Infra Insight Blog

On June 8, 2018, the City of Los Angeles, acting through the Los Angeles World Airports (LAWA) Board of Airport Commissioners, and LAX Integrated Express Solutions, LLC (LINXS) successfully reached financial close on the $4.9 billion agreement for the APM project.

After reaching commercial close with LAWA on April 11, 2018, LINXS proceeded to secure equity contributions and to arrange and close both bond and bank financings for the project.  Private financing for the project is comprised of approximately (a) $1.2 billion in private activity bonds issued by the California Municipal Finance Authority on behalf of LINXS; (b) a $270 million construction period credit facility with loan commitments from Canadian Imperial Bank of Commerce New York Branch, Mizuho Bank Ltd., Sumitomo Mitsui Banking Corporation, Korea Development Bank and Toronto-Dominion Bank; and (c) an aggregate equity contribution of $103 million secured by letters of credit provided by Fluor Enterprises, Inc. (27%), Balfour Beatty Investments, Inc. (27%), HOCHTIEF LINXS Holding, LLC (18%), ACS LINXS Holdings, LLC (18%) and  Bombardier Transportation (Holdings) USA Inc. (10%).

The bonds were underwritten by Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc. and Ramirez & Co., Inc. Certain maturities of the bonds have the benefit of bond insurance provided by Assured Guaranty Municipal Corp.

Fitch Ratings assigned a rating of BBB+ to the bonds (other than the insured bonds) and S&P Global Ratings assigned a rating of AA to the insured bonds.

LINXS’ debt obligations under the bonds and to the banks, and distributions to equity providers, will be paid through revenues generated by the APM project.  The revenues generated by the project are the payments from LAWA to Developer under the terms of the project agreement, comprised of (a) five Milestone Payments, together with certain additional D&C payments, paid by LAWA during the construction period and a sixth Milestone Payment paid after final completion; and (b) availability payments that commence when the APM system is available for passenger service and continue through the operations and maintenance period.

Under the terms of the project agreement LAWA may make downward adjustments to availability payments if the APM system does not meet specified availability and performance requirements.  As such, Developer’s private financing is at risk to performance, creating a strong incentive for Developer to provide high quality infrastructure and service throughout the operating period.  LAWA’s APM is the first APM system to be procured through an availability payment P3 delivery model.

The APM will directly benefit airport users and the community by vastly improving mobility and access at the airport. The APM system will include six stations and up to nine electric powered trains, each with four cars, in simultaneous operation.  The APM trains will travel on an elevated 2.25-mile long guideway, easing access into and out of the second busiest airport in the United States (LAX) and connecting travelers to LA Metro’s Crenshaw Light Rail Line, intermodal transportation facilities and a consolidated rental car center.