Milbank represents lenders on US$1.8 billion debt financing of largest power and water project in Middle East

The law firm Milbank, Tweed, Hadley & McCloy LLP represented the commercial lenders on the US$1.8 billion debt financing of the Umm Al-Nar Independent Water and Power Project.

LONDON, July 31, 2003 - Underscoring its traditional role in the Middle Eastern project finance market, the international law firm Milbank, Tweed, Hadley & McCloy LLP represented the commercial lenders on the US$1.8 billion debt financing of the Umm Al-Nar (IWPP) Independent Water and Power Project.

The loan facility was signed on July 2nd and initial drawdown occurred on July 16th. Total project cost is US$ 2.1 billion.

The approximately 2200 MW project is the largest power project to date in the Middle East. The borrower, the Arabian Power Company, will use the financing to acquire an existing 850 MW and 162 million imperial gallons/day power and water desalination station and add 1,550 MW and 25 million imperial gallons/day of new capacity.

The Arabian Power Co.'s shareholders include affiliates of The Abu Dhabi Water & Electricity Authority (ADWEA), the UK's International Power plc, and Japan's Tokyo Electric Power Company, Incorporated (Tepco) and Mitsui & Co., Ltd.

Much of the existing capacity will be decommissioned by 2008. Construction of the new facilities will begin immediately.

Milbank represented the Global Facility Agent, Bank of Tokyo-Mitsubishi, and the commercial banks, including lead arrangers Abu Dhabi Commercial Bank, Abu Dhabi Investment Company, Bank of Tokyo-Mitsubishi, Bayerische Landesbank, First Gulf Bank, Gulf International Bank, HSBC, ING, Kreditanstalt für Wiederaufbau (KfW), National Bank of Abu Dhabi, Sumitomo Mitsui Banking Corporation Europe, Mizuho Finance Group and West LB.

The US$1.8 billion debt financing is made up of six tranches and includes among the largest, at US$540 million, Sharia compliant Islamic financing components ever incorporated in a project financing. The first tranche is a 20-year US$855 million commercial facility; the 2nd tranche is a 20-year US$250 million Islamic financing; the 3rd tranche is a 5-year US$232 million commercial facility; the 4th tranche is a 5-year US$290 million Islamic equity bridge facility; the 5th tranche is a 5-year US$150 million commercial equity bridge facility; and the 6th tranche is a 1-year AED 70 million working capital facility.

This transaction represents International Power's second major investment in Abu Dhabi's power and water sector and the first for each of TEPCO and Mitsui. The project is among the first to reach financial close in the region since the conclusion of the Iraq conflict. It demonstrates the confidence of the sponsors and the financial markets in an important and growing region.

Commenting on the transaction, Milbank London partner Phill Fletcher stated, "Drawing upon our significant expertise in global project finance transactions, we were able to address the particular needs of the lenders and sponsors in this landmark transaction. The signing of the facility agreements represents the culmination of a significant effort by all of the parties and marks another major advancement in the privatisation of the power and water sector in the United Arab Emirates."

Fletcher added, "Coming on the heels of Milbank having represented the sponsors of the Baymina power project in Turkey in 2002, the lenders to the Salalah power project in Oman in 2001, the project sponsors on the Taweelah A1 power and water project in Abu Dhabi in 2000, the sponsors on the refinancing of the Al Manah power project in Oman in 1999 and the lenders to the Jorf Lasfar power project in Morocco in 1996, we continue our contribution to the region's growing power and water sectors".

The Milbank team representing the lenders in negotiating, structuring and documenting the transaction was led by partner Phill Fletcher and senior associates Cathy Marsh and Jon Nash. The team also included associates Suhrud Mehta, Antony Skinner and Andrew Glynn.

About Milbank:
Milbank's Global Project Finance Group is one of the largest and most experienced among the world's major law firms. Renowned for its leadership, Milbank has pioneered some of the most innovative project financing techniques, and consistently ranks among the top law international law firms by industry trade publications such as Infrastructure Journal, Privatisation International, Project Finance International, The American Lawyer and Euromoney's Project Finance Book of Lists. With more than 100 dedicated project finance attorneys in the firm's offices worldwide, Milbank provides legal advice under both English and U.S. law. The Group's attorneys have represented the full spectrum of project participants, including credit providers, underwriters, advisors, sponsors, project joint ventures, insurers, contractors, government agencies and multilateral institutions.

The depth of Milbank's project finance expertise includes engagements in projects ranging from power generation, power transmission and distribution, pipelines, oil and gas and petrochemicals, telecommunications and space, waste disposal and recycling, water treatment, mining and natural resources, pulp/paper, transportation, to other types of infrastructure. As the project finance marketplace has evolved, Milbank's Global Project Finance attorneys have expanded the range of products and services by working in conjunction with attorneys from other practice areas to include asset disposition, restructuring, portfolio securitization, credit enhancement and political risk mitigation techniques.

Milbank, Tweed, Hadley & McCloy LLP is a global law firm headquartered in New York, with offices in London, Frankfurt, Washington, D.C., Los Angeles, Palo Alto, Tokyo, Hong Kong and Singapore. Milbank is a recognized leader in mergers and acquisitions, capital markets and corporate finance, project finance, acquisition finance and other major fields of legal practice. Milbank has both English and U.S. law capabilities, and provides a full range of services to many of the world's leading financial, industrial and commercial enterprises, as well as governments, institutions and individuals.

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