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Mumbai Metro achieves financial closure

MUMBAI: Mumbai Metro One Pvt. Ltd. (MMOPL), a joint venture between Reliance Infrastructure, Franceâs Veolia Transport and Mumbai Metropolitan Regional Development Authority (MMRDA), on Saturday signed the loan agreements to raise debts totalling Rs. 1,194 crore, and achieved the financial closure for the first line of Mumbai Metro Varsova-Andheri-Ghatkopar corridor.

MMOPL has raised the debt from a group of banks led by IDBI, Corporation Bank, Karur Vysya bank, Canara Bank, Indian Bank and Oriental Bank of Commerce. IIFCL (U.K.) is providing the foreign currency loan for the project. The project, being built at a cost of Rs. 2,356 crore, will have a debt component of Rs. 1,194 crore, while the equity is Rs. 512 crore. MMRDA, the concessioning authority, will provide a capital grant Rs. 650 crore.

The cost of borrowing for the rupee component, which constitutes about 75 per cent of the total debt, will be 12.25 per cent, while the foreign currency loan will be at 3.5 per cent above LIBOR (London Inter-Bank Offered Rate).

“The debt has been raised amidst a tight global liquidity position, based on a unique funding model, where the only recourse available to the lenders is to the cash flow generated from the project instead of the project assets. The repayment has also been structured in a manner that gradually increases over a period in sync with the increasing traffic revenue generated by the project. This model of financing for an urban infrastructure project is first of its kind for most Indian banks and financial institutions,” stated a company release.

“The repayment model is also unique as for the first time the project’s assets are not charged to the lender as security,” said Mr. Maheshwari, Director, MMOPL.

“The project is ahead of schedule and is slated to be completed by July 2010.”

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