Highway 431 funding deal signed [pg. 18]

Following a year of talks, HSBC - together with a group of domestic banks - have signed a funding agreement with Africa Israel, paving the way for work to begin on Highway 431, the Finance Ministry and Africa Israel said Tuesday. Welcoming the entry of HSBC into the project, Finance Minister Avraham Hirchson said "this is a good beginning, which will continue to lead foreign investments in the state of Israel," as he stressed the event's importance as a sign of confidence in Israel's economy despite the confrontation in the North. "I thank the investors for their faith in the economy, and we shall do everything to get through this period in the best manner for the State of Israel, and even emerge stronger from it," he said. The agreement arranges coverage for the NIS 1.2 billion long-term debt, while the total project will require a NIS 1.8b. investment. Africa Israel CEO Pini Cohen and subsidiary Danya Cebus CEO Ofer Cotler signed the deal with HSBC's Israel representative, Ehud Arnon, and officials from Bank Hapoalim, Mizrahi-Tefahot and First International Bank. The Finance Ministry called the agreement an "unprecedented accomplishment in the field of projects in Israel, especially in light of the complexity of the funding strategy chosen by the winner of the tender," which requires the banks to commit from the outset to fund the long-term debt. Intended to improve the connection between the Rishon Lezion area and Jerusalem, Highway 431 will be a 22-kilometer road with three lanes in each direction linking Rishon Lezion with Highway 1, near Modi'in. It will include 12 interchanges. A PFI (Private Finance Initiative) project, the concession period covers 25 years, including a 30-month construction period and a 22.5 year operation and maintenance arrangement. Africa Israel said that it already had begun work on the project "at its own expense" in November, and has completed 10 percent of the work. The road is expected to be open for traffic in January, 2009, the company said. The state will pay the company a fee for operating the road, and after the period is up, ownership will revert to the state. The project includes incentives for Africa Israel to complete segments of the road and open them to the public ahead of the deadline Africa Israel and Danya Cebus are also bidding on other large state infrastructure projects, including Highway 531, the Tel Aviv Light Rail, and express lanes at the entry to Tel Aviv.