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Infrastructure privatisation in Europe

Fraport Greece

Financing a 14-airport concession

With the country planning to sell off as much as €50bn in state-owned assets, privatisation is a key part of Greece’s economic reform.

When a 40-year concession for 14 airports that handle some two-thirds of the country’s tourist traffic was offered, Fraport Greece, a joint venture of Fraport Frankfurt Airport Services Worldwide and Copelouzos Group, entered into negotiations. Freshfields assisted with the financing.

Getting off the ground

The number of airports involved made the financing a challenge, especially as the assets were divided between two essentially separate concessions of seven Ionian and seven Aegean airports.

The number of airports involved made the financing a challenge.

Freshfields structured identical financing packages for each as part of a single financing process, enabling the sponsors to commercially consider this a single project.

The nature of the deal offered a further complication: Fraport Greece was to pay €1.2bn as an upfront payment for the concession and promised to invest €330m in the airports’ infrastructure by 2020. We had to balance the interests of lenders of the upfront payment – essentially acquisition financing – with the development capex element funded by the European Investment Bank, which was lent over a two-year period.

We had to balance the interests of lenders of the upfront payment with the capex element funded by the European Investment Bank.

Education in the complexities of Greek law was another key responsibility for Freshfields: this was the first Greek transaction for two of the three international financial institutions, who first had to familiarise themselves with the hybrid bond loan structure and split choice of law arrangements customarily used in the Greek market.

Unlike many infrastructure concessions, the Greek airports were taken over as live operating assets, inheriting existing arrangements. The handover and the financing had to work in tandem, with the upfront concession fee paid as the airports were taken over.

A runway success

Having worked with Fraport on the concession to operate the Pulkovo Airport in St Petersburg and boasting a peerless airports practice, Freshfields brought a wealth of experience.

Boasting a peerless airports practice, Freshfields brought a wealth of experience.

Seamless work between our Frankfurt and London offices, as well as with Koutalidis, one of our StrongerTogether partner firms, also brought comprehensive international and domestic perspectives.

A 40-year concession to upgrade and operate the airports was agreed with the Hellenic Republic Asset Development Fund in March 2017.

As well as offering Fraport Greece important assets with strong potential, the deal – with the biggest concession fee ever paid to Greece – was an important step on the country’s journey to recovery.