DBRS Confirms Capital City Link General Partnership at A (low)

DBRS has today confirmed the rating of A (low) with a Stable trend on the Long-Term Senior Bonds (the Senior Bonds) of Capital City Link General Partnership (ProjectCo or the Issuer), a special purpose entity (SPE) formed by ACS NEAH Partner Inc. (a subsidiary of ACS Infrastructure Canada Inc.), HOCHTIEF NEAH Partner Inc. (a subsidiary of HOCHTIEF PPP Solutions GmbH), and Meridiam Infrastructure NEAH ULC (a subsidiary of Meridiam Infrastructure North America) created to design, build, finance, operate and maintain the final 27-kilometre northeast leg of Anthony Henday Drive in Edmonton (the Project) under a 34.5-year Design Build Finance Operate and Maintain Agreement (the DBFOM Agreement) with the Government of Alberta (the Province, rated AAA with a Stable trend).

All of ProjectCo’s construction-related obligations have been passed down to a design-build joint venture consisting of Flatiron Constructors Canada Limited, Dragados Canada, Inc., Aecon Construction Management Inc. and Lafarge Canada Inc. (collectively, the DB Contractors). Construction activities began in May 2012, and are approximately 28% complete as measured by fees earned by the DB Contractors, and the Project is on track to meet the scheduled Traffic Availability Date of October 1, 2016. The design, permitting and approval process, early works and construction activities are advancing smoothly, with no material concerns raised by BTY Group, Inc. Currently, bridge foundation and column work is underway, as well as substructure and superstructure work along the route, drainage installations, panel and girder prefabrication and installations, and on-site material stockpiling.

The achievement of Traffic Availability in 2016 will mark the beginning of the 30-year service phase, and ProjectCo’s operating and routine maintenance obligations (O&M) during this period have been passed down to Volker Stevin Highways Ltd. (Volker or the Operator). Volker is currently responsible for O&M on approximately 25% of Alberta’s highways and is therefore very familiar with the contractual requirements. Rehabilitation obligations for the new infrastructure have been retained by ProjectCo, and will be supported by a dynamic lifecycle reserving mechanism and ProjectCo’s relatively sound operating resilience sufficient to absorb a 27% increase in the lifecycle and SPE budget (30% lifecycle alone) or a 40% shock to the O&M budget.

Notes:
All figures are in Canadian dollars unless otherwise noted.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodology is Rating Public-Private Partnerships, which can be found on our website under Methodologies.