CBK, ABK and KfW IPEX-Bank lead arrange $650m project finance

KUWAIT: Dr Rana Abdullah Al-Fares, Minister of MPW, Bakheet Al-Rashidi, Chairman and Joachim Dudey, CEO of Umm Al-Hayman Company for Waste Water Treatment, Talal Behbehani (Chairman ABK), Sheikh Ahmad Duaij Al-Sabah (Chairman CBK), Motlaq Al-Sanei – General Director KAPP and senior representatives from the German and Kuwaiti sponsors.

KUWAIT: A consortium of six banks led by Commercial Bank of Kuwait (CBK), Al-Ahli Bank of Kuwait (ABK), and KfW IPEX-Bank as Initial Mandated Lead Arrangers and Joint Bookrunners has signed a US $650 million, 26-year project loan to finance the construction and operation of the Umm Al-Hayman Waste Water Plant. The other mandated lead arrangers are The Korea Development Bank, DZ BANK AG, and Siemens Bank GmbH.

Under the loan facility agreement, KfW IPEX- Bank will act as the Global Facility Agent and Offshore Security Agent, while Al-Ahli Bank of Kuwait will act as the Onshore Security Agent and Commercial Bank of Kuwait as the Onshore Account Bank. The legal services were led by Hogan Lovells and ASAR Legal on behalf of the Developers and Covington’s and Al-Bader Law Office on behalf of the Financiers.

On the 23rd January 2020, Dr Rana Abdullah Al-Fares, Minister of Public Works; Bakheet Al-Rashidi, Chairman of Umm Al-Hayman Company for Waste Water Treatment KSCP, and Joachim Dudey, CEO of Umm Al-Hayman Company for Waste Water Treatment KSCP, signed the PPP agreement and other Project Agreements for the development of the plant.

The banks represented by Talal Mohamed Reza Behbehani (Chairman ABK) and Sheikh Ahmad Duaij Al-Sabah (Chairman CBK), signed the Financing Agreements with the Umm Al-Hayman Waste Water Company KSCP, in the presence of Motlaq Al-Sanei – General Director of the Kuwait Authority for Partnership Projects (KAPP) and Senior Representatives from the German and Kuwaiti Sponsors. The project was tendered under the auspices of KAPP and will be developed by WTE Wassertechnik GmbH (Germany), a fully owned subsidiary of the Austrian State Utility Company EVN, and International Financial Advisors (Kuwait).

Umm Al-Hayman Waste Water Treatment Co. KSCP is owned 40 percent by the German/Kuwaiti Development Consortium and 10 percent by the Kuwait Investment Authority on behalf of the Government of Kuwait. The remaining 50 percent is held by KAPP, with the aim of offering shares to the public through an IPO once the facility is operational.

Joachim Dudey, Director of WTE and CEO of the Umm Al Hayman Company for Waste Water Treatment KSCP, said: “WTE Wassertechnik is delighted to be involved in this project, which represents a milestone in the development of modern, efficient and environmentally friendly waste water infrastructure in Kuwait. We are pleased to bring our market leading water management and environmental systems technology to this project, which we believe will be hugely beneficial for all parties.”

Saleh Al-Selmi of IFA said: “Since 1974, IFA has invested in assets management and infrastructure projects that help in creating efficient market structures and streamline the investment industry. Umm Al Hayman is a critical infrastructure project that will set a new worldwide benchmark for sustainable water treatment and reuse.”

Sheikh Ahmad Duaij Al-Sabah, Chairman of Commercial Bank of Kuwait, said: “The signing of the PPP agreement for Umm Al-Hayman project is truly a landmark event and the learning during the process will serve as a benchmark for future PPP projects. The signing of the financing agreements reflects major developers’ continued confidence in the ability of Kuwaiti institutions to arrange financing for such complex project financing transactions. We are pleased to partner with our fellow banks on this project and thank the Government of Kuwait for showing confidence in us.”

Markus Scheer, Member of the Management Board of KfW IPEX-Bank, said: “As a bank that is strongly committed to environmental sustainability, KfW IPEX-Bank has been involved with this project as an Initial Mandated Lead Arranger from the very beginning. This builds on our many years of firm support to WTE’s/EVN’s worldwide investment. The Government of Kuwait understands that water is a critical resource, and its decision to build the Umm Al-Hayman Waste Water Plant is in line with this view.”

In closing, Talal Mohamed Reza Behbehani, Chairman Al-Ahli Bank of Kuwait, said: “The financing of critical and mega infrastructure projects is a part of our strategic and long-term objective, especially as such projects are considered an essential part of Kuwait’s Vision 2035, which is aimed at transforming and diversifying the national economy. We are extremely pleased with the hard work of the MPW, KAPP, the sponsors and our partner banks that has resulted in the signing of the PPP agreement today.”

The Umm Al-Hayman Waste Water Treatment Project is one of the largest of its kind in the world, with a number of treatment plants, related facilities, and transmission and distribution assets being constructed, operated, rehabilitated and/or decommissioned under a single concession agreement – the Transmission and Sewage Treatment PPP Agreement (TST-PPP).

Under the terms of the TST-PPP, the assets are split between two contracting models (BOT and DBO). The BOT elements include a new waste water treatment plant near Umm Al Hayman with an initial hydraulic capacity of 500,000 m3/d daily average inflow and a new electrical substation for the stage 1 plant. The DBO elements include a number of wastewater transmission assets, effluent transmission and distribution assets and the rehabilitation or demolition of existing pumping stations and treatment facilities.

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