US$2 billion light rail PPP in Toronto reaches commercial and financial close

lightrail250.jpgInfrastructure Ontario and Metrolinx have announced that their preferred proponent for the Finch West Light Rail Transit (LRT) project, Mosaic Transit Group, has signed a contract valued atCAD2.5 billion (US$1.94 billion) for the design, construction, financing and maintenance of the 11km light rail line in Toronto.

Aecon, one of the leading members of Mosaic Transit Group, has confirmed that the project has also reached financial close. The other equity partners in the group are ACS Infrastructure Canada Inc. andCRH Canada Group Inc.

Aecon, ACS‘ subsidiary Dragados Canada Inc. and Dufferin Construction Company, a division of CRH Canada Group Inc., will construct LRT line that will run in a semi-exclusive lane along Finch Avenue in Toronto. It will have 16 surface stops and two underground terminuses – a below-grade terminal stop at Humber College and an underground interchange station at Keele Street that connects with the new Finch West Subway Station on the Toronto-York Spadina Subway Extension. The estimated cost of this construction is CAD1.2 billion (US$932.6 million).

The Finch West corridor is one of the busiest bus routes in the City of Toronto, linking the communities of Jamestown, Rexdale and Black Creek with downtown Toronto.

Construction is scheduled to begin in fall 2018. At the peak of construction, Mosaic estimates that approximately 600 workers will work on the project and that 85% of the labour will come from the Greater Toronto Area.

The project also includes the delivery of a maintenance and storage facility for the light rail vehicles and other required components, such as trackworks, signaling, communications and public realm infrastructure, as well as a 30-year maintenance agreement for the LRT.

Mosaic has not disclosed how it has achieved financial close. However, Moody’s Investors Serviceannounced last month that it assigned a first-time Baa2 rating to two amortizing senior secured bondstotaling approximately CAD183 million (US$142.2 million) to be issued by the group to partially finance the project.

As Moody’s expects that the project will be completed largely on time or with minimal delays and when completed, will operate with minimal deductions to its availability payments, the rating outlook is stable.

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