This document discusses three case studies of port financing projects: 1) The Odessa Grain Terminal in Ukraine, which received a $60 million senior loan from EBRD to construct a new grain terminal with a capacity of 4.5 million tons. 2) The DCT Gdansk project in Poland, which received a €31 million senior loan and €259 million syndicated loan to construct a second deep-water container terminal increasing capacity to 2.55 million TEU. 3) The Mersin International Port in Turkey, which refinanced $450 million in loans and issued a $450 million Eurobond to restructure its balance sheet and expand with a new deep-water

1. Case Studies in Port Financing
Andrii Tsokol
Principal Banker, Transport Team
5 June, 2015

2. 5 June, 2015 2
What is a good project?

3. Reciprocal frames
Concept
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“ A reciprocal frame is a class of self-
supporting structure made of three or
more beams and which requires no
center support to create roofs, bridges
or similar structures...
The failure of a single element may lead
to the failure of the whole structure. ”
Wikipedia

4. Reciprocal frames
Used in architecture since long
5 June, 2015 4
Leonardo Da Vinci’s self-supporting
arc bridge (1485-1487)
Chinese Rainbow Bridge –
Qingming scroll (12th century)

5. Reciprocal frames
Modern times
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6. Project structure
Building blocks
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Macro environment
Country rating
Economic growth
Regulatory environment
Business case
Market test
Project structure
Strong sponsor(s)
Offtake commitments
Risk allocation
Financing structure
Cash flow generation
Security package
Successful
project

7. 5 June, 2015 7
Overview of Global Transport Financing

8. Global transport financing overview
Instruments and their specifics
Characteristics of transport assets
 Long payback period
 Big ticket projects ($100M+)
 Regulation
 Fluidity of traffic flows
Financing requirements
 Long tenors
 Key role of debt / Syndication
 Risk allocation
 Offtake agreements

9. 0
20
40
60
80
100
120
140
2008 2009 2010 2011 2012 2013 2014
USDbn
Financing by instrument
Equity Loans Bonds IFI Government Support
Global transport financing overview
Global trends
5 June, 2015 9
1%
99%
Bonds
4%
96%
Loans
Non IG IG
15%
85%
IFI / Gov
Source: IJ Global, Fitch, S&P, author’s calculations
• Bank loans are the main source
of debt financing for transport
projects
• Bank lending is adapting to the
constraints posed by regulation
(Basel III):
o shorter tenors (5 years)
o local banks replacing
international banks in
emerging markets
• Growing share of bonds
• Investment grade sovereign
rating (BBB- and above) is critical
for bonds

10. Global transport financing overview
Global trends
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0
20
40
60
80
100
120
140
2008 2009 2010 2011 2012 2013 2014
USDbn
Financing by purpose
Primary Financing Refinancing
35%
53%
12%
Bonds
51%
36%
13%
Loans
95%
3% 2%
IFI / Gov
Source: IJ Global
• Primary financing in decline until
2014
• Bond investors are most averse
to construction risk, IFIs more
willing to take it

11. 5 June, 2015 11
Case Study: Odessa grain terminal (Ukraine)

12. Case Study: Odessa Grain Terminal (Ukraine)
Overview
Client: Brooklyn-Kiev LLC
Total project
cost:
$104M
EBRD
finance:
Senior loan $60M
Signed: 2014
Construction of a new grain terminal in the Port of Odessa
with a maximum design throughput capacity of 4.5 million
tons
Sponsors:

13. Case Study: Odessa Grain Terminal (Ukraine)
Business case
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• Growing grain production and exports from Ukraine (record 32M tons in MY 2013/14)
• Biggest sales growth potential in distant markets (China #4 importer already)
• Large vessels generate up to 20 $/ton cost savings on long-distance transportation
• Shortage of deep water port capacity in Ukraine => high stevedoring charges
• Modern deep water terminal with advantageous location and good hinterland connections
0.0 2.0 4.0 6.0 8.0 10.0
Yuzhnyi
Nikolaev
Odessa
Illichevsk
Berdyansk
Kherson
Mariupol
Sevastopol
Kerch
Others
million tons
Ukraine grain turnover
2013
2014

14. Case Study: Odessa Grain Terminal (Ukraine)
Project structure
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• Strong partnership between a leading
private port operator (BK) and a major
international commodities trader and
top-3 grain exporter from Ukraine
(LDC)
• BK’s existing business generating
stable cash flows
• New Terminal developed in stages =>
cash flows during construction
• Berth developed by the
Administration of Sea Ports => third
party risk (?)

15. 5 June, 2015 15
Case Study: DCT Gdansk (Poland)

16. Case Study: DCT Gdansk (Poland)
Overview
Client: DCTGdansk S.A.
Total project
cost:
€361M
EBRD
finance:
Senior loan €31M
Co-financing: €259M syndicated
loan financed by
six banks
• Construction of a second deep-water container
terminal at the Port of Gdansk to enable extension of
capacity from current 1.35 million TEU to 2.55 million
TEU
• Refinancing of existing loan facilities
3 Australian
pension funds
Sponsors:

17. Case Study: DCT Gdansk (Poland)
Business case
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• Gdansk is the gateway terminal for
Poland and a major transshipment
hub for the SE Baltic and CEE
regions
• Direct deep-sea call of the largest
ULCS ships (up to 18,000TEUs)
• Transportation cost savings of 20%
on deliveries from Shanghai to
Warsaw and 12% on deliveries to
CEE compared to W European
ports
• Market tested business case – 92%
capacity utilization atTerminal 1

18. Case Study: DCT Gdansk (Poland)
Project structure
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• Terminal 1 fully operational with
an existing offtake from Maersk
• Cash flows from Terminal 1 alone
are sufficient to cover debt
service
• Strong sponsor and
management team with a
successful track record
• Fixed price turnkey EPC contract
with a top tier construction
company + direct lenders’
agreement with the contractor

19. 5 June, 2015 19
Case Study: Mersin Port (Turkey)

20. Industry Recognition 2013
Port Deal of theYear (MEA)
Case Study: Mersin International Port (Turkey)
Overview
Client: Mersin International
Port
Total project
cost
Financing:
$857M
$450M Eurobond
EBRD stake: $79.5M
Signed: 2013
• Refinancing of the company’s loan portfolio to
restructure and strengthen balance sheet
• Capacity expansion including construction of a new
deep-water berth (17.5 m)
Sponsors:

21. Case Study: Mersin International Port (Turkey)
Business case
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• Established business with stable cash flows and growth prospects capitalizing on the development of the
Turkish economy
• Diversified client and cargo base
• Strong competitive position (2nd largest container port in Turkey with a market share of 19%) and a
dominant position in its catchment area (82% market share in SETurkey)
• Limited construction risk – key facilities are operational, expansion limited in scope and not affecting
existing business
0.0 1.0 2.0 3.0 4.0
Ambarli
Mersin
Kocaeli
Gemlik
Izmir
Aliaga
Antalya
Iskenderun
Others
million TEU
Turkey container traffic, 2014

22. Case Study: Mersin International Port (Turkey)
Project structure
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• Favorable macroeconomic
conditions (BB+/BBB- sovereign
credit rating at the time of
placement)
• Established business with
predictable cash flows
• Strong partnership between a
leading Turkish infrastructure
investment group (Akfen) and a
major international port
operator (PSA)
• Stable regulatory framework: 36
year concession with clear terms
& conditions and a good
reputation on the market

23. Summary and conclusions
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Project structure
building blocks
Odessa Gdansk Mersin
Macro environment
Sovereign rating
Economic growth
Regulatory environment
Business case
Market test
Project structure
Strong sponsor(s)
Offtake
Risk allocation
Financing structure
Cash generation
Security package
• Key challenges in Ukraine:
o Macro environment
(outside of our control)
o Legal and regulatory
issues (land and property
titles, stable regulation,
etc.)
o Timely delivery of
commitments by the state
• Which projects are still
successful despite the
challenges?
o Strong sponsors
o Tested business case
o Offtake commitments
o Balanced risk allocation
o IFI financing

24. 5 June, 2015 24
Thank you!

25. Contacts
© European Bank for Reconstruction and
Development 2015
25
AndriiTsokol
Principal Banker –Transport
email: tsokola@ebrd.com
European Bank for Reconstruction and
Development
Kyiv ResidentOffice
16 Nemyrovycha-Danchenka Street
Kyiv 01133
Tel: (044) 277 1100
For further enquiries, please contact :