Monday, April 07, 2003

 In one of the quickest transactions yet seen in the European PPP market, Orkdalsvegen, a consortium formed by Laing Roads (a division of John Laing Plc) and Skanska BOT, has reached financial close with the Vegdirektoratet, Norway’s state roads agency, for the first Norwegian PPP roads project. The project, the E39 between Klett and Bardshaug, near Trondheim, is the main arterial road for the western part of Norway.

The concession, which will run for 25 years after construction, is Laing Roads’ second PPP investment in the Nordic region along with the Finnish Helsinki-Lahti shadow toll road. Laing Roads and Skanska have also pre-qualified to bid for the second Norwegian PPP road project. The E39 concession requires overall funding of approximately £140m, of which approximately £5.5m each will be provided by Laing Roads and Skanska BOT. Senior debt has been provided by Handelsbanken AB, LB Kiek, and Nordea Bank, and includes Nordic Investment Bank post-construction. LB Kiel. Work will start immediately on the project, which involves a new grade separated route of over 27km including 10km of tunnels. Construction is expected to be completed in the Autumn of 2005. The construction and operations partner in the consortium is Selmer Skanska, one of the largest contracting organisations in Norway.

Laing Roads and Skanska BOT applied their extensive experience of infrastructure investment in other markets to optimise the commercial and financial structure of this project - financial advisory support was provided by Laing Roads and Skanska, rather than externally sourced. The procurement was completed in record time for a new PPP programme, with a period of just over one year between pre-qualification and financial close.

Derek Potts, Managing Director of Laing Roads said:

“This milestone builds upon and demonstrates the benefits of our strong existing partnership with Skanska BOT in the region, where we are both major investors in the Finnish shadow toll concession.

“This deal proves how emerging European markets can efficiently implement new PPP procurement structures in a timely fashion. Together with our partner Skanska, our team has been able to actively contribute to this process, working closely with the Vegdirektoratet. Documentation and financing have been completed only two and a half months from selection as Preferred Bidder. We believe this to be a best practice example of how new markets can implement PPP.

“The closure of this contract further strengthens Laing Roads and John Laing Plc’s position as a leading infrastructure developer and investor, and demonstrates our ability to engage in key European markets.”

Notes to Editors

1. The Klett to Bardshaug section of the E39 is the first of three major projects in Norway. The existing route follows a twisting coastline and is of low standard, with many intersections, reduced speed limits and a high accident rate. The E39 section, near Trondheim, is the main arterial road for the western part of Norway. This is one of the busiest sections, serving as the principal route in the area for local industry of over 10,000 companies and over 200,000 inhabitants.

2. The consortium prequalified early in 2002, with tenders being submitted in September and Best and Final Offers in mid December. The three other bidders were consortia including Bouygues, Hochtief and NCC respectively. The Vegdirektoratet’s programme called for the contract to be signed at the end of March 2003.

3. Laing Roads, a division John Laing plc, has extensive experience of privately financed roads, and currently holds investments in eight roads concessions, seven in the UK and one in Finland. It has participated in the UK’s private finance programme since its inception, securing investments in the M40 J1 to J15 (50%), A55 Bangor to Holyhead (50%), A130 (100%), Severn River Crossing (35%), M6 (19.5%), A19 (50%), Walsall Street Lighting (50%), as well as the Nelostie (Helsinki – Lahti) road (50%) in Finland with Skanska BOT. Laing Roads is planning to expand its activities in Europe, working with partners in the main emerging PFI/PPP markets.

4. John Laing plc, a publicly quoted company, holds a large and expanding portfolio of investments spanning transport (including 100% ownership of Chiltern Railways), health, education and special purpose government facilities. The majority of the investments are within the UK though a number are in continental Europe and the Far East and Pacific regions. Laing Investments currently invests in 34 projects, of which 24 are fully operational. It is currently shortlisted for a further 20 PFI and PPP projects. The company is one of the most successful participants in the Government's Private Finance Initiative and has a proven record of delivering new investments on time and on cost. Laing Investments Ltd won the Infrastructure Journal PPP Developer of the Year Award in February 2003 for the second year running.

5. John Laing plc has undergone a marked transformation since the sale of Laing Construction in October 2001. It has reorganised its debt; completed an asset realisation programme, including the sale of Laing Property and Europistas; and following a strategic review, which concluded that Laing Investments offered the greater growth prospects, sold Laing Homes Limited, its UK housebuilding arm, to George Wimpey plc for £297 million. It recently negotiated the purchase of Amey’s PFI assets, acquiring a further eight PFI projects, taking its total portfolio to 34 investments, of which 24 are fully operational. John Laing plc is now a focused infrastructure investment and operations company, and today’s announcement further enhances its position as a leading infrastructure developer, investor and operator.