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It's equity owners, lenders, the NSW government and bankers at 10 paces as a $2 billion refinance for the once-troubled Reliance Rail heats up.
In the red corner is Reliance Rail's equity holders - listed contractor Downer EDI and infrastructure managers AMP Capital and Amber Infrastructure Ltd, from the UK - who it is understood are preparing a new proposal to put to key counterparty, the NSW government.
In the blue corner are the lenders, who are owed about $2 billion with most focus on $1.15 billion worth of senior secured bank facilities and bonds due in the 2018 and 2019 financial years, and Syncora, the credit wrapper.
While the parties know each other well and have been talking about the refinancing for months, it is understood the situation is about to heat up.
The equity owners, advised by RBC Capital Markets, are said to be preparing a new ownership structure to put to the NSW government before going to debt markets for a long-dated debt deal.
As it stands, Downer EDI owns 49 per cent of the NSW rolling stock venture, while AMP Capital has 34 per cent. The third shareholder, Amber, owns 17 per cent taking the stake after a management buyout of the PPP infrastructure team at Babcock & Brown in 2009.
The shareholders are expected to tip fresh equity into Reliance Rail as part of the deal. However, it is unlikely to be in proportion to the current ownership, with AMP Capital's cashed up infrastructure team expected to lift its stake at the expense of one - if not both - of its co-investors. The question, as always, is about price.
That proposal is expected before the NSW government within weeks, with all involved aiming to have the refinancing done by June 30.
On the other side of the deal is credit wrapper Syncora, advised by Moelis & Co, who is no doubt keen to see all the debt paid off so it can walk away from the situation.
That side of the deal is understood to be frustrated the refinancing has already taken this long. The window for raising cheap debt has been open for the past year, with the cost of borrowing generally seen to be favourable for such an infrastructure-backed project.
In the background is NSW, advised by Lazard, who in darker days a few years ago signed a deal where they could take ownership of Reliance Rail's equity for $175 million "on a commercial basis" in 2018 pending a successful refinancing.
NSW's equity has not come in yet and most involved expect that it never will. Instead, AMP, Downer and the like will pay to retain control and claw back some of that value.
Talks with new lenders are also understood to have kicked off in the past fortnight, although it seems unlikely there will be any new issuances until the equity side of the deal is signed off.
This article first appeared on www.afr.com
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