Saskatchewan Chamber of Commerce P3 Summit

1. Saskatchewan Chamber of CommerceP3 Summit Innovation in Financing Infrastructure Projects September 9, 2014 presented byAon Construction and Infrastructure Services

2. Agenda • Canadian Public, Private, Partnerships (P3) Success Factors • Factors Fueling Innovation in P3 Financing • Public Sector Financing Innovation in P3s • Private Sector Financing Innovation in P3s • Typical Financing Solutions – Canadian P3s • Typical Credit Provisions between Lender and Project Co • Current Innovation in Performance Security • How to Creatively Finance Infrastructure Projects

3. Canadian P3 Success Factors • Strong and Steady P3 Pipeline • Mature Market with 214 projects in various stages (completed, in operation, under construction, open RFP, open RFQ, etc.) source: C2P3 August 2014 • No one model fits all: • Delivery models include BF / DBF / BFM / DBFM / DBFOM • P3 market is broad and deep in the players it attracts • Risks allocated to the party best suited to take on the risk resulting in VFM • Payments made based on performance resulting in on-time & within budget • Continuous P3 financing innovation over the years

4. Factors Fueling Innovation in P3 Financing • Credit and liquidity Crisis • Competition within the Financial Markets • Introduction of European Lenders • Size of Transaction

5. Public Sector Financing Innovation in P3s • Increase in Substantial Completion Payment (SCP) • Credit Spread Benchmarking Process • Collapse of Financial Close and Commercial Close • Introduction of Milestone Payments in Ontario • EDC backed LC

6. Private Sector Financing Innovation in P3s • Broadly Distributed Long Amortizing Bond Solution • Narrowly Distributed Private Placement Bond (Short and Long) • Broadly Distributed Bullet Bond (Short and Long) • Structured Deposit Notes (SDNs) • Hybrid Financing Solutions • Mini Perm Solutions & Refinancing • Alternative Assets posted in lieu of Letter of Credit • Modeling life cycle/other components of the monthly service payment for most cost effective bid

7. Typical Financing Solutions – Canadian P3s • Short Term (Term 3 to 6 years): • Bank Syndicates (primarily dominated by Canadian banks + two Japanese banks) • Broadly distributed Bullet Bonds (Pension Funds, LifeCos, Asset Managers, etc.) • Narrowly distributed Private Placement Bonds (LifeCos ) • Medium Term (Term 7 to 10 years): • Narrowly distributed Private Placement Bonds • Bank Syndicates • Long Term (Avg. life - 23 to 30 years and Term – 33 to 36 years): • Broadly distributed Amortizing Bonds (Pension Funds, LifeCos, Asset Managers, etc.) • Broadly distributed Bullet Bonds (Pension Funds) • Narrowly distributed Private Placement Bonds • Long Term Bank Financing (European Bank Mini Perm)

8. Typical Credit Provisions between Lenders & Project Co

9. Current Innovation in Performance Security Liquid Surety / P3 Bonds • Demand Bond • Demand Bond plus Standard Performance Bond • Convertible Surety Bond • Loss Advance P3 Bond Non-Bank Letter of Credit Backstop O&M Performance Bond (standard and liquid surety) Liquidity in key insurance covers (property, professional and pollution)

10. How to Creatively Finance Infrastructure Projects • Choose a Financial Advisor with thorough knowledge and experience with P3s, the various financing solutions available in Canada, and relationships with various P3 debt and equity investors, and rating agencies; • Ensure your Financial Advisor competes the various financing solutions overall (and performance security options within) to find the most cost effective solution with a high degree of deliverability; • Choose Insurance Advisor/Broker with thorough knowledge and experience with P3s, performance security options, rating agency criteria, and strong relationships with the insurance/surety markets and other P3 players; • Consider all available performance security options to minimize overall cost.

11. APPENDIX: Aon Construction Services Group - Canadian Credentials • Broker/Advisor to 2,400 Canadian construction clients of all sizes • Broker/Advisor to over 50% of the Top 100 Canadian Projects • Broker/Advisor to over 84% of all Canadian P3 Projects • Long time relationships with P3 participants (Contractor, Debt, Equity, Insurance/Surety markets, Rating Agencies, Financial Advisors) • 25% of construction insurance in Canada is brokered by Aon • 97% of all Canadian Contractor Default Insurance premium placed • 23% -26% of all surety bonds in Canada are brokered by Aon (last 7 years)

12. Contacts Michael Sali, B.Admin., CAIB  |  Vice President Construction Services Group  |  Surety 2103 – 11th Avenue, Suite 800  |  Regina, Saskatchewan S4P 3Z8 t +1.306.569.6704  |  m +1.306.502.6758  |  f +1.306.359.0387 michael.sali@aon.ca  |  aon.ca Aon Reed Stenhouse Inc. Kent Peters   |  Senior Vice President - National Director Surety Aon Risk Solutions  |  Construction Services Group 20 Bay Street  |  Toronto, Ontario M5J 2N9 t +1.416.868.5996  | m +1.416.419.6475 kent.peters@aon.ca  |  aon.ca Aon Reed Stenhouse Inc. Jim Cahill  |  Senior Vice President Aon Risk Solutions  |  Construction Services Group 20 Bay Street   |  Toronto, ON   M5J 2N9 t +1.416.868.2409  |  m +1.647.534.6526 james.cahill@aon.ca  |  aon.ca Aon Reed Stenhouse Inc.