Alberto de la Parra
Jones Day
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Building Blocks for NAICM Financing

Tue, 11/01/2016 - 22:59

Q: What measures have been taken to manage the project finance risks associated with the financial tools selected for NAICM?

A: Jones Day has participated with advisory services for NAICM since the inception of the financing plan, analyzing the legal feasibility of the financing structure. Jones Day has worked hand in hand with NAICM’s financial adviser, Latam Capital Advisors. Our company has also advised NAICM with respect to all different projects associated with the construction and development of the airport.

The financial plan is based on a simple structure whereby the passenger tariff (TUA), which is paid by passengers directly to the airlines and in turn transferred to a special financing vehicle, creates a secured source of repayment. A trust is created with the right to collect the TUA that corresponds to AICM, which in turn receives compensation from the sale of the TUA. To pay compensation from the sale of the TUA, the trust obtains financing from the international banking community and capital markets. The repayment of the financing is secured due to the fact that the TUA is paid directly from the airlines to the trust structure, which creates and maintains required reserves for debt repayment and transfers the remaining amounts to AICM and NAICM. This structure guarantees no construction risk since the repayment is based on the TUA paid by actual passengers traveling through AICM.

NAICM’s financing structure guarantees no construction risk since the repayment is based on the TUA paid by passengers traveling through AICM

Q: What is your evaluation of the NAICM Green Bond?

A: The Mexican government has designed this project in a way that is favorable to the natural environment. The design, construction methods and maintenance and operation are carried out while prioritizing environmental impact. This attracted the attention of different institutions willing to analyze whether the project as well as the financing could comply with the high standards they have set to qualify as a green bond. This has in turn attracted funds from the international financial community dedicated to infrastructure projects with social and environmental responsibility at their core.

Q: What gives Jones Day an edge in addressing legal issues for a project with the complexity of NAICM?

A: Jones Day lawyers in the project and infrastructure practice have a long history in the airports and infrastructure industry, which is a unique virtue that can assist NAICM from regulatory and contractual points of view. Furthermore, due to Jones Day’s business model, the client obtains the benefit of the vast experience across our 42 offices. We can offer the client advice for each different legal aspect and for any jurisdiction in the same place, which makes us distinct from any other firm.

Q: How will NAICM be a stepping stone for Jones Day to strengthen its position in the Mexican infrastructure sector?

A: Jones Day was established in Mexico in 2009 and since then has been very involved in the Mexican infrastructure industry with the responsibility of participating on projects either on behalf of the financing institutions or the Mexican government. Jones Day is committed to its clients in every transaction, litigation or representation that we consult on. Based on that principle the collaboration between Jones Day and NAICM in this project guarantees a successful and transparent process.

We have also represented financial institutions and sponsors in the energy industry with a great deal of success. Jones Day is not limited to a single industry or area of strength but we strive to reach the same level of quality across all our practice areas. That is the reason we can proudly say we are well positioned in other infrastructure industries such as renewable energy, oil and gas and toll roads, among others.