Canada Infrastructure Bank agrees US$1 billion loan for light rail project in Montreal
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Canada Infrastructure Bank (CIB) has concluded a business agreement with CDPQ Infra, a wholly owned subsidiary of Caisse de dépôt et placement du Québec, regarding its investment in the Réseau express métropolitain project (REM) in Montréal, which will amount to CAD1.28 billion (US$980.5 million).
CDPQ Infra proposed to deliver a 67km light rail transit (LRT) network in Montréal, the largest city in the eastern Canadian province of Québec, in April 2016. The network will link downtown Montréal, the South Shore, the West Island (Sainte-Anne-de-Bellevue), the North Shore (Laval and Deux-Montagnes) and the city's airport via 26 stations.
CIB's investment completes the project’s CAD6.3 billion (US$4.83 billion) financing. Subject to the execution of the final documentation, it will take the form of a 15-year senior secured loan at a rate starting at 1% escalating to 3% over the term of the loan.
The majority of the remainder of the financing is being provided as equity by CDPQ Infra (owner of a 70% stake in the project) and the Government of Québec (owner of a 30% stake). These equity investments total CAD2.95 billion (US$ 2.26 billion) and CAD1.28 billion, respectively.
The investment by CIB represents the CAD1.28 billion promised to the project in June 2017 by the Canadian government. At that time, it was thought that this would take the form of an equity investment, with the government taking a 24.5% stake in the project.
The bank is a Crown corporation, a distinct legal entitiy established by the government to pursue public policy and commercial objectives, in this case to attract private and institutional investment to revenue-generating infrastructure projects. It was established by law in June 2017. The Chief Executive Officer and Chief Financial Officer were appointed in June 2018. The REM is the bank's first investment.
The REM is currently in construction. The first trains are scheduled to run in the summer of 2021. The high-frequency network will be entirely automated and electric.
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