By Alasdair Reilly
LONDON, March 20 (Reuters) - The 1.3 billion pound ($1.89 billion) financing to widen the M25 motorway in London is being considered by a number of lenders, banking sources told Reuters Loan Pricing Corp on Friday.
Progress on the financing has been slow since the Connect Plus consortium -- comprising Atkins, Balfour Beatty, Egis Projects and Skanska -- was named as preferred bidder on the project in July 2008.
The global credit crisis has impacted many banks' ability to commit money to long-term financings.
"The proposal on the table is basically what's been around for quite a while," one of the sources said.
Nineteen banks are still looking at the transaction which has been widely touted to be a benchmark for motorway financing this year.
"Five or six banks are already comfortable with the terms and conditions on the financing, now it's a matter of bringing the other banks on board," the source said.
Another banking source said banks co-ordinating the deal are Lloyds TSB as documentation agent, SMBC will be technical bank, BBVA as insurance bank and WestLB as modelling bank.
Banking sources said the financing comprises a 27-year loan of around 700 million pounds of senior debt, a 200 million pound direct loan from the European Investment Bank (EIB) and a 200 million pound commercial bank guaranteed loan also from the EIB.
There is also an equity bridge loan of around 200 million pounds, which may be held by the lead banks, they said.
One of the sources said the deal pays an initial margin of 250 basis points (bps) over LIBOR stepping up after year seven by 50 bps increments up to 350 bps at year 11.
In line with other recent project financings, the step-up is designed to encourage an early refinancing. There is also a 50 percent cash sweep mechanism kicking in at year eight rising to 100 percent at year 20, bringing the average maturity of the loan down, the source said.
There are three provisional ticket levels on offer - 50 million pounds, 75 million pounds and 100 million pounds, the source said. A fee of 200 bps is initially on offer for the 75 million pound ticket varying depending on commitment level, he added.
He said there is expected to be some flexibility on the fees which may increase by 25-40 bps in line with wider market pricing movements.
The project involves widening stretches of the M25 from three lanes to four lanes from junctions 5 to 7 and junctions 16 to 30. The consortium will also be responsible for maintaining the motorway over the contract period of 30 years. ($1=.6865 Pound) (Editing by Jon Loades-Carter)