1. Welcome to Chris Scoble

2. Agenda Brief introduction to Orrick Models for Infrastructure Development UK example of PFI and PPP (London Underground)

3. Orrick Today 690 Lawyers 1,550 Total Staff 13 offices in 5 countries on 3 continents Uniquely balanced within the US with an equal distribution of lawyers on both coasts. Growing presence in Europe and Asia. Strategically focused on high-value engagements in carefully selected practice areas, locations, and industry sectors.

4. 13 offices in 5 Countries on 3 Continents Tokyo San Francisco Silicon Valley Sacramento Pacific Northwest Los Angeles New York Washington DC London Orange County Milan Rome Paris

5. Orrick at a Glance: Our Practices FINANCE Bankruptcy and Debt Restructuring Energy & Project Finance Global Finance Leasing Public Finance Structured Finance CORPORATE Compensation and Benefits Mergers and Acquisitions Real Estate Tax LITIGATION Antitrust and Competition Employment Intellectual Property

6. Structured Finance

7. Source: The Bond Buyer, Tuesday, July 1, 2003 Public Finance

8. Energy & Project Finance

9. American Lawyer Dealmaker of the Year 2003 Nomination for Project Finance : Dan Matthews  SR125 Toll Road in San Diego (CA)  US$640 million Public Private Partnership  Represented lead bank arrangers  “A groundbreaking public-private project” (International Financial Law Review)

10. Changing Models for Infrastructure Development Mary Rose Brusewitz

11. Challenges Growing need for infrastructure development: power, transport, water and waste Competition for capital and developing local markets Can basic services generate sufficient profit to attract private sector? Sustainability of profit-making by private sector for basic services Risk and responsibility allocation

12. Structural Models Traditional State-owned and –operated model Privatization and deregulation during the 1990’s Public Private Partnerships Contractual and concession models U.S. municipal finance

13. Range of options of PSP

14. Finance Techniques Sovereign finance Project finance Structured finance or securitization Private or public sector company balance sheets Role of multilaterals and development banks and agencies

15. Allocation of responsibilities OptionAsset Ownership Operations & maintenance Capital investment Commercial risk Duration Service Contract PublicPublic and Private Public 1-2 years Management Contract PublicPrivatePublic 3-5 years LeasePublicPrivatePublicShared8-15 years ConcessionPublicPrivate 20-30 years BOT/BOOPrivate and public Private 20-30 years DivestiturePrivate or public and private Private Indefinite (may be limited by licence)

16. Matching Models and Techniques Legal, political and financial environments Analysis of both successful and failed models, techniques and projects Some types of infrastructure more easily attract private sector interest and risk appetites Creativity: combining models and techniques

17. U.S. Model: Municipal Finance Legal system promotes tax exempt financing and attracts ‘local’ and ‘retail’ capital Use of ratings or ‘balance sheets’ of States or municipalities to support infrastructure development with long term financing at comparatively low cost General obligations of States or municipalities with financial institution guaranty ‘Securitized’ tax or other directed revenues Results in combined participation of public and private sectors in a variety of areas including commercial and residential real estate development and small business support, as well as basic services Key: stability of legal and regulatory structures

18. London Underground PFI and PPP Martin Stewart-Smith

19. What was PFI? Public sector procurement to seek value for money by offering the opportunity to the private sector Had to beat the “public sector comparator” Initial problems were Lack of institutional capacity Lack of understanding of risk allocation High transaction costs The fixes were Setting up of the Treasury Task Force PFI Guidelines Standardization of documentation Risk matrices

20. LUL Seeboard Powerlink PFI Needed to upgrade the power supply to the underground (1997) Technical evaluation and bidding process Scope of the PFI project Decommissioning of dedicated power stations Lots Road and Greenwich Transfer of employees and certain LUL contracts Complex regimes of dependencies and variations Total project size of over $1.04 billion Separated ownership of the distribution network from LUL Successfully closed the financing in 1999

21. What is PPP? Public Private Partnership includes PFI as well as Outsourcing Marketing of irreducible spare capacity, under the Government's Wider Markets Initiative; and Strategic partnerships between Govt and key suppliers.

22. LUL PPP Separation between deep lines and ‘cut and cover’ lines Separation of track ownership from maintenance Creation of separate bid packages Various quality criteria as output driven contracts Obligation to raise finance Transfer of employees and contracts

23. Taking a good credit… Strong cash generator The securitized bond debate Keeping the network and maintenance together Splitting the financing from the operational arrangements Public Sector Borrowing Requirement Treasury comfort letter – ‘off balance sheet’ nature of the debt The Verdict?

24. Gracias por su atención