Infrastructure Finance
Transportation / Energy and Power / Water and Wastewater Treatment / Sports Facilities
Demand for infrastructure improvements is on the rise. In the United States alone, an estimated $2 trillion gap exists between the need for roads, tunnels and bridges, mass transit, water and sewage systems, and other public infrastructure, and the funding available. The American Recovery and Reinvestment Act addresses only a fraction of these infra-structure needs.
Given limited government funding and increased demand for greater and more efficient services, forms of ownership, management, and financing of infrastructure projects have been undergoing a transfor-mation as many traditional publicly-owned and operated projects are increasingly giving way to more complex arrangements, many involving public-private partnerships (P3).
Infrastructure Finance team
Nixon Peabody’s Infrastructure Finance attorneys bring a unique combination of creative solutions, sophisticated skills, and depth of experience to our clients’ infra-structure financing needs. Not only do we understand the complexities involved in infrastructure financing arrangements, based on our long history of successfully facilitating the financing of publicly-owned and operated infrastructure projects, but we also have been at the forefront of P3 financing.
Serving the needs of infrastructure clients
We represent a broad range of clients in the infrastructure sector, including project sponsors, equity investors, commercial lenders, issuers, underwriters, developers and contractors, public authorities, governmental entities, multilateral funding institu-tions, infrastructure funds, financial advisors, and others.
Transportation
Few firms can match the depth and breadth of Nixon Peabody’s experience in transpor-tation finance, which includes the financing of bridges and tunnels, toll roads, mass transit, ports, and airports. In the transportation sector, we are proud to have been coun-sel on some of the most notable and innovative financing transactions in the country— the 23-mile Washington Metrorail Extension, Build American Bonds, the first public-private partnership toll road, first HOT lanes project, the first transportation Private Activity Bonds, and the first refinancing under SAFETEA-LU. Our activity in this sector includes the following projects and our representation of:
Project sponsors/bidding teams
I-595:
Various financial institutions as lenders, underwriters, and insurers in a consor-tium led by Babcock & Brown to finance the $1.5 billion I-595 project in Broward County, Florida, using an availability payments structure.
IH-635:
ING team as debt counsel in connection with their proposal to finance the 17-mile IH-635 LBJ Managed Lanes project in Dallas, Texas.
Port of Miami Tunnel Project:
Miami Mobility Group Consortium, a joint venture consisting of ACS Infrastruc-ture Development, Inc., Odebrecht S.A., and Parsons Transportation Group, in structuring a tax-exempt private activity bond in an availability payments structure.
South American Airport:
Potential investor in connec-tion with the acquisiconnec-tion of interests in a company that holds an airport concession in South America, including analysis of proposed amendments to the country’s constitu-tion and impacts on the related concession.
Port Facilities:
Prospective investors in the evaluation of an auction of port facilities in the United States, South America, and Asia.
Denver Eagle P3:
Bidding team led by HSBC for the $2.1 billion commuter rail project under a 34 year conces-sion agreement.Few firms can match the depth and breadth of
TIFIA program
Denver Union Station:
The Federal Highway Administration on the $145 million TIFIA loan to finance the federal portion of the Denver Union Station project. The $518 million project includes an underground bus terminal, a light rail station, a commuter rail station, public plazas, private development, a pedestrian mall, and renovations to the historic station. This financing marks the first time TIFIA and a Railroad Rehabilitation and Improvement Financing (RRIF) loan from the Federal Railway Administration have been used.
Capital Beltway:
The Federal Highway Administration on the financing with Transurban of the first HOT lanes project in the U.S. and the first use of SAFETEA-LU transportation private-activity bonds. The financing included $588 million of senior PABs, $588 million of TIFIA subordinate debt, $409 million VDOT contribution, and $340 million of equity.
SH130:
The Federal Highway Administration as the subordinate lender in a $1.3 bil-lion toll road financing in Texas under a concession agreement with Cintra and Zachry to build, operate, finance, and maintain the road. The finance plan involves a $424 mil-lion loan from TIFIA, a $665 milmil-lion senior loan facility, and equity of $200 milmil-lion. SR125:
The Federal Highway Administration on the historic SR125 financing, thefirst transportation PPP project in the U.S. and the first use of TIFIA dollars to lever-age private participation in public infrastructure. The financing for the Macquarie Infrastructure Group was provided by Banco Bilbao Vizcaya Argentaria, S.A. and DEPFA Bank plc, as joint lead arrangers of a $400 million senior loan facility, over $150 of equity, and a subordinate $140 million TIFIA loan.
Triangle Expressway:
The Federal Highway Administration as the subordinate lender on the North Carolina Turnpike Authority’s Triangle Expressway financing, financed on a senior level by NCTA Bonds. This financing required review of NCTA’s bond agreements and statutes, as well as issues involving state appropriated revenues and O&M guarantees. This is the first toll road in North Carolina.Tr
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Infrastructure Focus:
Our attorneys
advise on a wide
range of complex
financing structures
and arrangements.
Governmental entities
Port of Oakland:
Special tax counsel for a 50-year concession held by Ports America Outer Harbor Terminal L.L.C. to finance $700 million of improvements to five berths to increase capacity and reduce the environmental impact of operations.
Port Authority of NY/NJ:
Debt and local counsel to Halcrow team which advised the Port Authority on proposals to finance the approximately $6 billion cost of replac-ing three Staten Island bridges.
Puerto Rico Highways and Transportation Authority:
Bond counsel to the Puerto Rico Highways and Transportation Authority’s $2 billion Transportation Highway Revenue Bonds, which were issued to finance and refinance transportation costs. New York’s Metropolitan Transportation Authority and Triborough Bridge
and Tunnel Authority:
Disclosure counsel and bond counsel for both entities for decades, including on their 2002 $14 billion debt restructuring, the largest in munici-pal bond history.
Los Angeles County Metropolitan Transportation Authority:
Counsel to LACMTA in evaluating and addressing the issues it faced as a result of the collapse of the auction rate market, the credit rating downgrades of municipal bond insurers, and general market conditions. These efforts have included issuing refunding bonds, nego-tiating new liquidity facilities, negonego-tiating amendments to existing liquidity facilities, addressing issues with swaps, and providing general advice.
Presidio Parkway/Doyle Drive:
Counsel to the financial advisor to the California Transportation Commission in connection with its review for legal and financial suf-ficiency of the Project Proposal Report and related submissions. The Presidio Parkway public-private partnership project is the first submission under California’s revised transportation P3 statute.Underwriters/investors
Metrorail Extension/Dulles Airport:
Citigroup and Morgan Stanley as co-senior managers for Metropolitan Washington Airports Authority $963 million multi-lien bonds, including BABs, issued to finance a 23-mile extension of Metrorail to Dulles International Airport. The bonds are secured by toll revenues from the Dulles Toll Road.
Central Texas Regional Mobility Authority Turnpike System:
Foreign investors in the purchase of $45 million in subordinate lien fixed rate and variable rate Build America Bonds to finance certain portions of the Central Texas Regional Mobility Authority Turnpike System relating to the 183A Turnpike Project, the 183-A Phase II Project, and the 290 East Project.
Bay Area Toll Authority and Bay Area Infrastructure Financing
Authority:
Underwriters’ counsel for the Bay Area Infrastructure Financing Authority financings since 2006. Also represented Bay Area Toll Authority in the negotiation and acquisition of $194 mil-lion State of California general obligation bonds in 2009.Energy and power
Energy project finance
Nixon Peabody has extensive project finance and development experience in the energy sector. In addition to financing arrangements, our attorneys review and negotiate all project documents to determine their impact on the project financing, including concession agreements, offtake arrange-ments, EPC/equipment supply arrangearrange-ments, real estate docuarrange-ments, operation and maintenance agreements, and fuel and transportation arrangements. We represent developers, investors, lenders, and others on a broad range of traditional and renewable energy projects in the United States and internationally.
Representative U.S. energy projects
U.S. Department of Energy:
Representation of DOE in connection with numerous loan guarantees to energy companies, including AES Energy Storage, Abound Solar Manufacturing, Beacon Power Corporation, and Red River Environmental Products. Astoria Energy LLC (New York):
Representation of Astoria Energy in connection with the $1 billion project financing and refinancing of the 50 MW gas-fired com-bined cycle electricity generation facility located in Queens, New York.
Astoria II (New York):
Representation of Energy Investors Funds in connection with the $1 billion project financing of the Astoria II project, a 550 MW natural gas-fired combined cycle unit.
PG&E National Energy Group:
Representation of PG&E National Energy Group in connection with the $1.46 billion portfolio construction and term financing of four merchant gas-fired power projects in New York, Arizona, Michigan, and Massachusetts.
Crockett Energy 144A and Reg S Offering (California):
Representation of the project company in connection with the 144A and Reg S offering of $295 million 20-year senior notes, the proceeds of which were used to refinance existing debt. Bethpage Project Development and Financing (New York):
Representation ofthe sponsor in connection with development contracting matters and $123.1 million non-recourse senior and junior loan facilities to fund construction of a power plant on Long Island.
Hartwell Energy (Georgia):
Representation of the sponsors in connection with a $170 million debt financing for a gas and oil-fired 300MW power facility.
Keystone Revenue Bonds and Mezzanine Debt (New Jersey):
Representation of the project company in connection with the financing of a power plant in New Jersey through a $530 million loan funded by a consortium of commercial banks, the tax-exempt revenue bonds, subordinated bank debt, and additional junior debt pro-vided by a project vendor.
Preferred Stock Transaction (Florida):
Representation of the seller in connection with monetization of power assets in Florida through the sale of preferred equity inter-ests in the project company and related amendments to project contracts and secured loan arrangements.Nixon Peabody
has served the
needs of energy
industry clients
for more than
75 years.
Representative international energy projects
Jorf Lasfar Privatization and Financing (Morocco):
Representation of the spon-sors in the $1.5 billion privatization of existing generation facilities and the construc-tion of new facilities in Morocco, funded by a consortium of commercial banks, the Export-Import Bank of the United States, Swiss and Italian export credit agencies, the World Bank, and the Overseas Private Investment Corporation. The transaction was financed through a Common Agreement among the lenders and related intercreditor arrangements.
Samalayuca II Financing and Conversion (Mexico):
Representation of the Inter-American Development Bank in connection with the $515 million construction financing and term loan conversion for a 700 MW power plant in Mexico.
Aguaytia Financing and Refinancings (Peru):
Representation of a major equity participant in connection with the initial financ-ing and multiple refinancfinanc-ings of a merchant power plant and transmission line and a gas project (including gas fields and a gas pipeline) in Peru.
Miravalles III Financing (Costa Rica):
Representation of the Inter-American Development Bank and commercial banks in the financing of a geothermal facility, which was the first private equity sector energy project in Costa Rica and the first Build-Own-Transfer (BOT) project built in Latin America.
Rockfort Project CARIFA Bond Offering (Jamaica):
Representation of the project company in connection with the financing for a power project, involving issuance by Caribbean Basin Projects Financing Authority of two series of tax-exempt bonds. One series of bonds was supported by a letter of credit from an international bank consortium, which was backed by take-out commitments from the World Bank and the Inter-American Development Bank.
Public power financings
Nixon Peabody also has considerable experience in public power financings for systems across the United States. We regularly serve as bond counsel, underwriter’s counsel, dis-closure counsel, and special tax counsel. Members of the firm have represented utility issuers in the acquisition of assets through financings involving fixed and variable rate bonds, put bonds, and bonds secured by stand by or direct pay letters of credit.
In addition, Nixon Peabody attorneys have negotiated and drafted acquisition agree-ments, both project-specific and all-requirements power sales contracts, project support contracts, construction contracts, reliability exchange agreements, and operating agree-ments as well as other related contracts and agreeagree-ments.
Water and wastewater treatment
Nixon Peabody attorneys possesses in-depth, multi-faceted finance, legal, and regulatory compliance experience in the water and wastewater industry, sup-ported by an in-house team of engineers and scientists. We have worked on dozens of project financings in this sector in which our role included the struc-turing, drafting, and negotiation of contracts that were essential elements of project financings and incorporated allocations of risks between the public and private entities. We have represented sponsors, municipal entities and invest-ment banks on these projects. Our representative experience includes:
Representing the builder/operator, we drafted and negotiated the construction and long-term operating contracts for a seawater desalination project in Florida.
Representing several Rhode Island communities, we negotiated with USEPA an agree-ment that resulted in the design, construction, and financing of that state’s first regional publicly-owned wastewater treatment facility.
Representing the underwriter and conducting an environmental due diligence review for the District of Columbia Water and Sewer Authority.
Representing the developers on the development, contracting, and financing of drink-ing water and wastewater facilities throughout the United States.
Sports facilities
Nixon Peabody has earned a reputation as a market leader in the area of stadium finance and development, having participated in financings for member teams of the NFL, MLB, NBA, NHL, Barclays Premier League, and other professional sports leagues around the world. We have advised on transactions that have utilized a broad range of financing structures, including straightforward government-owned, sponsored, and financed proj-ects, public-private partnerships, private joint ventures, and 100% privately-owned and project-financed facilities. Examples include our representation of:
The New York City Industrial Development Agency in connection with financings for the development and construction of new baseball stadiums for Major League Baseball’s New York Yankees and New York Mets.
A football club in Greece involving the preliminary aspects of the financing of its new 50,000-seat stadium.
Both lead investment banks in connection with two separate joint venture non-recourse project financings under Rule 144A by the New York Giants and New York Jets for the new 82,000-seat open-air stadium. This was the largest sports financing transaction closed to date.
The lead investment bank in connection with the nonrecourse project financing under Rule 144A of the team’s contribution of funds to finance the construction of a new 42,000-seat ballpark for the Minnesota Twins.
A large corporation and its subsidiaries in the structuring of a P3 in California for the financing, construction, and operation of a state of the art, 19,200-seat, indoor sports and entertainment arena to house professional sports teams including the facility’s National Hockey League tenant.
The capabilities of a
full-service law firm
enable the Infrastructure
Finance team to work
with attorneys with
knowledge and
expe-rience critical to the
success of large-scale
infrastructure projects.
Project contracts/concession agreements
Nixon Peabody has a broad-based practice that represents owners, developers, lenders, design professionals, general contractors, and subcontractors on a wide variety of infra-structure projects throughout the United States and internationally.
Our experience includes the drafting, negotiation, and analysis on behalf of developers and financing parties of concession agreements, the design/build and construction sub-contracts, and EPC agreements required for major infrastructure projects such as toll roads, bridges, airports, energy facilities, water treatment facilities, stadiums, and process manufacturing projects.
We believe that the relative success of concession agreements is determined more at the planning phase than in the actual negotiations. In preparing to negotiate a concession agreement, we first work with our client to establish the framework for our process and create a risk analysis matrix. An attempt is made to identify all foreseeable risks and to assign such risks to the appropriate party. Each major risk, its chance of occurring and the party contractually responsible are set forth in columnar form. Examples of our work include the following:
• Negotiated open book design/build agreements for the JetBlue Operations Center at JFK Airport.
• Negotiated target price EPC contracts for the engineering and construction of a 600 MW coal and biomass-fired power plant.
• Negotiated construction contracts and long-term service agreements for over 30 Covanta waste-to-energy transactions.
• Provided a detailed risk analysis for the proposed concession agreement and the associated design/build subcontracts and sub-subcontracts for Florida’s I-595 toll road project.
• Represented the owner in negotiating construction and operating contracts for the largest seawater desalination project in the country.
• Negotiated the EPC agreements for the construction of a 400 MW, 55-mile submarine cable transmission facility under San Francisco Bay.
Full-service capabilities
The firm’s Infrastructure Finance practice brings together the knowledge and talents
of attorneys from multiple practice areas, such as Project Finance, Public Finance,
Real Estate, Construction, Labor and Employment, Financial Restructuring and
Bankruptcy, Derivatives, Global Finance, Tax, Environmental, Corporate, Banking,
Syndication, Private Equity, and Securities Law. This interdisciplinary capability is a
powerful asset for clients attempting to master complex infrastructure financing
problems in a demanding economic environment.
Tax
An important aspect of Nixon Peabody’s infrastructure resources is the depth of our tax law experience and capabilities. Our infrastructure attorneys are supported by an experi-enced, creative tax team with a reputation for cutting-edge thinking on tax law and for using the law’s most recent interpretations to our client’s advantage.
In these markets where more and more infrastructure projects involve federal government subsidies in the form of private activity bonds, Build America Bonds, SPV on behalf of entities, and traditional tax-exempt bonds, a firm with a national reputation in the tax aspects of tax-exempt bonds, defeasance, arbitrage rebate, and private use brings added value to clients seeking solutions to complex financing challenges.
Financial restructuring and bankruptcy
Nixon Peabody’s Financial Restructuring and Bankruptcy practice group has been inti-mately involved in a variety of infrastructure transactions. When the initial transaction is being negotiated and documented, we work closely with the firm’s finance attorneys to arrive at a structure for the transaction that produces a predictable and acceptable result should a party to the transaction experience subsequent financial distress. In that context, we address rating agency, lender, or investor concerns that often include establishing the borrower as a single purpose bankruptcy remote entity or dealing with unique bankruptcy opinions and disclosures. We also address unique bankruptcy or insolvency issues that arise in the context of certain transaction documents, including intercreditor and subor-dination agreements. Our work on the front-end of infrastructure projects has included the financing of toll roads and sports stadiums in various parts of the country.
We also become involved when financial distress appears and threatens an infrastructure project, either to work on a consensual restructuring or a reorganization proceeding under either chapter 9 or 11 of the Bankruptcy Code. In that context, the full range of our bankruptcy capabilities is put into play including pre-reorganization planning, consensual debt restructuring either out of court or via a prepackaged or pre-negotiated plan, debtor-in-possession loan facilities, asset acquisitions and sales, loan workouts and forbearance agreements, real estate foreclosures, creditors’ committee representation, litigation, the enforcement of intercreditor agreements, and exit financing. Our experience has included work on toll roads, water treatment facilities, and sports stadium acquisition financing and involves work in both chapter 9 and chapter 11 cases.
Our financial
restructuring and
bankruptcy attorneys
can assist clients
on the front-end
and back-end of
infrastructure deals.
Derivatives
Nixon Peabody has significant experience with the use of derivative products in the capital markets. Our attorneys have experience with a broad range of derivatives such as interest rate swaps, caps, options, forwards, swap guarantees, termination agreements, swaptions, credit default swaps, commodity, total return, and currency swaps. We have represented municipalities, corporate obligors, swap dealers, lenders, borrowers, and credit support providers on a wide array of derivative transactions.
Our attorneys have drafted and/or negotiated the legal documentation for these derivative transactions and we have developed substantial experience with ISDA Master Agreements, Credit Support Annexes, Confirmations (documenting new transactions as well as full and partial terminations of transactions and amendments to various aspects of transac-tions), Novation documentation, and various ISDA Definitional publications as well as Corporate Guarantees, and Swap Insurance Policies. We often draft, review, modify and negotiate related debt documentation to ensure our client’s rights and the other parties’ obligations are clearly set forth.
We assist our clients by often providing legal opinions regarding the enforceability and other aspects of the derivative and related debt transactions and have worked with clients in developing guidelines for their use of derivative products. In addition, we have experi-ence assisting our clients in working through the challenges created by the bankruptcy filings of their swap counter-parties or related credit support providers.
Environmental
Nixon Peabody’s environmental attorneys offer our infrastructure clients a unique and cost-effective blend of legal counseling and representation supported by in-house engi-neering and scientific professionals.
We have experience in all substantive areas of environmental law, including regulatory compliance (air, water, solid and hazardous waste, wetlands, and drinking water); indus-trial facility siting, permitting, and land use; environmental quality reviews and brown-fields redevelopment; environmental litigation; transactional due diligence; site investiga-tion, remediainvestiga-tion, and facility closure; spill release reporting and emergency planning; occupational health and safety incidents and management systems; and governmental investigations.
Our attorneys are also widely recognized for their leadership in the development and financing of environmental infrastructure projects, such as those for disposal of infec-tious, medical, hazardous, and solid waste, and water and wastewater conveyance, as well as projects that convert waste to energy.
We serve a broad range of clients, including municipalities, energy companies, financial institutions, hospitals and medical centers, universities, industrial firms, manufacturers, not-for-profits, and individuals.
Our attorneys
are also widely
recognized for
their leadership in
the development
and financing of
environmental
infra-structure projects.
Private equity
Nixon Peabody represents fund sponsors, institutional investors, pri-vate equity firms, and venture capital funds in connection with the financing of infrastructure projects. We advise clients on fund forma-tion and management issues and continue to provide advice on related matters as a transaction progresses. We also counsel investors on restructuring and recapitalizing portfolio companies that hold significant future potential.
Nixon Peabody ranked 2nd nationally by the 2010 Dow Jones Private Equity Analyst Rankings for the number of private equity and venture capital funds that had a final close in 2009 (310) and 15th for the number of private equity and venture capital deals negotiated and closed that year (169).
By working closely with limited partners and general partners at every stage of the invest-ment lifecycle, we have gained broad experience in the challenges and opportunities fac-ing investors. Nixon Peabody has represented a broad scope of institutional investors in connection with over 400 fund investments in the United States and abroad. These inves-tors included a number of leading funds of funds, public pension systems, and university endowments whose investments were in buyout, venture, and distressed funds focused in the United States, Europe, Israel, Asia, and Africa.
Labor and employment
Numerous labor and employment issues emerge in infrastructure projects, such as nego-tiations regarding public sector employee protections and reassignment or conversion with carryover wage and benefit protections, neutrality regarding union organizing, pub-lic pension funding requirements, compliance with local and state employment regula-tions, contracting and subcontracting commitments, project labor agreements, and related negotiations.
Attorneys in Nixon Peabody’s Labor and Employment practice advise investors and pri-vate contractors regarding the labor law implications of public infrastructure investments and privatization initiatives. For example, we assisted in the RFP and negotiations for the privatization of Midway Airport; the due diligence and RFP for the purchase of West Coast ports by a foreign public sector pension fund; and counseled Australian and Spanish investor groups in the purchase and ongoing operations of the Chicago Skyway.
Nixon Peabody is
well positioned to
bring our
collec-tive knowledge and
resources to bear on
the development of
innovative
public-private and other
infrastructure projects.
About Nixon Peabody
Nixon Peabody LLP is a full-service,
international law firm and is recognized as
a “Global 100 firm”—one of the largest in
the world. The firm’s size, diversity, and
advanced technological resources enable it
to offer comprehensive legal services to
individuals and organizations of all sizes in
locate, state, national, and international
matters. For more information, visit us at
www.nixonpeabody.com
Infrastructure Finance
team contacts:
Michael A. Vaccari, Co-Practice Chair
212-940-3108
Virginia Wong, Co-Practice Chair
212-940-3028
Sponsors’ counsel on Project Finance Magazine’sNorth American Single Asset Power Deal of the Year 2009, Astoria II in Queens, New York
Underwriters’ counsel on The Bond Buyer’s 2009 Deal of the Year, the $963.3 million Metropolitan Washington Airports Authority (“MWAA”) Dulles Toll Road Bonds
TIFIA counsel on Project Finance Magazine’s 2008 North American Transport Deal of the Year, SH130 in Texas
TIFIA counsel on Project Finance Magazine’s 2008 Deal of the Year and The Bond Buyer’s 2008
Innovative Nontraditional Public Finance Deal of the Year, Capital Beltway in Virginia
Underwriters’ counsel on Project Finance Magazine’s 2007 North American Leisure Deal of the Year, the new Meadowlands Stadium for the Giants and the Jets NFL teams
Developer’s counsel on Project Finance Magazine’s 2007 North American Infrastructure Deal of the Year, Trans Bay Cable in San Francisco
Bond counsel on Project Finance Magazine’s 2006 North American Leisure Deal of the Year, the
Yankees financing and The Bond Buyer’s 2006 Deals of the Year, the Yankees and Mets financings
Transaction counsel on The Bond Buyer’s 2006 Midwest Deal of the Year, the Missouri Joint Municipal Electric Utility Commission, and the Municipal Energy Agency of Mississippi in the Plum
Nationally recognized
Infrastructure practice
Our infrastructure work has received national
recognition and numerous awards:
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