Wednesday, January 11, 2012

Example of Good Memo Report


To: Directors of the Polish Airports Agency
From: Vincent Steven Rijpkema (Managing Director of Laumann Construction)
Date: October 6, 2011
Subject: Negotiation agreements for Konopnicka Airport expansion project

Introduction
On October 6, the Polish Airports and the Ministry of Infrastructure discussed together with Laumann and the Weber-Merkel bank, the contract for the development of a second runway and the construction of a new world-class passenger terminal, a cargo terminal and a catering base at the Konopnicka Airport in Poland. We have agreed on the following plans of action and financial agreements to construct and run the to be newly built runway and related services.

Financing
Firstly, we concurred on the financing loan to be set at 85% loan from the Weber-Merkel bank and the remaining 15% will be financed by Polish Airports at a total cost of 120 million euros. The loan interest rate will be set at a rate of 3%. Laumann will take full responsibility for designing and building the new facilities at the Airport.

Operation and management
Secondly, after completion of the second runway and extra services, there will be a joint-venture for ten years, where Polish Airports will have decision power. However, 55% of net profit will be for Laumann Construction after costs are split.

Repayment terms
Moreover, the loan will be repaid by Polish Airports over 20 years, starting after 50% completion of the project. This will be done on a quarterly basis. The airport will collect take-off and landing charges and overflight fees from  foreign airlines and use this to repay the loan. Excess charges and fees will be for Polish airports.

Building schedules
Furthermore, the construction project will take 30 months. Laumann will cooperate with Polish construction companies who they pick themselves.

Risk allocation
Lastly, Laumann will be responsible for additional costs from delays in building schedules, with a fine of one million each month and a maximum penalty fine of five million euros. Risk associated with low air-traffic volumes will be shared on a 50-50 basis.

Conclusion and recommendations
Laumann Construction realizes that a project of this size comes with risks and great difficulties, but both parties have agreed on foundation parts as financing, a joint-venture, repayment terms, schedules and risk allocation. We believe that the construction and expansion of the airport is an essential investment for the Polish Airports, as is the construction and joint-venture programme for Laumann Construction.

Vincent Steven Rijpkema,
Managing Director of Laumann Construction.

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