FC for landmark Fargo-Moorhead P3

The $2bn Fargo-Moorhead Flood Diversion P3 scheme has reached financial close.

The pioneering deal to deliver a new flood diversion system to the region has a capital value of $1.5bn, with the total sources used to finance the project adding up to $2.42bn, including a revolving facility used during the construction period, and a focus on green financing.

Private partner Red River Valley Alliance (RRVA), comprising Acciona, Shikun & Binui and North American Construction Group, will allocate the proceeds from green bonds, notes and loans to finance the scheme in Fargo, North Dakota. 

“This Green Financing Framework will help channel investment to the Fargo Diversion Channel and associated infrastructure projects that contribute to the global sustainability and resiliency agenda,” said Shikun & Binui.

The designated contractor to RRVA, ASN Constructors, is a construction JV consisting of Shikun & Binui America (35%), Acciona Construction USA (35%) and North American Construction Group North Dakota (30%).

“We are proud to have reached this significant milestone which allows us to move forward with the design and construction of this vital flood relief project” said Sharon Novak, chief executive of Shikun & Binui USA.

Senior lenders include CaixaBank, SMBC, and Korea Development Bank. Citigroup, Morgan Stanley and SMBC acted as underwriters on the bonds, which were rated Baa3 by Moody's. Morgan Stanley was the green structuring agent on the tax exempt, senior revenue bonds, which mature in March 2056 with bullets in 2051 and 2056.

The financing package also includes a $569m WIFIA loan, while the RRVA is putting in $48m of equity. There will also be $870m from North Dakota, $86m from Minnesota, and $1.1bn from local tax levies.

There is also an option to return to the market to borrow around $100m after substantial completion, which is scheduled for six years' time.