Port Financing of the Year: Itapoá

SPONSOR: Portinvest Participações S.A. and Aliança Administração de Imóveis e Participações Ltda. (Hamburg Süd group)
LOCATION: Itapoá, Brazil
FINANCING TYPE & SIZE: $116 million project financing
BANKS: IDB Invest, Banco ABC Brasil, ING
ADVISOR: BR Partners
LAW FIRMS: Mattos Filho, Tozzini Freire, Allen & Overy, Norton Rose Fulbright

The need to expand Port Itapoá in the southern Brazilian state of Santa Catarina was clearly obvious in 2015, when it reached maximum capacity for the second year in row. But it couldn’t have been a worse time to look for financing as Brazil sank into a crippling recession.

“There wasn’t a lot of money in the market and it was very expensive, with short tenors,” recalls Thiago Gama, the port’s administration and finance manager. “It was the eye of the hurricane. The worst time to get funding. It was very challenging.”

Still, the container port issued a BRL90 million debenture in 2016 to begin the much-needed expansion, extending the quay and upgrading the yard.

Then in 2017, as Brazil’s economic climate improved and financing options looked more favorable, Itapoá decided to return to the market. The port hired BR Partners to advise management and began a series of meetings with commercial banks and multilateral agencies.

By the end of the year, the Inter-American Development Bank, acting through IDB Invest, and ING agreed to provide two-thirds of the port’s financing needs. Banco ABC Brasil supplied the remaining third.

The lenders came to the deal with different perspectives, ranging from social to commercial. “They had different DNA. We had a lot of talk about the vision,” Gama says.

In the end, each contributed BRL150 million ($36.5 million) to the BRL450 million package, a sum that allowed Itapoá to repay the previous debt and begin an expansion program. The port also had to negotiate an intercreditor agreement that had to meet the requirements of both Brazilian capital markets instruments and multilateral development banks.

Itapoá is now doubling the capacity of its yard to 200,00 square meters and extending its quay by 170 meters. As the container handling capacity grows from 500,000 TEUs to 2 million TEUs, the port will have the ability to handle two large cargo ships simultaneously, says Gama.

“We invested in a better future,” says Gama. “We have grown very quickly, and we’re a healthy company.”