The Tel Aviv light rail project has received a major boost. Representatives of the major foreign banks that will provide financial support for the project, including Royal Bank of Scotland plc (LSE; NYSE: RBS) and Germany's KfW Bank Group, and Bayern LB have decided to continue their support for the Tel Aviv light rail despite the global financial crisis.
Representatives of the banks are expected in Israel today for a series of meetings with Tel Aviv light railway franchisee Metro Transportation Solutions (MTS), which is led by Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY). The bankers will also meet with government officials. After the meetings they will officially announce their decision on the matter.
As "Globes" reported several months ago, the foreign banks decided to delay their funding of the project due to the global financial crisis, and requested to bring in additional banks into the financing package in order to reduce the risk.
The foreign banks are expected to extend credit of between NIS 7-8 billion to the project. At the same time as the ongoing negotiations with the European banks, MTS, which is managed by Yochanan Or, is making every effort to find additional banks to finance the project. There have even been talks with Chinese banks.
The date for closing financing for the Tel Aviv light rail project in January 29, 2009. This date has already been postponed twice from May 2008.
Despite the progress in talks with the foreign banks, it looks doubtful if MTS and the Israeli government can reach commercial understandings by the end of the month. The government will thus be required to decide if the date for closing the financing should be postponed for a third time.
Published by Globes [online], Israel business news - www.globes-online.com - on January 18, 2009
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