June 23, 2006

Financing

Quito airport project ready to fly

PATRICIA WILLIAMS

staff writer

With financial closing of the deal imminent, Toronto-based Aecon Group Inc. is gearing up to start construction of a new international airport to serve the Ecuadorian capital of Quito.

“The final step is for financing to close and the first tranche of funding to flow -- which we expect sometime in the next two weeks -- with construction to begin immediately following,” chairman and chief executive officer John Beck told shareholders this week.

The project, which has an estimated construction price tag in excess of $400 million US, has been in the works since 2002 when an Aecon-led consortium was awarded a concession to design, build, finance and operate the new airport.

In addition to having a major stake in the Quiport concession, Aecon will play a lead role in construction of the new facility through Aecon Constructors, which has set up a joint venture with a Brazilian construction company.

Doug Steels, the Toronto-based president of Aecon Constructors, told Daily Commercial News the four-year construction project will be challenging on several fronts.

“A big initial challenge will be the co-ordination of all the different entities involved so we can get our drawings and designs approved in a timely manner so that there isn’t interference with the progress of construction,” he said.

Steels, whose firm has started mobilizing for construction, said manning the project “with the right people and getting the right subcontractors” also will be critical. Some of those subcontractors could come from Ontario.

Aecon Constructors is managing partner in the construction joint venture, which already has earthmoving equipment on site. The partners will self-perform earthworks, Steels said.

Steve Nackan

The project’s senior lenders are U.S.-based Overseas Private Investment Corp., Export-Import Bank of the USA, the Inter-American Development Bank and Export Development Canada.

“I can vouch for the complexity of the deal given who the lenders are and the parties that are involved,” said Steve Nackan, president of Aecon Concessions. He previously worked for a global law firm advising government agencies, banks and industry on development, implementation and financing of major international infrastructure projects.

“We had four, multilateral export credit agency-type banks, who each have very complicated and inflexible requirements for lending. They had never worked together before.

“This also is the first deal of its kind to be done in Ecuador.”

Prime consultants are Toronto-based Marshall Macklin Monaghan (MMM). The firm has completed preliminary schematic design drawings for the main buildings: the terminal, air traffic control tower, cargo facility, hangar and catering building.

“We still have several smaller buildings that need a lot of work,” said MMM project director Janine Turner, a partner in the firm’s airports group.

“But we are pretty much ready to pick up where we left off and get going as soon as the financing is in place.”

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