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⟦7e140d7d0⟧ Wang Wps File
Length: 7233 (0x1c41)
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Notes: AIR CANADA PROPOSAL
Names: »2209A «
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CLN 1
Page #
FINANCING POSSIBILITIES FOR THE ACDN PROJECT
MAY 29, 1982
…86…1 …02… …02… …02… …02…
1. In continuation of Christian Rovsing's bid submittal
for this project Christian Rovsing has further investigated
our possibilities of offering a financial package to
ease the financing of the project. This note outlines
what we consider to be the most attractive possibilities
identified.
It should be noted that although the financial institutions
which have indicated their interest in assisting Christian
Rovsing in these arrangement are all highly reputed
and of strong capability, no irrevocable commitments
have been given by them at this early stage. Only
when contractual and payment terms are better defined,
can such commitments be obtained.
Christian Rovsing is thus not in a position to commit
in any legal sense to the following, although we have
every reason to believe that the schemes can be implemented
as described.
2. Danish Export Finance Corporation
A general outline of project financing supported by
the Danish Export Finance Corporation (DEFC) is given
in the letter from Copenhagen Handelsbank, which is
included as Attachment 1 to Document I - Chapter 1
of Christian Rovsing's proposal.
Christian Rovsing has now received a commitment in
principle from DEFC to support the financing of Christian
Rovsing's supply of ACDN.
Due to the expiry on May 10, 1982 of the OECD agreement
under which such financing takes place, DEFC's commitment
is based on an interest rate of 12 1/4 per cent per
annum.
Funds have been confirmed available in US $ and Dkr,
and a confirmation of availability of Can.$ is expected.
Please note that the interest rate is independent of
the choice of currency.
All deliveries from Christian Rovsing could be financed
under this scheme with the following exceptions:
(a) CNCP's installation and maintenance services
(b) DEFC requires the borrower to make a cash advance
payment of 15 per cent
(c) DEFC does not refinance additional advances and/or
progress payments made by the borrower.
As points (b) and (c) above have not been subject to
any negotiation, it is premature to determine which
percentage of the project costs will qualify for DEFC
financing.
3. 15 Years Project Financing Scheme
To supplement or replace DEFC financing Christian Rovsing
can offer to arrange a project financing scheme based
on a Dutch Guilder loan.
An outline of this scheme is given below:
Borrower: Air Canada
Amount: Hfl. 25 mill. to Hfl. 60 mill. (app.
equal to Can.$ 12.5 million to Can.$
30 million), however not to exceed
110 per cent of total contract value
incl. estimated price escalation
during the implementation period.
Purpose: Financing of Christian Rovsing's
supply of Air Canada Network.,
Term: Min. 10 years/max. 15 years.
Repayment: 10 equal instalments after a grace
period of 5 years.
Interest Rate: To be fixed for the total term at
date of draw dawn. At todays interest
level the rate would be 10 3/4 to
11 1/4 per cent per annum, payable
semi-annually.
Draw Dawn: Date after signing date of loan agreement,
which would be signing date of contract
plus 30 to 60 days.
Management Fee: Reimbursement to Christian Rovsing
not to exceed 3/4 per cent flat.
Legal Cost: Legal advisor to Air Canada at Air
Canada's cost.
General: The loan will be arranged as a private
placement with institutional investors.
Interest payments are assumed not
to be subject to Canadian withholding
tax or aany other Canadian taxes.
No prospectus or other official supporting
documents will be published, only
a brief memorandum will be circulated
No bonds or notes to bearer will
be issued.
Borrower will sign a uniform loan
agreement with each individual participant.
Prepayment may be negotiated for
maturities in excess of 10 years,
but will be associated with rather
high premiums.
The exchange rate between Dutch Guilders and Can.$
has in recent years developed in favour of borrowing
Dutch Guilders.
H̲f̲l̲/̲C̲a̲n̲.̲$̲
…06…1 …02… …02… …02… …02… …02… …02…
End 1978: 0.6061
End 1979: 0.6165
End 1980: 0.5519
End 1981: 0.4810
May 25, 82: 0.4826
In connection with this financing scheme it should
be noted that the excess funds which will be available
to Air Canada from the start of the project could be
applied in Danish prime bonds, with a maturity matching
Air Canada's scheduled payments to Christian Rovsing.
The interest earned by making such a deposit would
be not less than 18 per cent per annum.
To illustrate the impact of this scheme a very simplified
calculation has been made on the following assumptions:
Contract period: 82-IV three 85-I
Payments to
Christian Rovsing: 1/10th at end of each quarter
Loan financing: 100 per cent, 15 years, 11
per cent per annum
Balance of pro-
ceeds from loan: Deposited at 18 per cent per
annum
Currency fluc-
tuations : Ignored
Present Value
of Cash-flow : Discounted at 17 per cent
per annum.
The resulting cash-flow and present values are presented
overleaf.
In this example the discounted present value of the
investment cost is reduced by more than 55 per cent
by combining it with the offered financing scheme.
̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲
̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲
PAYMENTS ̲ ̲ ̲ ̲D̲U̲T̲C̲H̲ ̲G̲U̲I̲L̲D̲E̲R̲S̲ ̲L̲O̲A̲N̲ ̲ ̲ ̲ ̲ ̲ ̲D̲A̲N̲I̲S̲H̲ ̲B̲O̲N̲D̲ ̲D̲E̲P̲O̲S̲I̲T̲
̲ ̲
TO CR (PROCEEDS)
̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲/̲I̲N̲S̲T̲A̲L̲M̲E̲N̲T̲S̲ ̲ ̲I̲N̲T̲E̲R̲E̲S̲T̲ ̲ ̲ ̲D̲E̲P̲O̲S̲I̲T̲ ̲ ̲ ̲ ̲I̲N̲T̲E̲R̲E̲S̲T̲
̲ ̲ ̲ ̲ ̲T̲O̲T̲A̲L̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲
YR-Q
82-IV 100 (1,000) 900
83-I 100 800 (40.5)
II 100 55 700 (36)
III 100 600 (31.5)
IV 100 55 500 (27)
84-I 100 400 (22.5)
II 100 55 300 (18)
III 100 200 (13.5)
IV 100 55 100 (
9)
85-I 100 (
4.5)
II 55
III
IV 55
86-II 55
IV 55
87-II 55
IV 55
88-II 55
IV 100 55
89-II 49.5
IV 100 49.5
90-II 44
IV 100 44
91-II 38.5
IV 100 38.5
92-II 33
IV 100 33
93-II 27.5
IV 100 27.5
94-II 22
IV 100 22
95-II 16.5
IV 100 16.5
96-II 11
IV 100 11
97-II 5.5
̲ ̲ ̲ ̲I̲V̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲1̲0̲0̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲5̲.̲5̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲
̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲
̲T̲O̲T̲A̲L̲ ̲ ̲ ̲ ̲1̲,̲0̲0̲0̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲0̲ ̲ ̲ ̲ ̲ ̲ ̲1̲,̲1̲5̲5̲.̲5̲ ̲ ̲ ̲ ̲ ̲N̲/̲M̲ ̲ ̲ ̲ ̲ ̲(̲2̲0̲2̲.̲5̲)̲
̲ ̲ ̲ ̲ ̲1̲,̲9̲5̲2̲.̲5̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲ ̲
PRESENT
VALUE 801.1 (772.5) 489.2 N/M (167.6)
350.2
