Newbridge advised JLIF, the FTSE 250 listed infrastructure investment company, on its completed acquisition of a 6% indirect interest in the Intercity Express Programme Phase 1 project from John Laing Investments Limited.
The total consideration for the acquisition will be approximately £42.4 million, which will be financed by drawing on JLIF’s revolving credit facility.
The IEP project, which is still in the construction phase, involves the provision of 57 new high speed intercity trains to be deployed on the Great Western Mainline (“GWML”). The contract with the Department for Transport (“DfT”) benefits from a 27.5-year concession from acceptance of the first train (scheduled 2017). Payments are on an availability-basis, whereby revenues are received in return for the trains being made available for use and for certain performance and reliability criteria being met. Hitachi are contracted as both manufacturer and maintainer of the trains for the duration of the concession period, with typical pass-down of delivery and operational risk. They are also a 70% shareholder in Agility Trains West Ltd, the project company.
The first trainset is scheduled for delivery in 2017 with the remainder delivered over the subsequent 15-month period. The design life of the trains is 35 years and Agility Trains West Ltd retains ownership of the trains at the end of the concession period, providing a residual design life of 7.5 years. Current and projected demand for these types of modern trains is strong and around 10% of the consideration is due to that expected residual value of the trains.