Jerusalem light rail franchisee Shapir Engineering and Industry Ltd. (TASE: SPEN) and its Spanish partner CAF are close to signing one of the largest project financing agreements ever agreed in Israel for the construction and operation of a network of lines. The financing will be extended by a consortium of banks led by Bank Hapoalim (TASE: POLI).
The investment for building the project is estimated at between NIS 5 billion and NIS 7 billion and the financing that will be extended is worth about NIS 3.5 billion. The debt is likely to grow during the life-cycle of the project and the franchise includes the right to operate the Jerusalem light rail for 15 years with an option to extend it for another 10 years.
The consortium led by Hapoalim includes First International Bank of Israel (TASE: FTIN), Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) and Altshuler Shaham Ltd.. The financing at Hapoalim is being led by Tzahi Cohen, head of the corporate division.
Sources in the infrastructures market told "Globes" that closing the financing for the project, "comes at an excellent time. It's exactly what the economy needs. One of the solutions for an economic crisis is by investing in infrastructures."
Closing the financing about one year after winning the tender is considered a relatively short process for a financing agreement which is so large and complicated. So far only one similar project has been completed - the Jerusalem light rail Red Line, which began operating by CityPass in 2011. The Tel Aviv light rail Red Line project was originally planned as a BOT project but was nationalized after MTS Group was unsuccessful in closing financing.
In August 2019, TransJerusalem J-Net Ltd., owned by Shapir and CAF, won the tender put out by the Ministry of Finance, Ministry of Transport and Jerusalem Municipality to operate J-Net, the Jerusalem light rail network. Shapir and CAF are committed to operating the existing Red Line between Mount Herzl and Pisgat Zeev and extending its northwards to Neve Yaakov and southwards to Hadassah Hospital in Ein Kerem. Shapir and CAF will also build the Green Line from the Hebrew University on Mount Scopus and to Malkah and Gilo with a branch line to the Hebrew University's Givat Ram campus and Givat Shaul.
Published by Globes, Israel business news - en.globes.co.il - on October 21, 2020
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