BRIDGING LOAN 2017-01-31T02:37:48+00:00

 

On 12 November 2012, TE SpA signed, on the basis of a Board issued mandate, the €120 million bridging loan contract that will be paid out in equal quotas (€40 million) by the arrangers (Banca IMI, Banca Popolare di Milano and Centrobanca-UBI).

The arrangers stipulated in the term sheet that a capital increase from €100 to €220 million was an essential requirement for the pay-out of the loan. The resolution passed by the Shareholders’ Meeting (in Extraordinary session on 12 September 2012) for such a capital increase and the bridging loan have significantly consolidated the company’s financial position.

Indeed, the capital increase and bridging loan mean TE can guarantee the continuation of the work begun on 11 June 2012 (12 building sites divided into three sections) until the closing of the senior loan worth €1.42 billion due in early 2014. This is the same time when TEEM will move from an “in progress” construction to an “in use” one, meaning TE will be able to start collecting tolls from the Arco TEEM (7.3 km). Moreover, without the Arco TEEM connections, the BreBeMi motorway, which is due to open in April 2013, will not be able to link into the Milan and Greater Milan road network.

Thus, the bridging loan should not be seen in the limited paradigm of short-term funding to cover the end of the first stage of financing. Indeed, it really should be seen as part of a bigger picture in which TE is viewed as a reliable entity by a pool of leading banks that are funding a large-scale infrastructure project despite the continuing economic crisis having greatly reduced the tendency of banks to finance such works.

TE’s desire to be seen as a creator of employment and a driver of growth would seem to be substantiated by the TEEM financial and economic plan, which makes recourse both to tried and trusted financing tools – bridging loans and project financing – as well as innovative ones like project bonds. A similar conclusion can be drawn from looking at the quality of the executive project approved by the Board of Directors (unusually for Italy, there was not one euro of difference in investment compared to the definitive plan) or the excellence of TE’s shareholders. Finally, the prestigious nature of the arrangers (the teams have shown extraordinary professionalism and commitment) and the classification of the project on the European Union’s TEN-T (Trans European Network-Transport) list are the final two pieces proving the company’s goals.

TEEM requires the laying of 32 km of motorway between Agrate Brianza and Melegnano, the creation of 38 km of new ordinary roads, the upgrading of 15 km of existing roads and the building of 30 km of cycle paths. Getting such a project from a blueprint to reality before the 2015 Expo also provides a real economic boost in these troubled economic times that have beset the Greater Milan Area, the manufacturing heart and engine of Italy.