09 February 2004
Key Points:
Clayton Utz acted for the Australian Railroad Group (ARG) in refinancing the facilities ARG put in place for the acquisition of the Western Australian Government freight rail business in 2000. The refinancing was completed in December 2003.
The previous financing for ARG reflects the fact that the financing of most privatisations in Australia in the late 1990s and early 2000s adopted a project finance style approach, with extensive covenants (including detailed proceeds accounts regimes), security over all assets and the like. Given the success of ARG's business operations, which also includes the South Australian freight rail business, ARG has had the opportunity under the refinancing to obtain more flexible terms, moving towards a corporate financing style facility, more reflective of their business needs. As the counsel for ARG we assisted in the structuring of the refinancing and also prepared the finance documents.
The transaction was interesting in that ARG has utilised the Asia Pacific Loan Market Association (APLMA) documentation as the basis for its finance documents. APLMA has produced sets of documentation which may be used for syndicated loan transactions for borrowers with an investment grade rating in the Australian market. Clayton Utz is a member of the legal and documentation committee of APLMA. It is this committee that has had the primary responsibility for assisting in the preparation of this documentation. APLMA's purpose in producing the documents has been to streamline and improve the documentation process in the Australian syndicated loan market. The APLMA documents have been available since 2001 and are slowly starting to gain market acceptance, as their use in the ARG transaction demonstrates.
