedgwick said: This finance will go towards improving the quality and reliability of an infrastructure network that plays a crucial role in the UK's economy. The PPP project will help underpin London's role as a major world city, and enable a progressive improvement in service delivery for a transport system coping with nearly one billion passenger journeys a year.
Sir Malcolm Bates, Chairman of London Transport, commented: On behalf of our customers and London as a whole, we are delighted that the finance is now in place to enable the long-awaited upgrading of the Underground network to begin. We are grateful for the support the EIB has provided.
Rod Hoare, Metronet Chief Executive, stated: "This is a great partnership, Metronet, with London Underground, Transport for London, Tube Lines and of course, our colleagues in the EIB whose co-operation, support and funds has made it possible."
Terry Morgan, Tubelines Chief Executive, said: "I am delighted to hear that Metronet has now commenced work on its contracts to modernise the Tube. With London Underground, Tube Lines and now Metronet working in partnership, we will effect the transformation of passengers' experience on the Underground. Our long term funding arrangements are absolutely fundamental to delivering an outstanding Tube for London."
EIB's long-term funding will match the long-term commitments of the borrowers, providing a cost-effective contribution towards the project's external debt, and help lower the contribution from the public sector. The London underground's modernisation is a UK flagship PPP project, forming part of the Government's plan to introduce private sector financing, best practices and management efficiencies into the country's transport infrastructure.
The European Investment Bank finances capital investment furthering EU integration, in particular: regional development, trans-European networks in transport, telecoms and energy, industrial competitiveness and integration, small and medium sized enterprises, environmental protection, energy security, and health and education projects. It also operates outside the EU within the framework of the EU's co-operation external policy. Owned by the EU Member States, the EIB raises its funds on capital markets (AAA issuer). In 2002, the EIB lent some EUR 40 billion, of which EUR 3.3 billion in the UK.