Better deal on Sports Hub loans
Repayment in 10 years, with option to refinance any time
By LEE U-WEN
(SINGAPORE) The global financial crisis may have wreaked havoc on Singapore's plans to build its long-delayed Sports Hub - but it has proven to be a blessing in disguise as far as the project's financing is concerned.
Under a new deal signed on Wednesday by the Singapore Sports Council and the Singapore Sports Hub Consortium, the hefty loans taken out from 11 banks to construct the $1.33 billion facility will be repaid over 10 years now, rather than the original intention to do so over 25 years.
What's more, the government now has the right to exercise an option to refinance the loan at any time within the 10-year period, in the event that credit conditions improve and interest rates plunge, said Community Development, Youth and Sports Minister Vivian Balakrishnan.
'Because of all the financial uncertainty going on today, if we had still asked for a 25-year loan, we would have to pay more,' he told reporters yesterday. 'Within these next 10 years, if we decide that market conditions have improved, we can cause a refinancing to occur which can then lower our repayments. If conditions turn against us, (the rate) is locked in anyway, so we don't have to pay more.'
After the 10-year period is up, the government also has the choice to refinance, raise funds elsewhere or structure another loan, Dr Balakrishnan said. Any refinancing would usually be done after the construction is completed because this would bring down the project's entire risk. 'After the construction phase, the facility, the real asset, is already on the ground,' he said.
Under the Sports Hub's public-private-partnership (PPP) arrangement, the government will not pay anything upfront. Instead, it will fork out an annual payment to the consortium over 25 years. The $1.33 billion figure does not include the cost of operating the facility.
Because of this arrangement, the construction risks and operation risks are transferred to the consortium and the banks that have provided the loans, Dr Balakrishnan said. 'Part of the reason it took so long to get to this stage is because the banks had to do their due diligence on the capability and merits of the consortium's business plan,' he said.
The consortium is headed by Dragages Singapore. Its members include facilities management firm United Premas and events management experts World Sport Group.
The Sports Hub, on a 35 hectare site in Kallang, will be the world's largest PPP sports infrastructure project. The completion date has been pushed back at least four times from the original 2010 target. The new deadline is April 2014, with work set to start next month.
The crown jewel will be a 55,000-seat National Stadium with a retractable roof that can host world-class football, athletics and possibly even cricket. There will also be a 6,000-seat indoor aquatics arena, almost 41,000 square metres of business, commercial and retail space, and a sports institute.
'As far as (the government) is concerned, we have signed and (the consortium) has to deliver,' Dr Balakrishnan said. 'We will pay specified rates. And even if the cost of credit changes, we will not have to pay more. I think, in the given conditions, you will agree that the markets and financial sector are not back to the good old days yet.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Sports Hub: Its crown jewel will be a 55,000-seat National Stadium with a retractable roof. There will also be a 6,000-seat indoor aquatics arena, and 41,000 sq m of business, commercial & retail space, and a sports institute.
Posts
No comments:
Post a Comment