Speaking at a conference on energy from waste in London yesterday, Bank of Ireland's head of infrastructure, Andrew Hartley, said that the institution would be the main bank for the deal.
It has been a long haul in the current financial market. The deal is all but done and we are looking to bolt down the funding
Alasdair Lawrence, John Laing Investments
However, Mr Hartley told delegates at the Associate Parliamentary Sustainable Resource Group and letsrecycle.com Live! event on waste to energy, that it was proving difficult to reach financial close on such large PFI deals in the current economic crisis.
He said: “The slowdown is a reality, and people who are looking to raise substantial amounts of funding will have found it difficult, with projects being delayed or scrapped.”
Alasdair Lawrence, investment manager at John Laing Investments, added that his company was still looking to “bolt down” its funding and that financial close was now expected in the last quarter of 2008.
He said: “Those of you who have had the experience of achieving closure on a waste PFI will smile knowingly at our predicted finish; it has been a long haul in the current financial market. The deal is all but done and we are looking to bolt down the funding.”
Providing more evidence of funding pressures, Dutch merchant bank NIBC, which was originally set to help fund the Manchester project, today told letsrecycle.com that it had reappraised its role.
A NIBC spokesman said: “We have not officially stepped out of our involvement in the project, we still hope that we can lend to it. It is now being lead by the Bank of Ireland and they have approached a number of other banks.”
Other banks are also expected to be involved in supporting the Manchester PFI scheme.
Taking a broader perspective on waste funding deals, Mr Lawrence said that John Laing was “continuing to close projects in a difficult market”, having achieved financial close on the extension of the Bundesautobahn 1 (A-1 motorway) in Germany and also two projects in Canada as recently as August.
Hiatus
The Department for Environment Food and Rural Affairs has also recognised that there are current difficulties in finalising PFI deals.
Melville Haggard, advisor for Defra's Waste Infrastructure Development Programme (WIDP), told letsrecycle.com that there was “a hiatus in the market” in terms of PFIs getting signed off because some banks were less willing to commit right here and now.
However, Mr Haggard said that the deals had strong support and used tried and tested project finance and that compared to other areas “we see this as an attractive area of lending.”
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