Sources inform ''Globes'' that the Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY.PK)-led Metro Transportation Solutions (MTS) Consortium, the Tel Aviv Light Railway franchisee, recently asked the Ministry of Finance and the Ministry of Transport to postpone by a few months the closing date for the raising of finance the project, originally set for May 2008. The cost of the Tel Aviv Light Railway, which is estimated at $10-12 billion, is the largest ever for an infrastructure project in the Israeli economy.
MTS, which is headed by Yochanan Orr, has already selected Bank Leumi (TASE: LUMI) as the lead financing bank for the project, providing NIS 3 billion, with the balance financed by foreign banks by way of a long-term loan. The request for the postponement comes against the background of the global sub-prime crisis, which has placed a strain on the resources of the foreign banks which are supposed to be providing most of the funding for the project. Some of the participating banks, such as KfW Bankengruppe, and BayernLB of Germany, and the Royal Bank of Scotland, have had to make massive write-downs, as a result of the crisis.
MTS managers are due to hold their first meeting today with representatives from the banks and officials from the Finance and Transport ministry to discuss a proposal to make changes to the terms of the tender. The request relates to 120 objections forwarded by the foreign banks, which MTS wishes to raise with Finance Ministry officials. The requests include a change to part of the indexation mechanisms for changes in tariffs, the provision of collateral, interest payments on delays in fees, and others.
The Finance and Transport Ministries were not surprised by the request by MTS for a delay in the closing date for the raising of finance, and had expected it to be unable to meet the original timetable, given the current crisis on the markets. It is believed that the government will probably grant MTS a postponement of a few months. A senior government official close to the project commented, "So far, the requests for changes to the terms of the tenders haven't been any more substantial than those in previous tenders in the sector."
MTS won the Tel Aviv Light Railway tender in early 2007.
Published by Globes [online], Israel business news - www.globes-online.com - on April 28, 2008
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