Orrick Advises on First P3 Forward Delivery Bond Refinancing

February.14.2022

Orrick advised Elizabeth River Crossings (ERC), a subsidiary of Abertis Infraestructuras and Manulife, on pricing an innovative US$571.5 million forward delivery tax-exempt series of bonds, the first-of-its-kind for a public private partnership (P3). The proceeds from the new bonds will refinance the company’s series 2012 bonds issued to originally finance the construction of additional Downtown and Midtown tunnels in the Hampton Roads region of Virginia, expanding and improving a vital transportation link between Norfolk and Portsmouth as well as the MLK Expressway and approximately 51 miles of highway. The new bonds were sold to investors with a significant 5.9x overall oversubscription. The transaction also included simultaneous modifications to ERC’s existing concession agreement with the Virginia Department of Transportation (VDOT) and ERC’s TIFIA Loan Agreement.

As forward bonds are sold based on predetermined interest rates but not issued until a future date, the structure allows issuers to lock in savings in a low-rate environment when the bonds themselves are not yet callable. The settlement of this forward delivery tax-exempt series of bonds is expected to take place in July 2022.

Elizabeth River Crossings OpCo acquired the ERC facilities in December 2020. Orrick advised Macquarie and Skanska in the ERC sale to Abertis and Manulife. Orrick had also advised Macquarie and Skanska in the original 2012 financing and on the negotiation of the concession agreement with VDOT in 2011. Following the acquisition of ERC by Abertis and Manulife in 2020, ERC hired Orrick for this forward refinancing and other ongoing matters.

The team for this transaction was led by Vincent Casey and included Victoria Boyne, Kevin Roche, Richard Chirls, Tom Kidera, Dan Mathews, Jessica Sewell and Jason Warrington.