Loan for the Intercity Express Programme in the UK
the First Project Finance Loan toward the Railway Sector for JBIC

• Region: Europe
• Infrastructures
• Overseas Investment Loans
• Project Finance

1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Okuda) signed on July 24 a loan agreement totaling up to approximately 1 billion Sterling Pounds (JBIC portion) with Agility Trains West Line Limited (ATWL) in the United Kingdom (UK), where Hitachi, Ltd. (Hitachi) has equity stakes, to fund the Intercity Express Programme (Great Western Main Line).  The loan, provided in project financing,^*1  is cofinanced with private financial institutions, including The Bank of Tokyo-Mitsubishi UFJ, Ltd., HSBC Bank plc, Lloyds TSB Bank plc, Mitsubishi UFJ Trust and Banking Corporation, Mizuho Corporate Bank, Ltd., Sumitomo Mitsui Banking Corporation, and Sumitomo Mitsui Trust Bank, Limited, as well as the European Investment Bank, which comprises the cofinancing amount up to approximately 2.2 billion Sterling Pounds in aggregate.  Nippon Export and Investment Insurance (NEXI) will provide Overseas Untied Loan Insurance for part of the portion financed by private financial institutions.  This project is one of the most important projects for the British government, which would be the first Rolling Stock Public Private Partnership project^*2  in the UK. 
    
2. In this project, ATWL, a joint venture set up by Hitachi and John Laing Investments Limited, will procure about 369 high-speed trains manufactured by Hitachi and develop railway depots for maintenance, while leasing the high-speed trains to the train operator of Great Western Main Line with maintenance service for a period of 30 years. Through the replacement of outdated high-speed trains running on the Great Western Main Line, this project is expected to make a significant contribution to the stability of the long-term railway service in the UK. Hitachi plans to take this opportunity to construct a new rolling stock manufacturing and assembly center in the UK.
    
3. This project is aligned with the New Growth Strategy and the overseas integrated infrastructure system deployment being promoted by the Japanese government in which Hitachi's role is not limited to providing the rolling stock, and parts and components, but also playing a pivotal role in the project as a major participant, and providing long-term maintenance services.  This project is also in line with a Memorandum of Understanding (MOU) that JBIC signed with UK Trade and Investment (UKTI) in April, 2012 for promoting investment in the field of infrastructure from Japan to the UK^*3, and is expected to strengthen cooperation and economic ties between Japan and the UK. Against these backdrops, and taking into consideration the long-term investment denominated in Sterling Pounds, JBIC has decided to provide the long-term loan denominated in Sterling Pounds.
    
4. In the UK, it is envisaged that there will be increasing demand for the replacement and upgrade of rolling stock, which is expected to create business opportunities for Japanese firms.  JBIC will continue to support overseas infrastructure business activities of Japanese firms, and contribute to maintaining and improving the international competitiveness of Japanese industries by utilizing a range of financial facilities and schemes for structuring projects, and by performing risk-assuming functions.

Note

1. *1 Project finance is a financing scheme in which repayments are made solely from cash flows generated by the project and secured only on the project assets.
2. *2 Public Private Partnership (PPP) refers to the operation of public service through cooperation between the public and private sectors. In Rolling Stock PPPs, leasing and maintenance services of rolling stock are undertaken in PPP.
3. *3 See Press Release on April 10, 2012.