Kier Regulatory News (KIE)

RNS - 31 March 2014 - 0700 hours

£450m Mersey Gateway Project reaches financial close

Kier Group plc announces today that Halton Borough Council and the Merseylink consortium have reached financial close on the construction of the £450m Mersey Gateway Project, a new six-lane toll bridge over the River Mersey. 

Kier Infrastructure is one of the three Merseylink construction joint venture (CJV) partners including Samsung C&T Corporation and FCC Construcción S.A. Construction will commence immediately and the project will be operated and maintained for the next thirty years.

Since the Mersey Gateway project received preliminary support from Government in 2006, Halton Council has been focused on affordability, and their innovative procurement programme has delivered impressive savings over the budget set by the Government in 2011 without compromising quality.

The Merseylink consortium's equity partners are Macquarie Capital Group Limited, Bilfinger Project Investments Europe Limited and FCC Construcción. The joint venture was appointed as preferred bidder for the project in June 2013.

Haydn Mursell, Kier Group Finance Director said, "The Chancellor in his recent budget statement confirmed the Government's support for Mersey Gateway, recognising the huge economic, social and transport benefits that it will bring to the region. This is a landmark infrastructure project which Kier and its consortium partners are proud to be involved in. We have worked closely with Halton Borough Council over recent months to reach this position and we look forward to delivering the project with them over the coming years."

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For further information:

Faeth Birch/Charlotte Whitley, RLM Finsbury 020 7251 3801Kier press office 07791 719452

Notes to Editors

About the project

The Mersey Gateway Project will be one of the largest infrastructure initiatives in the UK over the coming years. Last year Mersey Gateway was identified as one of the UK government's Top 40 priority projects in the National Infrastructure Plan and it has been recognised by KPMG as one of the 'Top 100 infrastructure projects around the globe'.

The centrepiece of the Mersey Gateway Project is a new six-lane toll bridge over the River Mersey. The existing Silver Jubilee Bridge will also be tolled as part of the project, which will bring major estimated economic, transport and social benefits to the region, including:

• 470 permanent full-time equivalent jobs on site during construction

• 4,640 permanent direct and indirect jobs

• £61.9m a year in Gross Value Added from the new jobs by 2030

• quicker journey times by up to 10 minutes in peak periods

• an improvement in journey time reliability

The total value of the construction phase of the project, including land, is estimated at £600m. The total project costs/revenues over the next 30 years are estimated at around £2bn.

Its features will include:

- a 1,000m long cable stay bridge consisting of four spans supported from three towers in the estuary

- a unique design where the 80m high central tower will be shorter than the two outer towers, which will be 110m (north tower) and 125m (south tower)

- a total length (including the bridge and approach viaducts) of 2.13km

- a deck carrying six lanes of traffic (three in each direction) with a speed limit of 60mph

- up to 30 supporting piers carrying it across the approach viaducts

- a curved approach at each end of the bridge giving varying views of its unique design and maximising its visual impact

You can find out more about the project at www.merseygateway.co.uk.

About the Merseylink consortium

Its members have delivered many high profile projects around the world in recent years, including the Golden Ears Bridge in Vancouver, the Vidin-Calafat Bridge in Bulgaria, the Incheon Bridge in Korea and the M50 widening in Dublin.

Merseylink funding package

The project is being funded over this 30-year period by a mix of tolls paid by users and the grants from the UK Government. The Council will not make any payments to Merseylink until the road is open and toll revenue plus government grant is available to fund these payments.

To finance this delay in receiving revenue the Merseylink consortium has put in place finance arrangements, which includes making use of the new UK Government IUK Guarantee Scheme to guarantee £260m of the senior debt required, with the balance of the finance provided by four banks and the Merseylink sponsors.

Halton Borough Council has set up a new company - the Mersey Gateway Crossings Board - which is the special purpose vehicle with the delegated authority to deliver the Mersey Gateway Bridge project and to administer and oversee the construction and maintenance of the new tolled crossings including the tolling of the existing Silver Jubilee Bridge.

Procurement savings

These savings have been made possible by:

- the introduction of innovative construction techniques such as making the main bridge deck out of reinforced concrete rather than steel

- bringing forward some elements of work such as dealing with contaminated land along the riverbanks so it was completed ahead of financial close

The savings are being shared between UK central government and Halton Borough Council. The

Council has already committed to reinvesting its 30% share of the savings - which amounts to around £4m a year over the lifetime of the project - to almost double the number of free trips available to qualifying local residents through its local user discount scheme.