Lexpert®Ranked Lawyers
P3 Realities | 13
Emblem, Robert D.G.
Clyde & Co
Canada LLP
(514) 764-3650
Mr. Emblem has over
20 years' experience
in construction dispute
resolution, representing
developers, contractors,
construction
professionals and
their insurers, and
is one of Canada's
experts in course of
construction insurance.
Fairey, Peter D.
Gowling Lafl eur
Henderson LLP
(604) 891-2266
peter.fairey@
gowlings.com
Mr. Fairey has a
33-year diversifi ed
corporate/commercial
private M&A practice
including PPP across
many sectors. His over
25 PPP mandates
span port, highway,
data services,
corrections and social/
hospital projects.
Finlay, QC, David G.
Bennett Jones LLP
(780) 917-5236
fi nlayd@
bennettjones.com
Mr. Finlay acts in
the acquisition,
development, leasing
and fi nancing of
commercial and
industrial real estate
developments. He also
advises on corporate
and governance
issues, and counsels
public and private
clients in the
health sector.
Estrin, David
Gowling Lafl eur
Henderson LLP
(416) 862-4301
david.estrin@
gowlings.com
Mr. Estrin advises
government agencies,
corporations, fi nancial
institutions, Aboriginal
people and law
fi rms in all facets of
environmental law.
He has appeared as
counsel in Ontario,
Alberta and federal
courts, and before
environmental
tribunals.
Fews, Stefan
Stikeman Elliott LLP
(514) 397-6493
sfews@stikeman.com
Mr. Fews focuses
on commercial real
estate, secured
fi nancing and JVs.
He acts for pension
funds and institutional
investors in negotiating
and structuring
partnerships and other
entities for real estate
transactions in Canada
and abroad.
Flaman, Derek S.
Torys LLP
(403) 776-3759
dfl aman@torys.com
Mr. Flaman's
commercial law energy
practice focuses
on M&A, JVs and
project development
in all aspects of the
oil and gas industry
(upstream, midstream
and downstream).
The way PPPs work is once the public authority commis-
sioning a piece of infrastructure puts out a request for pro-
posals, interested bidders start to line up all their potential
short-term and long-term financing.
They also have to commit to doing the project for a fixed
amount, and there are strict financial penalties for poor
performance. If construction is late or there are unforeseen
costs, they – or their investors – have to pay from the profits.
The winning bidder oversees the design and construction
of the facility, and also arranges to operate it and maintain it
for a fixed period of time, often 20 or 30 years.
The commissioning authority often pays a portion, typi-
cally 30 to 50 per cent, of the construction costs either dur-
ing construction or on successful completion, and a post-
construction revenue stream is designed to pay back the
balance and the cost of operation and maintenance.
Sometimes, the revenue stream is provided in part
through "concession" arrangements; in the case of a road,
that revenue might come through tolls, for a hospital, it
might be the gift shop, cafeteria and/or food kiosks. Most
of the revenue, though, comes from "availability payments"
that are based on the infrastructure being available for use at
the required standard of performance and cleanliness.
One thing they all have in common is they are financed
through a combination of equity and debt.
Debt holders are repaid first. The equity portion pays
higher returns because the equity investors bear the majori-
ty of risk of any financial penalties and overspending, which
means the equity portion of the financing is more expensive.
But debt lenders won't provide competitive rates and
might not even lend at all on projects that don't have enough
equity funding, says Greg Lewis, a partner at Bull, Housser
& Tupper LLP in Vancouver. That's because they don't
want to assume the risk of cost overruns.
With bidders trying to keep financing costs as low as pos-
sible, companies typically structure a project with 10 to 15
per cent equity as a buffer. At 10 per cent equity, for exam-
ple, debt lenders on a $1-billion project know the first $100
million of potential problems aren't theirs.
"It's like insurance for the debt lenders," says Lewis.
"The equity providers will feel the pain first, underperfor-
mance by the project company resulting in deductions will
start to eat into equity returns first. Performance has to be
pretty bad for the project company not to have enough left
to pay the lenders."
The long-term stable cash flow of P3s has proven attrac-
