FEATURE
SUB-SEA CABLES: A FINANCING PERSPECTIVE BY IAN MATHEWS
T
he requirements of third-party financiers are often downplayed or overlooked when developers are initially contemplating a sub-sea cable. Much time is rightly spent by developers in optimising the tender documents to ensure a technically efficient and reliable sub-sea cable system and in obtaining commitments from potential capacity purchasers. Less time is spent in discussions with financial institutions as to how to fund the cable and, in particular, the structuring elements of the financing. As financial institutions may well be the largest single providers of capital, early engagement is important
to ensure that potential roadblocks and deal breakers are not discovered a long way down the cable’s development timeline. This article seeks, at a high level, to identify both potential financier requirements and various alternative means of financing the opportunity.
POTENTIAL STRUCTURES
The two most common approaches seen in the market are the Incorporated Joint Venture (“IJV”) and the Unincorporated Joint Venture (“UJV”). At its simplest, the IJV is a special purpose vehicle that MARCH 2023 | ISSUE 129 31