Sources inform ''Globes'' that Shafir Civil & Marine Engineering Ltd. wants to make changes in the plan for Road 531, in order to lower construction costs. The company submitted its requests to the authorized agency.
In contrast to previous infrastructure projects, such as the Jerusalem light railway and Road 431, the contract between the state and the winner in the Road 531 tender includes a clause allowing the contractor to make design changes. If the state agrees to Shafir's proposed changes, this will facilitate the company's ability to obtain bank financing, despite the company's low winning bid in the tender.
Road 531 is a lateral road that will link the Coastal Highway (Road 2) with the Yitzhak Rabin Highway (Road 6) in the Kfar Saba-Ra'anana area in the Sharon.
Shafir won the Road 531 tender last year with a low bid of NIS 2.4 billion, beating Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) contracting subsidiary Danya Cebus Ltd. (TASE: DNYA), and a consortium of Housing and Construction Holding Co. Ltd. (Shikun u'Binui) (TASE: HUCN) and Electra Ltd. (TASE: ELTR). Shafir also demanded a set-up grant of NIS 640 million in order to secure financing for the project by July or August.
Shafir is negotiating with Bank Leumi (TASE: LUMI) and Bank Hapoalim (TASE: POLI; LSE:80OA), after French bank BNP Paribas SA (Euronext: BNP, TSE: 8665) withdrew plans to lead the syndicate that would finance the project. The economic crisis led Shafir and the banks to make a number of demands to change the franchise terms, including early payment of the set-up grant and higher interest rate spreads.
Sources inform ''Globes'' that, despite the global economic crisis, the European Investment Bank (EIB) recently expressed interest in joining Bank Hapoalim and Leumi in financing the Road 531 project.
Published by Globes [online], Israel business news - www.globes-online.com - on February 3, 2009
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