Representatives of foreign banks that are supposed to finance the Tel Aviv light rail project, including Royal Bank of Scotland (RBS) and Germany's KfW Bank Group have arrived in Israel for a series of crucial meetings with franchise Metro Transportation Solutions (MTS), and representatives of the government and NTA - Metropolitan Mass Transit System. "Globes" has been informed that they will attempt to reach an agreement that will enable funding of the project.
These meetings will be the first time that the most senior officials in the Ministry of Finance have negotiated directly with the foreign banks, with deputy comptroller Ami Landau heading the government team. In discussions so far with the foreign banks, the government has made it clear that it is committed to the project, and if required, will enlarge its safety net.
As "Globes" recently reported, the RBS, which after encountering difficulties was nationalized by the UK government, told MTS, led by Leviev's Africa Israel Investments, that it had meanwhile decided to freeze funding of the project due to the crisis, and until a new strategic plan had been formulated by the bank's management.
Fearing that the entire financing process would collapse, sources in the transportation sector called for the immediate intervention of the government to enlarge its safety net for the project. Sources in the government close to the negotiations said that the current negotiations will involve enlarging the safety net, although there is no intention of making government guarantees available for the project.
The foreign banks, KfW and Bayern from Germany and RBS are meant to provide financing to MTS of between NIS 7-8 billion, while Bank Leumi has agreed in principle to provide short term financing of NIS 2.5-3 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on November 23, 2008
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