2.3 Billion Euro Secured
SK Engineering & Construction Co. (SK E&C) and Daelim Industrial Co. have closed a financial contract for a project to construct the world’s longest Canakkale suspension bridge in Turkey and will start construction in earnest.
The two companies said on March 18 that they concluded a financial agreement on March 16 to construct and operate the Canakkale project in Turkey with a group of creditors consisting of banks at home and abroad, such as the Export-Import Bank of Korea (Korea Eximbank) and the Korea Trade Insurance Corporation (K-sure).
The consortium of SK E&C and Daelim Industrial provided 2.3 billion euro (US$2.83 billion or 3.03 trillion won) out of 3.1 billion euro (US$3.82 billion or 4.08 trillion won) of the total working expenses through project financing (PF). A total of 21 financial institutions, including the Korea Eximbank, the K-sure as well as the Korea Development Bank (KDB), Standard Chartered Bank, ING Bank, Industrial and Commercial Bank of China Limited (ICBC) and Turkey’s Garanti Bank, participated in the project as a member of creditors. The remaining working expenses will be supplied by shareholder companies’ paid-in capital.
The Canakkale suspension bridge is a public–private partnership (PPP) project on a build operate transfer (BOT) basis to build and operate a 3.6 km-long suspension bridge across the Dardanelles strait and about 85 kilometers of connecting roads and transfer it to the Turkish government. Daelim Industrial and SK E&C formed a consortium with two other Turkish builders, Limak and Yapi Merkezi, in January last year and won the project, outpacing the Japanese consortium of Itochu and IHI. Each member has a 25 percent stake in the mega project. The total period of construction and operation will be 16 years and 2 months.
An official from the consortium said, “The project is considered very exceptional across private sector investment projects at home and abroad. It was possible with proactive support from domestic export credit agencies and the Turkish government.”
The Korea Eximbank and the K-sure raised a total of 1 billion euro (US$1.23 billion or 1.32 trillion won) for the project, encouraging a considerable number of domestic private banks and foreign banks to take part in the investment. In addition, they minimized the risks of the creditors as it forced the Turkish government to take over the debts when their principal and interests are not repaid.