Memo report Konopnicka
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Memo Report To: Laumann construction firm, Weber-Merkel bank From: Konopnicka Airport, Ministry of Infrastructure Date: 5 October 2011 Subject: Agreements expansion Konopnicka Airport Introduction On 5 October, the Konopnicka Airport/Ministry of Infrastructure representatives and the Laumann construction firm/Weber-Merkel bank representatives negotiated about the PPP agreement. In order to expand the Konopnicka Airport some important subjects needed to be discussed. Subjects like Financing and Risk Allocation. We have agreed on the following plan of action for the expansion of the Konopnicka Airport. Financing Firstly, we suggested borrowing 90 percent of the 120 million from the Weber-Merkel bank against an interest rate of 2,5 percent. This would be preferable for the Konopnicka Airport. The remaining 10% will be financed by Polish Airports. Laumann construction firm would like to give into our demands if we let them manage the airport for a 5 year concession. We have made an agreement on the point of Financing. Operations and Management Secondly, we have given into their demand to own the assets and operation of airport services for 5 years. Repayment Terms Thirdly, we discussed the repayments terms of the expansion of the Konopnicka Airport. We suggested that the loan from the Weber-Merkel bank should be repaid over 20 years. Repayments will begin on full completion of works. The bank would agree on these terms if we repaid on a monthly basis. We had another agreement. The Weber- Merkel bank would like to collect take-off and landing charges from foreign airlines and over flight fees. Excess charges and fees would be paid back to Polish Airports on a quarterly basis. We agreed with these repayment terms. Building Schedule Fourthly, we had a discussing about how long the construction project would take to complete. The Konopnicka Airport representatives would like it to be completed within 24 months and the Laumann construction firm in 30 months. The Konopnicka Airport representatives gave into their demands on one condition, that Laumann would sub-contract work to and cooperate with Polish construction companies. They agreed with these terms. Risk Allocation Finally, we decided how to spread the risks of the expansion of the Konopnicka Airport. We agreed that delays in the building schedule were to be transferred to Laumann construction firm. The company will not be held responsible for circumstances beyond its control, such as adverse weather conditions. These delays in the building program will incur penalty fines of a half million for each week.
Transcript of Memo report Konopnicka
Memo Report
To: Laumann construction firm, Weber-Merkel bank From: Konopnicka Airport, Ministry of Infrastructure Date: 5 October 2011 Subject: Agreements expansion Konopnicka Airport Introduction On 5 October, the Konopnicka Airport/Ministry of Infrastructure representatives and the Laumann construction firm/Weber-Merkel bank representatives negotiated about the PPP agreement. In order to expand the Konopnicka Airport some important subjects needed to be discussed. Subjects like Financing and Risk Allocation. We have agreed on the following plan of action for the expansion of the Konopnicka Airport. Financing Firstly, we suggested borrowing 90 percent of the 120 million from the Weber-Merkel bank against an interest rate of 2,5 percent. This would be preferable for the Konopnicka Airport. The remaining 10% will be financed by Polish Airports. Laumann construction firm would like to give into our demands if we let them manage the airport for a 5 year concession. We have made an agreement on the point of Financing. Operations and Management Secondly, we have given into their demand to own the assets and operation of airport services for 5 years. Repayment Terms Thirdly, we discussed the repayments terms of the expansion of the Konopnicka Airport. We suggested that the loan from the Weber-Merkel bank should be repaid over 20 years. Repayments will begin on full completion of works. The bank would agree on these terms if we repaid on a monthly basis. We had another agreement. The Weber- Merkel bank would like to collect take-off and landing charges from foreign airlines and over flight fees. Excess charges and fees would be paid back to Polish Airports on a quarterly basis. We agreed with these repayment terms. Building Schedule Fourthly, we had a discussing about how long the construction project would take to complete. The Konopnicka Airport representatives would like it to be completed within 24 months and the Laumann construction firm in 30 months. The Konopnicka Airport representatives gave into their demands on one condition, that Laumann would sub-contract work to and cooperate with Polish construction companies. They agreed with these terms. Risk Allocation Finally, we decided how to spread the risks of the expansion of the Konopnicka Airport. We agreed that delays in the building schedule were to be transferred to Laumann construction firm. The company will not be held responsible for circumstances beyond its control, such as adverse weather conditions. These delays in the building program will incur penalty fines of a half million for each week.
Conclusions Konopnicka Airport realizes that implementing these agreements will probably be costly and involve some precision work. However, after a discussion, we firmly believe that this expansion will develop the Konopnicka Airport to an International Hub Airport. In the end the airport and Polen will benefit greatly from this expansion. We are looking forward to your reaction. Guido Plaizier S2208067 Konopnicka Airport/Ministry of Infrastructure Representative
