A consortium of financial institutions signed a long-term agreement worth approximately 1 billion euros with Fraport Greece to finance the 40-year concession contract of the 14 Greek regional airports, according to a Black Sea Trade and Development Bank announcement on Monday.
The consortium of lenders includes: Alpha Bank (284.7 million euros), Black Sea Trade and Development Bank (62.5 million), European Bank for Reconstruction and Development (186.7 million), European Investment Bank (280.4 million), and the International Finance Corporation (154.1 million), a member of the World Bank Group. IFC is also the sole provider of Euro interest rate hedging swaps to help Fraport Greece hedge potential fluctuations in interest rates through the term of the loan.
Of the total loan, 280.4 million euros will be used for the financing of development works at the 14 airports, while 688 million euros will be used as part of the upfront concession payment (1.234 billion euros) to the Hellenic Republic Asset Development Fund. Fraport Greece recently also announced a capital increase raising the company’s total capital amounts at 650 million euros.
Fraport Greece, a joint venture of Fraport AG Frankfurt Airport Services Worldwide and Copelouzos Group, is paying a total of 1.234 billion euros for the concession to the Hellenic Republic Asset Development Fund. Fraport Greece will invest at least 400 million during the first four years in construction works for the development of the airports that will support the development of the tourism industry, a key driver of the Greek economy. During the period of the entire concession, infrastructure investments will exceed 1.4 billion.
European Commissioner for Economic and Financial Affairs Pierre Moscovici, in a statement, noted that “modern infrastructure will play a crucial role in supporting Greece’s economic recovery. This requires sustained investment to ensure that it achieves its full potential to create jobs and spur growth. This agreement, with the support of the Commission, succeeds in mobilising private investment to finance upgrades to growth-enabling infrastructure that will support, for example, tourism and mobility. This is a prime example of the type of investments the European Commission is committed to support, as they bring growth and development.”
Fraport Greece CEO Alexander Zinell hailed the signing of the financing “for the largest concession in Greece” as a historic moment.
“Together with the equity injected by our shareholders, the proceeds of the loans will help funding the upfront payment and the four-year airport rehabilitation program. The successful financing of this complex project is a clear signal regarding the prospects of the Greek economy and the confidence in our company and the reliability of our shareholders Fraport AG and Copelouzos Group. The Hellenic Republic has entrusted us with 14 airports across the country, most of them gateways to thriving tourist destinations. We are proud to play a significant role in the future development of these destinations and in support the country’s tourist industry,” he said.
Fraport Greece CFO Vangelis Baltas said the agreement was the result of a long and fruitful procedure. “After 15 months of intense work, Fraport Greece signed with Alpha Bank, BSTDB, EBRD, EIB and IFC a financing programme with a total volume of nearly 1 billion euros. Due to the overall positive impacts of the project on the Greek economy, the financing partners supported the transaction from the beginning. Together with the sponsors’ contributions, the total investment amount consists of more than 1,65 billion euros. We have all worked together ensuring that this complex project is met with success. We would like to thank our partners for their efforts and contribution to laying solid foundations for the future course of the concession project”.
Jonathan Taylor, EIB Vice President responsible for Greece, stated: “The European Investment Bank is pleased to be investing to expand and improve 14 regional airports in Greece. This is a nationally, and regionally, important project. It will create jobs, and provide a major boost for tourism – a sector that has proved its importance, and resilience, during the crisis. The EU Bank will support further investments in Greece that promote growth and help create sustainable and high quality employment.”
Ioannis M. Emiris, Executive General Manager at Alpha Bank, said: “We are pleased to arrange, jointly with major International Financial Institutions, the financing of one of the most significant foreign direct investment in Greece in recent years. The 14 regional airports together constitute the major international gateway for Greek tourism, a key contributor to the country’s GDP. The financing will support Fraport Greece in increasing the capacity and improving the operational efficiency of these airports, creating new opportunities and advancing the welfare of the respective communities and regions. Alpha Bank delivers financing solutions that support economic growth, reinforce the competitiveness of our economy and create new jobs”.
BSTDB President Ihsan Ugur Delikanli said that BSTDB, as a multilateral development bank headquartered in Greece, was “particularly happy to contribute to this major infrastructure project that has a paramount development impact on the Greek economy. This is an important investment in the future of Greece. Furthermore, the project is strengthening synergies among MDBs and private partners and promotes developmental effectiveness for the benefit of this country and the region.”
Finally, EBRD First Vice President and Head of Client Services Group Phil Bennett said: “We are delighted to participate in this landmark transaction, which we expect to provide a much needed boost to the Greek economy and in particular Greece’s regional development. The modernisation of this key infrastructure, especially supporting tourism, will improve access, exchange and integration. The EBRD is very pleased to support strategic partners who will bring private funding and expertise to the regional airports in Greece and could provide an important model for future infrastructure development projects.”