OTS Project Deed - 423052

On the date of financial close, 18 September 2014, the units in NRT Holdings 2 Unit Trust, and the shares in NRT Holdings 2 Pty Ltd were held by the following equity investors which can be expected to receive a benefit under the OTS Project Deed:

MTR Corporation (UK) NRT Ltd a company incorporated in the United Kingdom, a wholly owned subsidiary of MTR Corporation (UK) Ltd, and ultimately a wholly owned subsidiary of MTR Corporation Ltd, a company incorporated in Hong Kong (20% holding);

Leighton Infrastructure Investments Pty Ltd (ACN 079 054 505), a wholly owned subsidiary of Leighton Contractors Pty Ltd, and ultimately a wholly owned subsidiary of Leighton Holdings Ltd, a public company listed on the Australian Stock Exchange (10% holding);

Plenary Group Pty Ltd (ACN 108 934 612) as trustee for the Plenary Group Unit Trust (10% holding);

Marubeni NRT Investments Pty Ltd (ACN 601 672 244), a wholly owned subsidiary of Marubeni Infrastructure Investments Pty Ltd, and ultimately owned by Marubeni Corporation (90% holding) and Marubeni Australia Pty Ltd (10% holding), (20% holding);

Commonwealth Superannuation Corporation as trustee for the Aria Investments Trust managed by Palisade Investment Partners Pty Ltd (10% holding);

PASIF NRT Holdings Pty Ltd (ACN 601 763 795), a wholly owned company of Palisade's Australian Social Infrastructure Fund 2, managed by Palisades Investment Partners Pty Ltd (10% holding); and

Partners Group NRT Access, L.P., a limited partnership with 100% of the economic interest ultimately held by the Partners Group pooled partnership, (constituted as follows, 19% BVK Investment III, L.P. Inc., 9% Partners Group Infrastructure Universal, L.P. Inc., 33.5% Partners Group Global Infrastructure 2012, L.P. Inc., 38.5% Partners Group Direct Infrastructure 2011, L.P.) which in turn is managed by the Partners Group (20% holding).

The following subcontractors are expected to receive a benefit or be involved, or potentially be involved, in the carrying out of the contractor's obligations under the OTS Project Deed:       

MTR Corporation (Sydney) NRT Pty Ltd (ABN 57 166 934 121), John Holland Pty Ltd (ABN 11 004 282 268), Leighton Contractors Pty Ltd (ABN 98 000 893 667) and UGL Rail Services Pty Ltd (ABN 58 000 003 136) which have been subcontracted to design and construct the Operations, Trains and Systems Works;

Metro Trains Sydney Pty Ltd (ACN 600 820 737) which has been subcontracted to operate and maintain the North West Rail Link. Metro Trains Sydney Pty Ltd is owned by MTR Corporation (UK) NRT Ltd (60% holding), John Holland Sydney NRT Pty Ltd (20% holding) and UGL Rail Services Pty Ltd (20% holding);

·                             MTR Corporation Ltd (a company incorporated in Hong Kong), Leighton Holdings Ltd (ABN 57 004 482 982) and UGL Ltd (ABN 85 009 180 287) have entered into parent company guarantees with the contractor to guarantee certain liabilities and obligations in relation to the design and construction or operation and maintenance of the NWRL;

Alstom Transport Australia Pty Ltd (ABN 68 165 157 451) has been engaged by MTR Corporation (Sydney) NRT Pty Ltd and UGL Rail Services Pty Ltd to design and manufacture the trains and communications based train control systems and it has been engaged by Metro Trains Sydney Pty Ltd to provide certain through life support for the trains and communications based train control systems;

Alstom Holdings (Registration number: 347951238 RSC Nanterre) (a company registered in France) has provided a parent company guarantee for Alstom Transport Australia Pty Ltd with respect to the design and manufacture of the trains and communications based train control systems;

Alstom Transport Holdings BV (Registration number: 34308168) (a company registered in the Netherlands) has guaranteed performance of Alstom Transport Australia Pty Ltd with respect to the through life support of the trains and communications based train control systems;

SYSTRA SA (ABN 68 557 615 546) and GHD Pty Ltd (ABN 39 008 488 373) have been jointly engaged by TfNSW and the contractor to carry out independent certification services in relation to the Operations, Trains and Systems Works; and

National Australia Bank Ltd (ACN 004 044 937) has been engaged as Security Trustee and as Agent for the project's debt financiers.

$3,766,400,000.00 (A project to be undertaken)

The contract provides for monthly Service Payments over the operations phase which is the primary source of payment to the contractor.

Multi-Stage

The Service Payment is calculated in accordance with clause 2 of Schedule 2 to the OTS Project Deed. Adjustments that can be made to the Service Payment include the following:

(a)        an Availability Deduction;
(b)        a Timeliness Deduction;
(c)        a Service Quality Deduction;
(d)        an Asset Functionality Deduction;
(e)        the Customer Satisfaction Payment;
(f)      an Asset Management Adjustment;
(g)        an Adjusted Indexed Availability Fee; and
(h)         an Indexed Lifecycle Component.

Information regarding the Final Completion Payment is commercially sensitive.

Payments to the contractor may be varied if the Pre-Agreed options in Schedule 30 of the OTS Project Deed are exercised.

Payments to the contractor may be adjusted if TfNSW's Representative issues an Extension Proposal request.  Clause 3.3 of the OTS Project Deed sets out adjustments that may be made to payments to the contractor if such a request is issued.

If certain conditions have been met between year 2 and year 4 of the operations phase, a lump sum Conditional Debt Pay Down Amount may be paid equal to the lesser of 50% of debt forecast to be outstanding, and 50% of debt actually outstanding, on the payment date.

Amounts will be paid to the contractor if the contractor prepares an initial or final Project Brief regarding Augmentation or an Augmentation Proposal and TfNSW does not proceed to implement the Augmentation.  Amounts to be paid are set out in clauses 33.7(f) and 33.8(e) respectively.

If a Relief Event occurs as set out in clause 27 of the OTS Project Deed the calculation of the Service Payment may be adjusted.

If a Compensation Event occurs, as set out in clause 26 of the OTS Project Deed, TfNSW is required to compensate the contractor for the net financial impact of the Compensation Event, to the extent that the contractor incurs additional costs or loss of revenue and provided it complies with certain pre-conditions.

Clause 62.4 provides that the OTS Project Deed may only be varied by a deed executed by or on behalf of each party.

Clause 29 provides that TfNSW may modify the OTS Project Deed requirements relating to the North West Rail Link or the contractor's activities.

Clause 33 establishes a framework by which an Augmentation can be discussed and potentially agreed by the parties.  An Augmentation is a continuous extension to the rail infrastructure and/or systems of the North West Rail Link to form a single, integrated operational extended rapid transit line.  TfNSW may propose an Augmentation to the contractor at any time.

Clause 33 also provides an acknowledgement that TfNSW is currently considering the possible extension of the North West Rail Link involving a new rapid transit line.  Due to the size and nature of this Augmentation, an alternative discussion and review process is established in Schedule 46 of the OTS Project Deed which sets out how the parties can work together on the project definition, planning, development and delivery of that particular Augmentation.

No

D&C Contractor:

MTR Corporation (Sydney) NRT Pty Limited (ABN 57 166 934 121)

John Holland Pty Ltd (ABN 11 004 282 268)

Leighton Contractors Pty Limited (ABN 98 000 893 667)

UGL Rail Services Pty Limited (ABN 58 000 003 136)

O&M Contractor:

Metro Trains Sydney Pty Ltd (ABN 54 600 820 737)

Significant Contractor:

Alstom Transport Australia Pty Limited (ABN 68 165 157 451)

Not Applicable

Sydney NSW

Unless they are hired assets, the contractor must acquire title to all moveable assets (including trains, spares, special tools and equipment and other chattels forming part of the works or used by the contractor in carrying out the Operations Activities (Moveable Assets)) either by completion (if the Moveable Asset forms part of the OTS Works) or the Original Expiry Date (in all other cases).  The contractor must transfer ownership of the Moveable Assets to TfNSW on the date on which the contractor acquires title to the asset.

At the end of the term, the contractor must transfer all of the contractor's rights, title and interest (if any) in the assets to TfNSW.

TfNSW grants the contractor an exclusive licence to use the Moveable Assets for the purpose of fulfilling the contractor's obligations under the OTS Project Deed.  This licence commences on the date that ownership of each Moveable Asset transfers to TfNSW and terminates at the end of the term.  TfNSW also grants the contractor an exclusive licence to use the existing Epping to Chatswood railway moveable assets, including emergency trolleys, scissor lifts, building maintenance units and jet fan lifting appliances for the purpose of fulfilling the contractor's obligations under the OTS Project Deed.  This licence commences on the date of financial close and terminates at the end of the term.

All fixtures affixed to the North West Rail Link site will be owned by the owner of the relevant part of the site from the time they are affixed.  From the date of completion, TfNSW grants the contractor a non-exclusive licence to use and occupy the licenced maintenance area for the purpose of performing the Operations Activities. This licence terminates at the end of the term.

A detailed evaluation of the commercial aspects of the NWRL as a whole project was prepared.  The cost-benefit analysis reported in the business case provided the following estimated economic return:

·           A Benefit Cost Ratio (BCR) within the range 0.9 to 1.0 using standard economic parameters that are required to be used for comparative purposes (and including wider economic impacts), and a value of 1.6 using parameters more suited to long-term rail infrastructure; and

·           Estimated undiscounted benefits of approximately $39 billion, including the residual value beyond the assumed 30 year economic life but excluding wider economic impacts.

The net benefits of the project included significant improvements in travel time and reduced congestion for large numbers of people, including North West Rail Link customers and other transport users. 

The Raw Public Sector Comparator (PSC) is the base cost of delivering the project before any valuation of delivery and operating risks.

The Risk Adjusted PSC includes an adjustment for delivery and operating risks to be transferred under private sector delivery.  The value of itemised delivery and operating risks was determined via statistical simulation using @Risk software.

The PSC used a discount rate of 5.63%, determined consistent with Infrastructure Australia’s National PPP Guidelines which specify the discount rate to be the relevant jurisdiction’s long-term borrowing rate, taken as the 10 year average of the 10 year NSW Treasury Corporation bond rate as advised by NSW Treasury at the commencement of procurement.

The present value of the OTS Public Private Partnership was evaluated using a discount rate that included a systematic risk premium of 1.40%, in accordance with NSW Treasury policies on the assessment of complying proposals. 

The table below provides a summary of the financial value for money analysis.

The full base case financial model is commercial-in-confidence.

The risk sharing arrangements for the OTS PPP are summarised in the contract summary.

The State guarantees the performance of TfNSW's payment obligations under the OTS Project Deed and other documents related to the project.

Refer to the published copy of the OTS Project Deed which is available on TFNSW's website.

Please see table published on the TfNSW website: http://www.transport.nsw.gov.au/projects/project-toolkit/register-of-contracts-awarded

Please see table published on the TfNSW website: http://www.transport.nsw.gov.au/projects/project-toolkit/register-of-contracts-awarded

Please see table published on the TfNSW website: http://www.transport.nsw.gov.au/projects/project-toolkit/register-of-contracts-awarded