Settlement clarifies status of Quito Airport project
Toronto, Ontario – November 24, 2009: Aecon Group Inc. (TSX: ARE) announced today that it has reached an agreement regarding issues affecting the Quito International Airport project that had arisen following a ruling earlier this
year by the Constitutional Court of Ecuador.
Under the agreement, which is subject to approval by the Constitutional Court of Ecuador and a number of other closing deliverables, an arrangement has been found which addresses the prior Court ruling and which resolves a number of other
issues important to the investors, the project’s lenders and the Municipality.
Other key elements of the agreement include:
• Project lenders will resume funding for construction of the new airport.
• Corporacion Quiport S.A (“Quiport”), which holds concession rights to both the existing Quito Airport and the new airport currently under construction, will, in addition to the currently contracted concession fees,
pay the Municipality of Quito 18% of Quiport’s net income plus $500 thousand per year. This change will effectively reduce the earnings Aecon reports from the project by approximately 18% and increase the Municipality’s
effective economic interest to the equivalent of 26%.
• A schedule of fee increases was established for “Regulated” fees charged by Quiport at the airports (including airline landing fees and passenger departure fees). The schedule, which respects the maximums
established in the original concession agreements, provides Quiport with increased certainty regarding the revenues expected to be derived from the concession, and does not limit Quiport’s ability to charge market fees for “Non-regulated”
items such as duty free and car rental concessions, parking, food services etc.
• It was agreed that a new completion date and a new construction price would be set for the project, reflecting the delays and increased costs associated with the slowing of construction activity following the Court ruling earlier
• A deadline of January 29, 2010 was set for receipt of Court approval and finalization of all conditions and deliverables relating to the settlement (including the construction issues noted above).
The agreement was negotiated among the various parties involved in the Quito International Airport project, including the Municipality of Quito (for the Ecuadorian authorities), the Canadian Commercial Corporation (“CCC”, an
agency of the Government of Canada that holds the contract to construct the new Quito Airport), and the project lenders, as well as Aecon and its partners in Quiport.
Prior to the effect of this agreement, Aecon has a 42.3% economic interest in the Quito airport concession through its stake in Quiport. The grantor of the concession on behalf of the Municipality of Quito is Corporacion Aeropeurto
y Zona Franca del Distrito Metropolitano de Quito (CORPAQ). The new airport is being constructed under a contract signed between CORPAQ and the CCC. The CCC, has subcontracted 100% of the construction work to Aecon who
in turn has subcontracted the work to a 50/50 joint venture consisting of Aecon and Andrade Gutierrez Constructores, one of the largest construction companies in Brazil.
The project's senior lenders are: USA-based Overseas Private Investment Corporation, Export-Import Bank of the USA and the Inter-American Development Bank as well as Export Development Canada (EDC).