East End Crossing Wins Bond Buyer Deal of the Year

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Recognizing the innovative P3 approach to project delivery and financial structure for a major US infrastructure project, the Bond Buyer awarded the Indiana Finance Authority's private activity bonds for the East End Crossing the Deal of the Year Award at its annual event held at the Waldorf Astoria hotel in New York City.  Notably, this is the first P3 transaction to win the award.
 
The $1.2B East End Crossing, a portion of the $2.6B Ohio River Bridges project, one of the largest transportation undertakings in the U.S. and the first availability payment P3 for the Indiana Finance Authority, will improve connecting roadways and provide a new $1.18B toll bridge across the Ohio River between Indiana and Kentucky, connecting I-265/KY 841 with S.R. 265.
 
Indiana Finance Authority acts as the public sponsor under the availability payment contract which was signed at the end of last year as well as the conduit issuer for the private activity bonds.  The debt portion of the financing is made up of two series of tax exempt private activity bonds.  Series A, in the principal amount of $482,310,000, has maturities starting in July 2035 with final maturity in January 2051; pricing for the long bonds is between 4.56% and 4.96%.  A construction financing tranche in the principal amount of $194,495,000, has a nominal maturity of January 2019, but is callable earlier as milestone payments are achieved; baseline substantial completion is scheduled for the end of October, 2016.  This Series B short-term piece is priced to yield 2.28%.  Lead underwriter for the deal is Bank of America Merrill Lynch, with JP Morgan, Goldman and RBC Capital as co-senior underwriters.  Equity members will contribute approximately $78 million towards project costs.  In conferring the award, the Bond Buyer noted the unique structure of the short term pabs which are payable from IFA's milestone payments and suggested that this innovative approach will prove to be a template for future transactions.
 
Kendra York, Public Finance Director for the state of Indiana, accepted the award, noting Governor Mike Pence’s commitment to using tools such as P3s to foster economic development and to improve the lives of residents of the Hoosier state.
 
This recognition comes on the heels of the East End Crossing winning the ARTBA "Project of the Year," as but one of a sweep of awards in the July 26 25th anniversary awards dinner, which also recognized Ms. York as "Public-Sector Entrepreneur of the Year" and Matt Walsh, among the equity members of the winning East End Crossing concessionaire/developer team.
 
Indiana continues to lead the P3 market, as it expects proposals for its follow-on availability payment concession, the I-69 Section 5 project mid-January and recently issued an RFQ for its share of the Illiana Expressway, also a bi-state project with the Illinois Department of Transportation.

Topics:  Bonds, Infrastructure, Public-Private Partnerships

Published In: Business Organization Updates, Finance & Banking Updates, Government Contracting Updates, Transportation Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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