Queen Alia International Airport Project, Jordan

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1 Queen Alia International Airport Project, Jordan Case Study Madhavi Gosavi, Partner Norton Rose LLP 11 September 2009

2 The Project 25-year concession for the rehabilitation, expansion and operation of the Queen Alia International Airport in Amman, Jordan Possibly the first Middle-East PPP-style dual tranche conventional loan and Islamic facility Jordan's biggest project finance deal & largest private sector investment Project Value: US$675m

Middle-East PPP-style dual tranche conventional loan and Islamic facility

3 The Transaction The Rehabilitation, Expansion and Operation of the Queen Alia International Airport

4 Parties Project Co: Airport International Group P.S.C. Sponsors: J&P Avax S.A Joannou & Paraskevaides (Overseas) Ltd EDGO Investment Holdings Ltd Noor Financial Investment Company KSCC Aéroports de Paris Management S.A. Abu Dhabi Investment Company

Holdings Ltd Noor Financial Investment Company KSCC Aéroports

5 Parties (continued) EPC Contractor (Unincorporated Joint Venture) J&P Avax S.A Joannou & Paraskevaides (Overseas) Ltd O&M Contractor Jordan Airport Management S.A.

6 Parties (continued) Financiers: International Finance Corporation Islamic Development Bank Sub-participant Banks: Calyon Natixis Europe Arab Bank The Hashemite Kingdom of Jordan: Jordanian Ministry of Industry and Trade Civil Aviation Regulatory Commission

Calyon Natixis Europe Arab Bank The Hashemite Kingdom of

7 The Concession - REOA Concession period: 25 years refurbishment and upgrade of the existing Airport (not including runways) Building of New Terminal Operation and management of the airport (including collection of revenue and airport charges) Concession Fee Initial fee of US$1 million Annual fee of 54.47% of gross revenues for 6 years and 54.64% thereafter Competition Exclusivity on scheduled commercial flights until passenger volume is 8 million in a 12 month period No financial assistance to other airports within a 200km radius with charges of less than 50%

million Annual fee of 54.47% of gross revenues for 6 years and 54.

8 The Concession - REOA Currency/inflation protection 25% inflation in any one year Dinar/Dollar exchange rate Force majeure and Political events protection Extension of time Protection against termination Compensation for revenue shortfall Termination 100% debt assumed by the Government Concessionaire default compensation: equity distributions Govt default compensation: value of equity x 18% for each year

termination Compensation for revenue shortfall Termination 100% debt assumed by the Government

9 Consent and Assumption Form of direct agreement with the Government Not a traditional direct agreement with step-in and novation Provided for assumption of debt upon termination of the concession Negotiated full payout for lenders upon termination/acceleration

novation Provided for assumption of debt upon termination of the

10 The Financing i Conventional Facility: IFC A Loan: US$70m IFC B Loan: US$160m (sub-participated to Calyon, Natixis and Europe Arab Bank) IFC C Loan: US$40m IFC Standby Loan: US$10m Islamic Facility: Istisna a (Islamic Manufacturing) and Ijarah Mawsufa Fi Al Zimah (Islamic Forward Lease): US$100m Total equity: US$370m

IFC Standby Loan: US$10m Islamic Facility: Istisna a (Islamic Manufacturing)

11 Structuring the financing: i Issues Conventional and Islamic financing to be on a pari passu basis To meet Shariah requirements IDB needed to: find an asset(s) with a life greater than 18 years have minimum ownership rights on the identified asset(s) which it can lease to Project Co Issues with GOJ what assets to choose? what kind of agreements to enter into? Issues with Project Co and GOJ transferring AIG s obligations under the REOA to IDB

rights on the identified asset(s) which it can lease to Project Co Issues with GOJ what assets to choose?

12 The Solution Commission Lease : AIG & IDB co-lessees but of different property Hashemite Kingdom of Jordan Commission Lease Non-Excluded Assets [Site, Immoveable Property (but excluding New Terminal Site) & Commission Moveable Property] AIG 25 years Reversion of the IDB s interest upon the expiry of the 18 years Facility Term Excluded Assets [New Terminal Site] IDB

excluding New Terminal Site) & Commission Moveable Property] AIG 25 years Reversion of the

13 The Final Structure: Flow of funds REO Hashemite Kingdom of Jordan Commission Lease IDB Consent & Assumption Intercreditor Security Trustee Ijarah Mawsufa Fi Al Dimah Istisna Commission Lease Airport International Group P.S.C. Banks 44% of the gross income 56% of the gross income Security Account Islamic Financing Income Conventional Financing

14 Flow of funds Financing Diagram Purchase Undertaking Excluded Assets REOA Forward Ijarah (Excluded Assets) Commission Lease Commission Intercreditor Sale Undertaking Istisna a Non-Excluded Assets Airport International Group P.S.C. IFC Loan : 56% of the gross income 44% of the gross income Security Account IFC A Loan IFC B Loan Calyon Natixis Islamic Financing Income IFC C Loan Europe Arab Bank Conventional Financing

15 Financing: Unique Features Pari passu drawdown Pari passu prepayment of all senior facilities (not IFC C Loan and Standby) Prepayment fee on all prepayments Two forecast DSCRs one for IFC and the other for sub-participants Shariah terms

Standby) Prepayment fee on all prepayments Two forecast

16 ACCOUNTS STRUCTURE OFFSHORE A/Cs (US$) ONSHORE A/C (JDS) Revenues (US$) Construction Costs / Etc. OFFSHORE PROCEEDS A/C Freedom to transfer (as and when needed) ONSHORE PROCEEDS A/C Balance Revenues (JD) Investment Fee ADP Fee FIN. MRA A/C MAINT. RESERVE A/C ENHANCEMENT RESERVE A/C DSRA A/C DEBT SERVICE INSURANCE PROCEEDS A/C DISTRIBUTIONS A/C COMPENSATION PROCEEDS A/C

Balance Revenues (JD) Investment Fee ADP Fee FIN. MRA A/C MAINT.

17 Hedging 100% Facilities hedged but no Islamic hedging g 4 Swap counterparties IFC, Natixis, Calyon and EAB 4 scheduled swap dates 60% of IFC commitments by first utilisation 60% of IDB commitments by 15 th January % of all commitments 6 months from financial close 20% of all commitments 12 months from financial close 24 swaps in total

utilisation 60% of IDB commitments by 15 th January 2008 20% of all commitments 6

18 Sub-contracts Construction Contract O & M Contract Interface issues due to construction on an operating airport Hotel Management Duty Free contract Government Services

Creating Opportunity Where Its Needed Most. December 2012 Christopher Olobo IFC, Nairobi

Jordan: Queen Alia International Airport Creating Opportunity Where Its Needed Most December 2012 Christopher Olobo IFC, Nairobi Table of Contents Subject Page Who is the IFC? 2 The Queen Alia Project