XLCA guarantees AUD 680million of senior secured bonds to refinance Dalrymple Bay coal terminal bank debt

XL Capital Assurance Inc has issued a triple-A rated financial guarantee for AUD 680 million of senior secured fixed-rate bonds to refinance existing bank debt the Dalrymple Bay Coal Terminal.

The XLCA-insured bonds issued by BBI (DBCT) Finance Pty Ltd, have bullet maturities in three tranches of 10, 15 and 20 years, and will be redeemed in full on maturity. The average life of the XLCA-guaranteed debt is expected to be 13 years. The bonds will be used to refinance existing bank debt used by BBI to acquire leases from the Queensland government in 2002. The Royal Bank of Scotland and Commonwealth Bank of Australia acted as investment bankers to the transaction.

The Dalrymple Bay Coal Terminal, a coal-handling facility and export terminal in Point Hay, Queensland, Australia, is leased from the Queensland government for a 49-year period (with a 50-year extension option) by Babcock & Brown Infrastructure (ASX: BBI), an infrastructure fund and wholly owned subsidiary of Babcock & Brown Pty Limited (B&B). Revenues are regulated by the Queensland Competition Authority (QCA) and are fixed for five-year periods.

"XLCA is delighted to have worked with Babcock & Brown, as well as The Royal Bank of Scotland and Commonwealth Bank of Australia to complete this transaction,' says Philip P Henson, co-head of XLCA's Power & Utilities group. "The Dalrymple Bay Coal Terminal is an essential part of the infrastructure supporting Australia's growing coal industry, the regulated nature of which, combined with the terminal's stable cash flows and relatively low risk business profile, made this transaction an attractive proposition for us."

 With the completion of this financing, XLCA has closed nine transactions in the Australia/New Zealand market totaling approximately USD 1.6 billion.

"The Dalrymple Bay Coal Terminal is an essential link in the supply chain of the raw material needed to make steel and electricity worldwide,' says Jeff Pollock, Chief Operating Officer, Transport at Babcock & Brown Infrastructure. 'XLCA's focus on understanding our business and tailoring of a financial guarantee to meet our unique needs means that we have achieved the most cost effective financing solution possible for this transaction. This debt refinancing transaction means that we can now approach our project to expand the terminal's capacity with even greater confidence."

The Dalrymple Bay Coal Terminal exports approximately six per cent of the world's seaborne coal trade, making it Queensland's largest export coal terminal and one of the largest terminals of its kind in the world. It also provides a vital link in the global coal supply chain, bringing hard coking coal to steel mills in Asia and Europe. Coal is Australia's largest export commodity and generates royalties accounting for five per cent of the Queensland budget.

Background notes:
XL Capital Assurance Inc. (XLCA) - rated triple-A by Moody's Investors Service, Standard & Poor's Ratings Services, and Fitch Ratings - is a mono-line financial guarantee company that provides triple-A rated credit enhancement for the obligations of debt issuers worldwide. XLCA guarantees US municipal bonds; asset-backed securities; debt backed by utilities and selected infrastructure projects; specialized risks, including future flow securitizations and bank deposit insurance; and structured investment products - in both the primary and secondary global markets. XLCA is an indirect, wholly owned subsidiary of XL Capital Ltd (NYSE: XL) which, through its operating subsidiaries, is a leading provider of insurance and reinsurance coverages and financial products and services to industrial, commercial and professional service firms, insurance companies and other enterprises on a worldwide basis. For more information, please visit www.xlca.com

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