European Infrastructure Finance Yearbook - Investing In Bonds ...

debt ratings would likely be lowered. If the
proposal was subsequently implemented, the longterm
and underlying debt ratings would likely be
lowered to ‘D’.
Although the Infracos are in administration, we
have maintained the ‘BB+’ ratings on debt issued
by the Metronet companies, reflecting the
structural protections within the PPP service
contract that are likely to benefit debtholders. For
example, as an insolvency event has occurred for
the Infracos, the funders ultimately have the
ability to exercise a put option, requiring TfL to
pay a put option price--that is, at least 95% of
the outstanding debt at each company. It is
therefore unlikely that the funders will accept any
proposed restructuring that would result in them
receiving less than the amount they would receive
through the exercise of the put option. There is
no track record of implementing any of these
arrangements, however, including determining the
value of the put option, or enforcing these
obligations. Although they provide significant
comfort at the rating level, the protections may be
subject to challenge and delay.
If, as part of the PPP service contract
restructuring process, the various debt obligations
of the Metronet companies are assumed by TfL-prior
to a final restructuring solution being
implemented--the long-term and underlying debt
ratings could be raised. ■
STANDARD & POOR’S EUROPEAN INFRASTRUCTURE FINANCE YEARBOOK
PROJECT FINANCE/PUBLIC-PRIVATE PARTNERSHIPS
NOVEMBER 2007 ■ 137