U.S. infrastructure for sale to foreigners

U.S. infrastructure for sale to foreigners
State, local officials gathering for seminar to learn 'how-to'

EuroMoney Seminars, a UK-based company, is holding a seminar to teach state and local government officials in the U.S. how to lease a wide range of public assets – ranging from highways to water departments – to international and foreign private investment groups.

The event, entitled "PPP: The North American Private Partnerships Intensive Seminar," will be held at the Hyatt Regency in Miami March 19 to 21. The cost will be $3,500 per attendee.

A spokesman for EuroMoney Seminars in the UK told WND the target audience was government employees at the state and local level who want to learn the "how-to" of putting together deals such as the one by Cintra Concesiones de Infraestructuras de Transporte to finance the Trans-Texas Corridor. The EuroMoney Seminars spokesman talked with WND on background, complying with EuroMoney Seminars policy that spokesmen not be named in news stories.

In its first mailing for the March PPP conference in Miami, EuroMoney Seminars targeted bureaucrats from the state departments of transportation. The group plans to limit the number of attendees to 50.

"We plan intensive training in a classroom setting," the EuroMoney Seminars spokesman told WND. "We plan to teach the attending government officials all aspects of how to structure a PPP deal with a private investment consortium. The curriculum is designed to cover every aspect of a PPP deal, from basic structures and asset classes, to the bidding process; documentation and contractual issues; tax and accounting implications; and project management. When finished with the seminar, the government official should be trained to enter the market and look for a public-private partnership for themselves."

The brochure for the March conference lists the following five individuals as "faculty":

1. A securities industry expert: Duncan Caird, managing director, Project and Export Finance, HSBC Securities (USA)

2. A legal expert: David Narefsky, partner, Mayer, Brown Rowe & Maw, Chicago

3. An accounting expert: Saad Rafi, Partner, Infrastructure Advisory & Project finance, Deloitte & Touche, LLP Canada

4. An investment banker: John Ma, managing director, Municipal Finance and Infrastructure Group, Goldman Sachs, New York

5. An insurance expert: Mary Francoeur, director, Financial Guaranty Insurance Company (FGIC)

Narefsky told WND, "There is enormous interest in the potential for privatization of U.S. infrastructure assets. So, the idea of an educational seminar workshop to educate particular state and local government officials about the potential opportunities and challenges involved with privatizing infrastructure seems like a terrific idea and a very timely one."

As additional examples of PPP projects in the U.S., Narefsky referenced the leasing of the Chicago Skyway for $1.83 billion in 2005 to a consortium that included Cintra and the Macquarie Group, an Australian private capital consortium, and the 2006 leasing of the Indiana Toll Road for 75 years for $3.85 billion to an international investment group that also included Cintra.

Narefsky told WND the progress in the PPP field leasing U.S. public infrastructure follows the experience in the European Union.

What kind of experience can U.S. citizens expect when infrastructure ranging from toll roads to water departments to prisons to public schools are leased by foreign investment concerns and placed under foreign management?

"That's why it is absolutely essential to have first class legal talent representing the government owners of these assets," Narefsky emphasized to WND, "to be sure that issues like maintenance and capital expenditures over time, as well as toll setting regimes are all very clearly negotiated and built into the transaction documents. There must be clearly stated contract protections built into the lease agreement so that public interests can be protected."

Last September, EuroMoney Seminars ran a "networking" PPP conference in New York City at the Waldorf-Astoria Hotel at a cost of $2500 per attendee.

"That conference," explained the EuroMoney Seminars spokesman "was a networking conference. We wanted more like 200 attendees, including a mix from government, investment banking, as well as the lawyers and accountants who structure the deals. The goal there was for people to meet one another. In the Miami conference we want more of a focused educational experience where government officials will be in a classroom setting."

Attending the September 2006 PPP conference in New York City were officials from nine state departments of transportation, including Texas, Virginia, Wisconsin, Louisiana, Florida, Oregon, Alaska, Indiana and California.

Financial firms represented at the September conference included Lehman Brothers, Goldman Sachs, The Royal Bank of Scotland, HSBC, the Carlyle Group, JP Morgan Asset Management, AIG Highstar Capital, Macquarie and Cintra.

The EuroMoney Seminars conference brochure explained:

The issue of North American shortfall in infrastructure is a serious one. Research estimates that in the U.S. alone $90 billion is required each year just to maintain current standards.

The PPP proposed solution was to involve private investment capital to upgrade, operate and lease "transportation networks, hospitals, airports, ports, municipal buildings, housing and schools."

The brochure went on to comment that the U.S. has been slower to utilize PPP structures than the OECD countries (Organization for Economic Co-operation and Development).

"The time is right for all this to change," the brochure asserted. "In recent years there have been a number of landmark PPP transactions in the U.S. and Canada, most notably the Chicago Skyway, Indiana Toll road, Pocahontas Parkway and the Richmond-to-Vancouver rail link. This has proved that PPP can work. It is important now that the deal flow begins to increase and the transaction time speeds up."

The EuroMoney Seminars provide detailed counseling on changes in U.S. state laws that need to be made before the PPP structures developed in the European Union can be applied here.

"The potential for the project finance community remains immense," the brochure asserted.

EuroMoney Seminars told WND the company plans to repeat the New York City "networking conference" twice this year, on the West Coast in April and in New York City once again in April.