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Konopnicka Airport Case

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    Director of Laumann Construction From: Denise Hensen (Representative of Laumann constructions) Date: 7 October 2012 Subject: Agreements for the expansion of Konopnicka Airport Introduction On 3 October, the negotiations about the PPP took place. The PAA and the Ministry of Infrastructure have made the decision to expand Konopnicka Airport. Laumann will be responsible for the construction, which will be financed by the Weber-Merkel Bank. The total cost of the expansion cannot exceed €120 million.

    During the negotiations both parties came to an agreement about the five points that were on the Agenda. Financing Laumann will be the only one that is responsible for the designing and building of the new facilities. Furthermore both parties agreed on the financing. The Weber-Merkel bank will lend 85% of the costs, this equals €102 million, at an interest rate of 3,5%. The remaining 15% will be financed by Polish Airports. This is decided by making a compromise between the wishes of both parties. peration & management Laumann was hoping for the option to manage the airport services on a 10 year long concession. However, after a long discussion, Laumann turned away from this option due to the fact that this point is against the values of Polish Airlines. Therefore the Airport services stay in the hands of Polish Airlines. Repayment terms Polish Airports agreed on repaying the loan on a monthly basis within 10 years. The loan repayment will at the moment Laumann finished the total construction.

    Weber-Merkel is authorized to collect the take-off and landing charges from foreign airlines, and the overflight fees. However, the bank is obligated to pay back excess charges and fee to Polish Airlines every month. Building schedule Laumann convinced the other parties that the construction project will take 30 months. A shorter project time would result in inferior quality of the building, therefore the deadline will be at 30 months after the start of the project. Additionally Laumann will cooperate with polish construction firms hat have proven track records. This will ensure the quality of the project. Risk allocation Both parties will allocate some of the risks. first of all Polish Airport will be responsible for the preliminary environmental studies and the local residents. Secondly delays in schedule will be the responsibility of Laumann, unless the circumstances are out of its control. Here you can think of adverse water conditions. All the other reasons for delay will have a penalty of 0. 5 million per week, with a maximum of 4 million.

    After the 4 million the penalty will result in a fine of 0. 5 per month. Conclusion Both parties agreed on all of the points motioned above. We will start with the construction work as soon as possible. We believe that the 30 months will be a good time allocation. Furthermore we think that the financial part is totally covered, and more important save For Laumann Inc. as well as for the other parties. we hope that we have informed you sufficiently. Denise Hensen Representative of Laumann constructions

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