Getting the money for the Santo Antônio project started off with a bang, when Brazils National Development Bank, the BNDES, announced that it would provide R$6.2bn (US$3.6bn) in debt in December 2008. The loan made the hydro plant the largest recipient of project finance loans worldwide in the first quarter.
The BNDES financing confirmed the typically Brazilian characteristics of the deal. Generous development bank money is indispensable, as long-term private sector funding is both very scarce and expensive.
The loans account for nearly 50 per cent of the estimated cost of the construction of the Santo Antônio dam. The total is estimated at R$13.5bn, notes Michael Machado, chief financial officer of concessionaire Santo Antônio Energia.
Half of the BNDES funds are to be provided as direct lending, where the development bank assumes some of the risks of non-payment.
The other half is via loans to both public and private banks which lend on to the project and absorb some of the risks. A pool of insurers led by AIG is supplying completion and perfomance guarantees.
The roster of state and development banks used as agents by the BNDES are Caixa Económica Federal; Banco do Brasil; Banco da Amazónia; Banco do Nordeste do Brasil; and Banco do Espírito Santo, while Bradesco, Santander; and Itaú-Unibanco are the private banks on the deal.
The loans have a 25-year duration and are priced at the Brazilian long-term interest rate, TJLP, plus between 2.8 and 3.8 per cent.
Shareholders are stumping up R$3.8bn ($2.2bn) in equity on a pro rata basis. Brazilian construction giant and leader of the consortium Odebrecht owns 18.6 per cent, and fellow constructor Andrade Gutierrez 12.4 per cent.
State-owned electricity generators Furnas and Cemig hold 39 per cent and 10 per cent, respectively. The 20 per cent balance is owned by a fund that is jointly controlled by Spanish banks Banif and Santander. The fund recently sold a quarter share to Brazils long-term worker fund, FGTS.
The remaining R$3.5bn is coming from a variety of sources. The issue of 20-year debentures will raise R$1.8bn and Santo Antônio Energia expects to make R$1.3-1.4bn in cash over the life of the loans, as operations begin in three years. Finally, a fund run by the Banco da Amazónia has contributed R$500 in loans.