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March 13, 2009 6:33 PM

Mayer Brown Lands Role on Mammoth 'P3' Proposal

Posted by Brian Baxter

In what could be the largest public-to-private partnership transaction to occur so far in the U.S., CenterPoint Properties announced on Thursday an estimated $8.9 billion proposal to privatize the Port of Virginia.

The unsolicited bid was submitted to Virginia's secretary of transportation under a Virginia statute that triggers the start of a ten-day period whereby the state can choose to move forward with the "conceptual proposal." (Yes, we know Virginia's a commonwealth, not a state, but we're going with state here for the purpose of brevity.)

CenterPoint is being advised by Mayer Brown partners Joseph Seliga, John Schmidt, David Narefsky, and associate Jeremy Cannon, all of whom specialize in government transactions and infrastructure finance. The firm has advised on several high-profile P3 transactions, most recently the $2.5 billion privatization of Chicago's Midway Airport in September.

Schmidt says that the proposed 60-year concession for the Port of Virginia--the third-largest port on the eastern seaboard and the fifth-largest in the country--is the first P3 proposal for an entire U.S. port. (The $686 million privatization of the Port of Oakland announced last week is for only a part of its maritime operations.)

Virginia has ten days to either accept or reject the proposal, Schmidt says. If it chooses to move ahead, that begins a 120-day window whereby the state can solicit competing bids for the project. (The proposal does not include U.S. naval facilities in the Hampton Roads region.)

"The need for capital by public entities right now is enormous," says Schmidt, explaining the boom in P3 deals during a down market. "What we are seeing with ports is another segment of the infrastructure world opening up to privatization."

Interestingly enough, Schmidt thinks that while the Obama administration's economic stimulus bill might be pushing more municipalities towards P3s, it is not because of direct investments.

"The stimulus bill has come nowhere close to meeting needs when expanding facilities," says Schmidt, noting that the $29 billion earmarked for roads and $8 billion for mass transit is only enough to fund repairs--not expand or fund new infrastructure projects.

Local counsel on the Port of Virginia proposal was provided by Barry DuVal and Douglas Smith of Kaufman & Canoles. (Prior to joining the firm, DuVal served as Virginia's secretary of commerce and trade from 1998 to 2001.)

Mayer Brown wasn't the only firm to get in on the P3 action as of late. Simpson Thacher & Bartlett is representing a group of 12 banks--including Banco Santander, Calyon, Dexia, Société Générale, and WestLB--providing $781 million in loans to help finance a $1.8 billion concession to develop toll lanes on I-595 in Broward County, Fla.

The 35-year concession, awarded to a consortium led by Madrid-based Actividades de Construcción y Servicios, will also be funded through a $608 million loan from the U.S. Department of Transportation. It is the first P3 deal to close in Florida.

Infrastructure finance partner George Miller, tax partner Robert Holo, environmental senior counsel Adeeb Fadil, employee benefits counsel Jeanne Annarumma, and associates Rafael Berckholtz, Michael Josenhans, Mindy Lok, and Jason Vollbracht provided counsel to the lender group from the firm.

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