DOLLY MIRCHANDANI, PARTNER

Los Angeles Airport is one of the busiest airports in America and the world.

In a typical year it caters for 84.5 million passengers, with an estimated 6,000 vehicles entering the airport terminal area every hour.

But there’s an escalating problem: the airport is also known for its hugely inadequate transport infrastructure, chronic congestion and lack of connectivity to onward travel networks.

Thankfully, a solution is on the way. The $14 billion Landside Access Modernization Program (LAMP) aims to transform the airport access and travel experience, with the centerpiece being a 2.25 mile elevated train line, the Automated People Mover (APM) project.

This state-of-the-art transportation system includes six stations and will link the airport terminals to metro, bus and train networks as well as a newly created rental car hub.

Partner Dolly Mirchandani explains: “Bidding for the APM element of the LAMP program closed earlier this year.

“The contract was for the design, build, financing, operation and maintenance of the APM system for 30 years.

“Rather than following the usual route of raising municipal finance and awarding a construction contract, the airport chose to enter into a public-private partnership arrangement.

“This involved the City of Los Angeles and the airport breaking new ground and experimenting with a new way of thinking regarding infrastructure development.”

Three highly qualified consortia competed for the integrated contract, with the Firm asked to advise one of them – the LINXS consortium.

This comprised ACS Infrastructure Development of Spain, the UK’s Balfour Beatty, Bombardier Transportation of Canada, Fluor Enterprises of the United States and HOCHTIEF PPP Solutions of Germany.

“All of these companies are top sponsors with extensive rail experience in both the US and globally who have worked together successfully in the past, but were new clients for the Firm,” explains Dolly.

We were involved in multiple aspects of the bid, including negotiation of the concession agreement between LINXS and LA World Airport (LAWA) and settling multiple, complex construction and operation arrangements.

“There are numerous parties and elements involved in a rail project like this, so negotiating all of these contracts was extremely complicated,” explains Dolly.

“In all cases, our priority was to come up with agreements and ultimately a concession agreement that would work for our clients and LAWA while protecting our client against the risks involved in a project of this size and complexity.”

Due to the large number of affiliates in the contractual structure, this involved an integrated approach that aligned partners as much as possible, resulting in better risk management and efficiency.
Another key part of the project involved negotiating the financing.

Dolly explains: “We needed to deliver a multi-source financing arrangement, with finance being raised in the capital markets in the form of private activity bonds and commercial bank debt, as well as equity contributions from sponsors.

“The final financing structure used a combined bank/bond structure with issuance of $1.2 billion of private activity bonds, which were rated investment grade by Fitch, that were eight times oversubscribed and achieved fantastic pricing.”

This was combined with a $270 million, five-year construction facility provided by commercial banks.

Dolly says: “We achieved financial close over the summer, which was the culmination of many months of hard work.

“Our success was the result of a huge team effort which drew on exceptional support from many of our partners and associates in our New York, Washington, D.C. and Los Angeles offices across all work streams, often to extremely tight timelines.

“We demonstrated our capability to work with participants from many different fields (governmental entities, construction firms, financiers) to execute high-value, complex deals in the US greenfield infrastructure market.

“This project has been a huge success for the Firm in raising our profile and reputation in this market, so much so that it has been nominated for America’s Transit Deal of the Year by a leading industry publication.”