MPDC – Sociedade de Desenvolvimento do Porto de Maputo S.A.

REQUEST FOR PROPOSAL

TRANSACTION ADVISOR

2013

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TABLE OF CONTENTS

1. Letter of Introduction ...........................................................................................................2

2. Background ..........................................................................................................................4

3. Concession structure ............................................................................................................5

4. Financial Highlights .............................................................................................................6

5. Fundraising Status ................................................................................................................7

6. Terms of Reference ..............................................................................................................8

7. Fraud and Corruption ...........................................................................................................8

8. Items to be included in proposal and cost estimate..............................................................9

9. Returnable items ................................................................................................................10

10. Submission of queries ........................................................................................................11

11. Evaluation of Proposals .....................................................................................................11

12. Disclaimer ..........................................................................................................................11

13. Submission Date and Timing .............................................................................................12

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1. Letter of Introduction

Maputo, 30 April 2013 Dear Messrs/Mes Maputo Port Development Company (MPDC) (hereinafter called “Client”) intends to appoint a transaction advisor to assist in financial and corporate structuring and debt arranging in relation to its capital expenditure plans. 2. MPDC now invites proposals to provide the transaction advisory services. More details on the services are provided in the Terms of Reference. 3. This Request for Proposal (RFP) has been addressed to the following short-listed Consultants:

ABSA Capital / Barclays

Banco ABC

Banco Comercial de Investimentos

Banco Unico

Bank of America Merrill Lynch

Bank of Tokyo Mitsubishi

Banco BPI

Citibank

Credit Agricole

Credit Suisse

Development Bank of Southern Africa

Deutsche Bank

FirstRand Bank / RMB

HSBC

Investec Bank

JP Morgan

KPMG

Macquarie

Millenium BIM

Moza Banco

Natixis

Nedbank

Societe Genenerale

Standard Bank

Standard Chartered Bank

4. An advisor will be selected under a quality and cost-based selection method based on procedures described in this RFP. 6. Please inform us in writing at the following address: Maputo Port Development Company

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The Financial Director Email: ana.santiago@portmaputo.com Praça dos Trabalhadores, PO Box 2841 Porto de Maputo Maputo - Mozambique Fax: +258 21 018 140 8. The deadline for submission of proposals is 31 May 2013 and the proposals shall be submitted by 16:30hrs CAT at the address indicated above. 9. Upon receipt of this RFP please respond in writing: (a) That you received the Letter of Invitation and RFP, and (b) Whether you will submit a proposal or not, and (c) Whether you will submit alone or in association Yours sincerely, __________________ Ana Santiago Finance Director

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2. Background

The Port of Maputo is an important transport gateway on the East coast of Southern Africa, and provides a strategic import / export route for Mozambique, South Africa, Botswana, Zimbabwe, Zambia and Swaziland. Geographically, the Port of Maputo is the closest port to the important industrial hubs of Gauteng and Mpumalanga in South Africa, which is currently the largest source of cargo moving through the Port. In the year 2000, Maputo Port Development Company (MPDC), a partnership between an international consortium of investors and the Mozambican Public Company CFM, was awarded the long term concession to develop, finance, rehabilitate, operate, manage and maintain the Port of Maputo. The Concession became effective in 2003, and was originally granted until 2018. In 2006/7 the original private consortium was bought out and replaced by the current sponsors, Grindrod and DP World in joint venture. During 2010 the sponsors negotiated an extension of the tenor of the Concession, which now runs until 2033 with an option of a further 10 years. This additional term provided the impetus for a substantial program of investment to rehabilitate and expand the capacity of the Port. The investment is co-ordinated through a Port Master Plan, developed by the sponsors and approved by the Ministry of Transport and Communications, which sets out the long-term growth framework of the Port. The first major projects of this investment program are in advanced stages of development, and will commence implementation during 2013/14. MPDC performs the functions of Port Authority, Terminal Operator and Marine Manager, which are conducted through different divisions within the same legal entity. In addition, a number of major terminals are operated by third parties under sub-concession agreements awarded by MPDC. These include:

the container terminal operated by DP World,

the bulk coal and magnetite terminal operated by Grindrod,

the sugar terminal operated by STAM,

the car terminal operated by Grindrod, and

the vegetable oil terminal operated by Maputo Liquid Storage Terminals amongst

others.

Three terminals operated by independent third parties are located outside the boundary of the Port Concession (Mozal, the Petromoc fuel terminal and STEMA grain terminal), and MPDC is responsible only for the provision of marine services to these operations. Over the past two decades the Port of Maputo has progressed from handling 1 million tons in 1992, to just less than 4 million tons at the commencement of the concession in 2003 and in 2012 it handled 15 million tons. The Port projects a cargo volume of 17 million tons in 2013 and has targeted 40 million tons by 2020. This rapid growth will only be accomplished through a program of significant capital expenditure on new infrastructure. This entails, inter alia:

Rehabilitation and/or reconstruction of various berths;

Construction of a multi-product general bulk terminal;

New road and rail infrastructure;

Administrative buildings; and

Dredging of the access channel, basins and berths.

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The current estimate of the cost of this infrastructure investment program is at least $300 million over the next 5 years, with the majority of the works scheduled to commence early in 2014. The quantum of expenditure is being refined through various engineering studies that will enhance the level of certainty around the cost of the various projects. In order to fund this expenditure, MPDC intends to raise a substantial new debt facility, with a targeted financial close during 2013.

3. Concession structure

The ownership structure of MPDC is as follows:

Key terms of the Concession Agreement is as far as they relate to capital investment in the Port are as follows:

MPDC has immediate control over the land designated the “Port Concession Area”,

and a pre-emptive right to develop any port-related projects within a larger area of

land designated the “Port Jurisdiction Area”. The below aerial map illustrates the

Port Concession Area in yellow and the Port Jurisdiction Area in blue:

PORTUS

ÍNDICO

MOÇAMBIQUE

GESTORES

48.5% 48.5%3%

51% 49%

Maputo Port

TCM

Port

Jurisdiction

Port

Jurisdiction

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MPDC is granted the rights to finance, manage, operate, maintain and develop the

Port Concession Area. Specifically, it is granted exclusive rights to operate the Port

and to provide pilotage and towage services, stevedoring, warehousing, cargo

handling and cargo storage, bunkering and berthing services.

MPDC has the right to establish, alter and charge port tariffs at its discretion.

The Concession Fee payable to the Conceding Authority comprises a fixed fee of

US$5 million per annum and a variable fee equal to a percentage of MPDC’s

turnover. As of 1 April 2013 this level will increase from 12.5% of turnover to 15% of

turnover, and is payable for the duration of the Concession.

MPDC may not to develop any additional terminals in sub-concession structures,

except where it is able to demonstrate that such a development will enhance

MPDC’s profitability and increase the Conceding Authority’s financial return, and/or

where such a development is advantageous to the development of the Port, the

country’s infrastructure, or employment and investment opportunities.

Government has guaranteed the repayment of any approved debt owed by MPDC in

the event of default (all circumstances), as well as equity and a limited equity return

to investors in the event of a Conceding Authority default.

4. Financial Highlights

At inception of the Concession, MPDC was capitalised through nominal equity contributions

from the shareholders, shareholder loans (of which the disproportionate majority was

contributed by the private sector sponsor-shareholders), and an external limited recourse debt

package. The external debt (drawdown of $23.375 million) is largely repaid, with only $4.8

million outstanding at the end of 2012. The balance will be settled through scheduled

repayments, and refinancing as part of the fundraising exercise. Shareholder loans owing at

the same time amounted to $21.5 million. At the end of December 2012 MPDC had $26

million in cash, however $8 million of this was applied to reduction of the shareholder loans

during January, and the balance of these loans have been approved for repayment by the

end of July 2013.

Key financial highlights for the 2012 year are as follows:

Balance sheet 2012 (USD 000’s)

2011 (USD 000’s)

Change %

Total Assets 71,041 57,030 25%

Net Assets 52,076 41,030 27%

Shareholder Loans 21,518 20,905 3%

External Loans 5,651 14,801 -62%

Cash 26,442 13,198 100%

Income Statement

Turnover 76,446 62,010 23%

EBITDA 31,960 22,406 43%

Net Profit 19,583 12,682 54%

Cashflow Cashflow from Ops 26,781 21,452 25%

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A comprehensive financial model covering the remaining period of the concession is being

prepared at present, with the assistance of KPMG. This is due to be completed during May

2013, and will provide support to the fundraising initiative. The model will not be distributed as

part of the RFP circulation to prospective bidders.

5. Fundraising Status

MPDC requires a substantial new debt injection in order to meet its capital investment

requirements. In order to be able to raise this quantum of debt, MPDC has commenced an

internal restructure to prepare for the debt raising. This has entailed the clear separation of

the distinct operating units. The three operating units (Port Authority, Terminal Operations and

Marine) have different characteristics with regards their revenue sources, asset types,

investment recovery periods and cost structures. The financial records reflect this structure

with effect from the 2012 year-end. A financial model has been prepared in line with this

internal restructure which is reflective of the anticipated arrangement upon which the funding

will be procured. This model will be completed by the end of May 2013. MPDC is also in the

process of updating the 5-year investment plan, which sets out the major capital expenditure

requirements over this period. The current plan contains early cost estimates, which must be

updated and refined to a narrower degree of certainty before the fundraising is concluded. A

number of contracts with consulting engineers are currently underway or being concluded for

this purpose. The outcomes of these feasibility studies will be factored into the financial

model.

Given the complexity of the investments being made, the impact of the Concession structure,

and the varying types of finance being anticipated, MPDC has determined to appoint a

transaction advisor to assist it in preparing for the fund raising. The primary activities included

in this role will be:

Review of the Concession Agreement and ensuring all activities are compliant with its

terms;

Review of the financial model, and amendment thereto in order to make it ready for

use in the fundraising;

Review of the current corporate and operational structure and recommendation of

any amendments to the structure necessary to make the investment plan bankable;

Formulation of a suitable debt raising strategy;

Corporate and or financial restructuring required to implement the debt raising

strategy;

Preparation of an information memorandum and/or other documents required in order

to raise debt from the selected markets.

The mandate will include the final debt arrangement to the extent that the debt is raised in a

single consolidated transaction by MPDC. It is anticipated that the arranging fee will take

account of the work done within the first component of this mandate.

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6. Terms of Reference

The project sponsor and Client for the transactional advisory mandate is MPDC – Sociedade

de Desenvolvimento do Porto de Maputo S.A. (“MPDC”). Costs are to be quoted in US

Dollars.

Proposals are to remain valid for a period of no less than 60 days after submission date.

The Proposal, as well as all related correspondence exchanged by the Consultants and the

Client, shall be written in English. Notwithstanding the above, documents in Portuguese,

submitted with the bid may be accepted without translation.

In preparing their Proposal, Consultants are expected to examine in detail the documents

comprising the RFP. Material deficiencies in providing the information requested may result in

rejection of a Proposal.

7. Fraud and Corruption

It is the policy of MPDC to require advisors, consultants and their agents (whether declared or

not), personnel, sub-contractors, sub-consultants, service providers and suppliers to observe

the highest standard of ethics during the selection and execution of contracts. In pursuance

of this policy, MPDC:

(a) defines, for the purposes of this provision, the terms set forth below as follows:

(i) “corrupt practice” is the offering, giving, receiving or soliciting, directly or

indirectly, of anything of value to influence improperly the actions of another party;

(ii) “fraudulent practice” is any act or omission, including misrepresentation, that

knowingly or recklessly misleads, or attempts to mislead, a party to obtain financial or

other benefit or to avoid an obligation;

(iii) “collusive practices” is an arrangement between two or more parties

designed to achieve an improper purpose, including to influence improperly the

actions of another party ;

(iv) “coercive practices” is impairing or harming, or threatening to impair or harm,

directly or indirectly, any party or the property of the party to influence improperly the

actions of a party ;

(v) “obstructive practice” is

deliberately destroying, falsifying, altering or concealing of evidence material

to the investigation or making false statements to investigators in order to

materially affect the Client’s investigation into allegations of a corrupt,

fraudulent, coercive, or collusive practice; and/or threatening, harassing, or

intimidating any party to prevent it from disclosing its knowledge of matters

relevant to the investigation or from pursuing the investigation, or

acts intended to materially impede the exercise of the Client’s inspection and

audit rights provided for in this section.

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(b) will reject a proposal for award if it determines that the consultant recommended for

award has, directly or through an agent, engaged in corrupt, fraudulent, collusive, coercive, or

obstructive practices in competing for the contract in question;

(c) will sanction a firm or an individual at any time, in accordance with prevailing

procedures, including by publicly declaring such firm or individual ineligible for a stated period

of time: (i) to be awarded a contract, and (ii) to be a nominated sub-consultant, sub-

contractor, supplier, or service provider of an otherwise eligible firm being awarded a contract.

In further pursuance of this policy, the transaction advisor shall permit the Client to inspect

their accounts and records and other documents relating to the submission of proposals and

contract performance, and to have them audited by auditors appointed by the Client.

Respondents shall furnish information on commissions and gratuities, if any, paid or to be

paid to agents relating to this proposal and during execution of the assignment if the

respondent is awarded the Contract.

8. Items to be included in proposal and cost estimate

Development, and assistance with the implementation, of a suitable corporate structure

for MPDC to enable it to fund its capital expenditure forecast, including evaluation of the

potential sub-concessioning of components of the existing and/or future business.

Development, together with MPDC, of a project plan for the funding of the projected

capital expenditure, including key deliverables, timelines, and decisions necessary to

accomplish financial close within the required timeline.

Development of a funding structure to ensure that MPDC obtains the best cost of funding

on terms most appropriately suited to the business requirements either in total or per

project, including analysis of commercial aspects of the investments and liaison with

potential lenders to determine ideal levels of equity, debt, mezzanine or other funding

sources.

Assistance to MPDC in preparation of key transaction documents to ensure bankability:

o Concession, sub-concession, direct or other agreements relating to the corporate

structure of MPDC and any other corporate vehicles deemed necessary to execute

the business plan;

o EPC / EPCM engineering and construction contracts for key items of capital

expenditure, where relevant;

o Key customer contracts (take-or-pay terms);

o Rail service agreements, and rolling stock supply agreements.

Primary responsibility for debt capital raising for MPDC, including:

o Preparation of an information memorandum for circulation to potential funding parties.

o Meeting with potential funding parties and execution of an in-depth market analysis.

o Co-ordination of a process to identify and secure funding through tender, direct

solicitation or other appropriate measure.

o Evaluation of term sheets together with MPDC.

o Negotiations with lenders and assistance with establishment of key terms together

with MPDC.

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Assistance with conclusion of finance contracts, including liaison with MPDC’s legal

advisors.

Management, oversight and updating of the MPDC financial model, including execution of

various scenario assessments.

Assistance with securing of investment incentives, tax incentives and related financial

structuring to maximise these benefits

Assessment and ensuring alignment of the ESIA process with the Equator Principles and

requirements of the lenders

Assistance with compliance-related elements of the funding package, including

preparation of drawdown notices, ECA submissions, Exchange Control applications and

similar.

Ongoing project management functions, including:

o Regular project meetings

o Co-ordination of the procurement process and funding structure, in particular in

respect of ECA, DFI or other multilateral funding sources

o Preparation and circulation of a project dashboard to key management and

shareholders

o Input to regular board updates

Note: The selected Transaction Advisor will only be permitted be a lender to MPDC to the

extent that market-determined terms for a particular tranche of funding are established and

the selected Transaction Advisor matches such terms.

9. Returnable items

The following items should be included in the proposal for the transactional advisory:

A detailed proposal and cost estimate addressing the terms of reference above, with the

cost of each component of the service proposal to be separately identifiable

CV’s of team members that will be working on this Project indicating skills, responsibility

and experience in projects in Mozambique and Africa

How you intend harnessing the Group’s experience of your entity and how it will apply to

this Project

Company profiles and list of projects that demonstrate experience in similar projects of

this magnitude

Similar details for any other service providers that may be included as part of a

consortium proposal

A schedule indicating the anticipated process and time frame to financial closure

In order to align our interests, the cost estimate should include a mix of milestone

payments and a success fee payable on closure of each stage of the transaction.

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10. Submission of queries

All respondents to the RFP will be permitted to submit written queries or requests for

clarification to the Financial Director, Ana Santiago, at the respondent address. All queries

must be received on or before Friday 10th May. The queries will be consolidated and a single

response to all queries will be circulated to all responding parties within 5 business days.

11. Evaluation of Proposals

Proposals will be evaluated based on the following criteria:

Cost estimate based on the resource plan

Extent of service offering and methodology covered in your proposal

Project finance experience of the specific team on large infrastructural projects

An understanding of statutory requirements, tax legislation and available investment

incentives of Mozambique

Understanding the scope of the structural and debt requirements of MPDC

Declaration of understanding confirming that if you are successful being awarded the

transaction advisory mandate will preclude you from participating as a lead lender to the

business.

The award of the mandate to the successful respondent will be subject to the approval of the

agreed terms by the MPDC board of directors.

12. Disclaimer

The requirements recorded herein are not exhaustive, and no agreement relative to the

matters recorded herein will be legally binding until such time as the salient terms of the

appointment have been agreed, and the parties have executed the necessary legal

agreement/s recording the agreed terms of the transaction advisory mandate.

Furthermore, MPDC is under no obligation to enter into any formal business arrangement with

anyone of the bidders approached in terms of this Request for Proposals.

Information relating to evaluation of Proposals and recommendations concerning awards shall

not be disclosed to the Respondents who submitted proposals or to other persons not

officially concerned with the process until the publication of the award. The undue use by any

respondent of confidential information related to the process may result in the rejection of its

proposal and may be subject to the provisions of the MPDC’s antifraud and corruption policy.

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13. Submission Date and Timing

Your proposal must reach MPDC by 12:00 on Friday 31st May 2013, and can be submitted

electronically via email to ana.santiago@portmaputo.com or delivered to the following

address:

Ana Santiago Financial Director MPDC Port Directors Building Port of Maputo Maputo Mozambique