Sources inform “Globes” that the City Pass consortium, which won the tender for the Jerusalem light train, is having difficulty raising a short-term euro loan for the project.
The sources added that the tender committee is considering various changes in the franchise terms, including the payment of a NIS 1.4 billion set-up grant in several payments, not one payment at the end of construction, as stipulated in the franchise contract. Engineering changes in the project are also being considered, in order to lower the cost. The tenders committee, however, has not yet made any definite decision.
City Pass stresses that the difficulty concerns only obtaining the loan in euros needed by the consortium. “The difficulty has nothing to do with City Pass; it is a problem of the Israeli banking system,” the group stated. A senior tenders committee source said he believed City Pass would manage to raise the money. He added that the difficulty in raising a short-term loan could be overcome.
The NIS 2 billion franchise contract between the state and City Pass was signed in November 2002. The consortium is scheduled to raise $300 million in shekels and euros for the short term, and the remaining $100 million in a long-term loan for the 30-year operating franchise period.
According to the stipulated timetable, City Pass is scheduled to present its financing arrangements to the tenders committee by August. The consortium is negotiating with Bank Leumi (TASE:LUMI) and Bank Hapoalim (LSE:BKHD; TASE:POLI). Foreign banks have expressed no interest in financing the project. City Pass and the tenders committee believe that the financial transaction will be settled by the end of the year, despite the difficulties.
Published by Globes [online] - www.globes.co.il - on June 11, 2003