Orrick Drives $1.5 Billion Financing of Complex Midtown Tunnel Project


New York - Continuing the firm's dominance in the U.S. PPP market, Orrick advised Macquarie Infrastructure Partners and Skanska Infrastructure Development on the $1.5 billion financing of the Midtown Tunnel concession in Virginia. This transaction marks the largest infrastructure deal to date this year.

Under a 58-year concession agreement with the Virginia Department of Transportation (VDOT), the concessionaire, owned 50% by Macquarie and 50% by Skanska, will undertake the design and construction of a new two-lane tunnel adjacent to the existing Midtown Tunnel under the Elizabeth River in Southern Virginia, improvements to the existing Midtown Tunnel and two other existing tunnels under the Elizabeth River and the development of an extension to the Martin Luther King Freeway.  The concessionaire will operate and maintain the project and has the exclusive right to toll users of the project.

"Orrick's unique dual strengths in infrastructure and public finance experience have enabled us to play a key role representing private developers, financial institutions and public agencies on PPP transactions," said energy and infrastructure co-chair Dan Mathews, who led the team. "This is a complex transaction in which our comprehensive knowledge and experience of our team and our dominance in the project and municipal finance markets enabled the firm to take a leading role in helping the clients and other stakeholders to achieve a successful result."

To fund the project, the concessionaire received approximately $312 million in contributions from the VDOT and borrowed approximately $664 million through the issuance of tax-exempt private activity bonds and an additional $422 million from the U.S. Department of Transportation under the Transportation Infrastructure Finance and Innovation Act (TIFIA) program.  The sponsors also contributed equity of $323 million. The total cost of the project is expected to be $1.593 billion, which will be funded with proceeds from the VDOT contribution, Private Activity Bonds (PABs) and TIFIA debt, the equity contributions and the operating revenues from the existing tunnels during construction. 

Orrick's market-leading infrastructure practice has advised on almost every major PPP transaction in the U.S. transportation sector over the past 8 years and has been recognized by numerous legal and industry publications including Project Finance Magazine's 2011 "Americas Transport Deal of the Year Award" for the Denver Eagle P3 project.