Debt Refinancing Advisory: Burgdorf PPP Refinancing, Switzerland

Rubicon was instructed by BAM PPP/ PGGM and Marti Invest AG to act in the refinancing of a social asset. Under the Concession, the SPV had to design, build, finance and manage an accommodation complex in Burgdorf consisting of a 110-person prison, a Road Inspection Agency and an administration centre. The Project was developed by BAM PPP, one of Europe’s leading developers and operators of PPP projects and Marti Invest AG, one of Switzerland’s leading contractors, under a 25-year DBFM concession agreement granted by Canton Bern, in Switzerland. Revenue is derived from inflation-adjusted availability-based quarterly payments from the Grantor.

Rubicon ran a competitive debt procurement process to refinance the existing debt facilities. The original senior debt of over CHF 100 million was provided via an 8 bank syndication while the interest rate hedging involved three different swap providers. Despite the CHF currency and documentation in German language, Rubicon was able to shortlist a number of commercial banks and institutional lenders ready to lend at extremely competitive terms.

Being the sole Swiss PPP to date, Rubicon had to carry out a careful approach towards the Grantor in order to smooth the gain sharing negotiations and refinancing process. As not all of the original swap providers were willing to enter into a swap novation, Rubicon completed the transaction through a combination of novation for some swaps and breakage for the remaining swap. The initial floating rate loan was subsequently replaced with a fixed rate loan. The refinancing resulted in significantly lower margins, a replacement of the DSRA by a DSRF and a lever up of the debt quantum in the SPV to cover breakage costs for one of the swaps.