Los Angeles APM P3 reaches financial close

Private sector consortium LINXS and Los Angeles World Airports (LAWA) have reached financial close on the LAX Automated people mover (APM) P3.

Financial close occurred today (June 8) on the project marking the largest US airport P3 closing so far this year.

The financing comprised of:

- $1.2bn senior lien private activity bonds which priced on June 5
- $270m design-build construction loan facility
- $103m sponsor equity

The short-term loan, backed by five commercial lenders, was split equally among them. The loan priced ‘tight’ in the region of 80bp, P3 Bulletin can reveal from sources close to the transaction.

Final pricing on the senior bonds’ provided all-in true cost of 4.1%. Citigroup, Bank of America Merrill Lynch and Ramirez & Co were underwriters on the bonds. Fitch Ratings affirmed its preliminary BBB+ rating to the bonds, which will be issued by California Municipal Finance Authority. The rating outlook remains stable. Assured Guaranty is providing insurance.

Proceeds of the series 2018A&B bonds, along with design-build loan facility, sponsor equity and $1bn in milestone payments from LAWA will be used to pay project costs as well as capitalized interest during construction.

MUFG acted as financial advisor to lenders while Ashurst was legal advisor. White & Case was legal counsel to sponsors. Nossaman advised the City of Los Angeles and Los Angeles World Airports

The availability payment-based design, build, finance, operate, and maintain contract and the total project cost is expected to be about $2.7bn with a five-year construction period followed by a 25-year operating period.

The 2.25 mile APM system will feature six stations connecting the airport terminals to off-airport intermodal transportation facilities and a future consolidated rental car center. LAX intends to use rental car customer facility charges (CFCs) and other airport operating revenues to cover its availability payments to the project.